Affordability, Benefit and Balance Underscore Discussion of Trends in Housing Development
Trends in Housing Development. Generally something achieves "trend" status by virtue of popularity and usefulness. But this does not always translate into a trendy thing becoming beneficial (look no further than parachute pants, leg warmers and big hair in the '80s). Certainly there are trends evident in the housing industry. But there's also ample evidence that those trends are not necessarily the best thing for the public. Higher foreclosure rates, increasing homelessness and structures that are either not affordable or substandard in quality mark the current state of housing across the nation as we enter 2005 and underscore the point.
Numerous organizations, on the state and national levels, have come to the same conclusion, namely that there are misconceptions surrounding housing and its policies, and that we must work to ensure future efforts reflect the housing trends most beneficial to the housing industry as a whole, and most importantly, to John Q. Public.
Most detrimental to both the industry and the individual is the common belief that subsidized housing in unnecessary, that the current market will sufficiently provide for everyone. As well, there is the very real issue of the unwanted nature of low-income housing - NIMBYism at its finest. (NIMBY - Not In My Back Yard). Also, although the low interest rates have been a boon for the homebuilding industry, there is a nasty blemish on this pristine face. Higher foreclosure rates are an indirect result of these lower rates, as people are talking themselves into -or being talked into - more house than they can really afford. While it is true that for the majority of people homeownership is the best option, the idea that it is the best thing for everyone, all the time, regardless of situation, has been exposed as a myth, thanks to this low-interest environment.
A recent report from the Center for Economic Policy and Research, Who's Dreaming? Homeownership Among Low Income Families, illuminated part of the problem by explaining that what makes home ownership desirable for middle-income families is less important or does not even factor into the equation for low-income families. The tax benefits of writing off mortgage payments are not of as much consequence, and the costs of buying and selling homes and making monthly payments disproportionately impact the low-income. It is no earth-shaking revelation, but rather a common-sense idea: in essence, $500 means more to a family barely getting by than it does for one earning $50,000 per year.
The lack of affordable housing also is resulting in a more commute-oriented workforce, unable to afford escalating housing costs in the communities where they work. This condition used to exist only in the most high-profile towns in Idaho, but it is becoming much more commonplace, to the chagrin of working-class families. Driggs, Idaho, serves that function for Jackson Hole, Wyoming workers. Bellevue and Hailey, and now Carey, Shoshone and Twin Falls, serve in that capacity for Sun Valley. Numerous towns in North Idaho do the same for the Coeur d'Alene's resort properties. As McCall is developed, it seems inevitable that Donnelly and other outlying towns will face that challenge as well.
"It's a concern wherever we see the high home prices," said Ken Harward, executive director of the Association of Idaho Cities. "That's happening along the Teton range, that's happening in Sandpoint, that's happening with the new resort in Valley County as well."
The fact that Idaho has a lot of amenity property makes the cost of housing more expensive for everyone, including those who work in key community jobs, said IHFA President and Executive Director Gerald Hunter.
"Housing prices are outstripping the income of people who are key to our communities," he said.
Hunter cited a recent study that deals specifically with that disparity: "In the amount of time that affordable single-family homes increased 10 percent, the number of jobs in retail and service industries increased almost 100 percent, according to the Joint Center for Housing Studies at Harvard University.
Idaho is not immune to the income pinch. In Idaho, 66 percent of renter households earning 50 percent or less of area median income live in unaffordable housing," according to The Crisis in America's Housing, published in January. And 88 percent of owner households earning 50 percent or less of area median income have an unaffordable mortgage.
The last few years have been record-breaking years in housing. In 2003, according to The State of the Nation's Housing 2004 by the Joint Center for Housing Studies of Harvard University, home sales, single-family housing starts, mortgage originations, home prices and residential fixed investment all reached new highs.
These are the issues we will be discussing in this issue of Cornerstones. Given the diverse nature of all of the parties with a stake in housing and the variety of interests that exist within that group, it may be unrealistic to think that we will come to any sort of mutually beneficial policy stance any time in the near future, but considering how much is stake in the dialogue, it is the least we can do to endeavor to thoroughly explore the issues surrounding housing and its development.
Locked Out: Workers Struggle against High-Priced Housing
The term "workforce housing" has taken the spotlight in the past year, shedding light on the struggle of working families to find affordable housing. Increasingly, health-care workers, schoolteachers, firefighters, police officers, retail sales clerks and food preparers cannot afford to live within the same communities they work.
A 2004 study of the 25 largest central cities uncovered the lack of housing opportunities available to police officers, teachers, nurses and firefighters. The study, Housing for Heroes, by the Homeownership Alliance, found that those working in central cities have a one-in-three chance of finding an affordable home. In the suburbs, the chances drop to three-in-10.
A similar study by the National Association of Home Builders found that retail workers were priced out of 97 percent of the tracts in the 25 largest cities.
Housing Cost Outpaces Income Growth
Why are key workers locked out of their communities? One reason is that housing costs are increasing faster than income.
For example, in Camas County from 1990 to 2000, median home values climbed 85 percent while wages increased just 0.68 percent. In Adams County, home values increased 53 percent while income plummeted 9 percent. The average disparity between wage and housing cost growth in Idaho counties was 31.5 percent.
The numbers after 2000 may be even more extreme. The average sales price for a home in Sandpoint in 2001 was $129,022. The average price shot up to $201,003 in 2004.
Growing consumer debt and lack of savings also explain why home ownership has become out of reach.
Solutions for Working Families
To expand the stock of workforce housing, Fannie Mae and the National Association of Home Builders a year ago launched a workforce housing initiative focused on 1,000 communities. NAHB and Freddie Mac also sponsored a symposium on the topic in December.
Local governments also are concerned about housing for working families. The National League of Cities placed housing among its top five priorities in 2004.
Here at home, IHFA has picked up the pace on housing needs assessments, presently . focusing on Valley County. IHFA also has extended home ownership resources to more people, including working families. On March 1, IHFA increased its income limits and sales-price limits for an IHFA home loan to $200,000, - and in Blaine and Teton counties it's $275,000, acknowledging inflated housing costs in resort areas.
Stanley Studies Housing Shortage
Workforce housing is a concern in large and small communities alike. The town of Stanley is working proactively to increase its stock of affordable housing. One hundred people live in the isolated city in the heart of the Sawtooth National Recreation Area. While the community enjoys infinite scenic beauty and recreational opportunities, access to housing is limited.
Stanley has only 38 permanent family units in the city limits. The city's 380 acres are somewhat landlocked, and demand has driven up the price for both rentals and ownership property. The typical price for an acre of bare land is $300,000-$350,000, said Dr. Rick Fawcett.
Fawcett owns Whisper Mountain Professional Services, specializing in community administration and development in small, rural communities. The mayor of Stanley, Paul Frantellizzi, asked Fawcett to help solve the city's affordable housing problem.
"I knew we had a serious problem and had to do something about it," Frantellizzi said.
Stanley's population triples during its five-month tourist season. But when the bitter cold sets in, seasonal workers and tourists head home. The challenge is creating decent, affordable places for part-time residents to live.
"How do you invest the money to build something like that if it's going to be empty seven months out of the year?" Fawcett wondered.
In a survey last June, 90 percent of the locals agreed affordable housing is a serious issue in Stanley. Sixty-five percent stated the lack of affordable housing impacted their businesses. Many business owners provide housing for employees because there is no other option. "Seasonal workers are housed in anything from a tent, to a little log cabin, to a bunch of people crammed into a little apartment," Fawcett said. Some employees commute more than an hour from Challis.
It is estimated that 60 of the town's approximately 200 seasonal workers are homeless, - living in the forest, sleeping in tents or in their cars, Fawcett said, adding, "we consider it to be an incredibly serious problem." An additional 20 to 30 workers report that they live in substandard housing and desire to upgrade their living conditions.
A Rural Development Summit was held in Stanley last July to explore solutions. The City of Stanley, Custer County, the Gem Community Committee, the Sawtooth Society and the Sawtooth National Recreation Area are working cooperatively on several options.
Mayor Frantellizzi said he is writing a housing plan for the community and is working with Rep. Mike Simpson to free up additional land for affordable housing. The mayor also wants to promote a nine-month tourist season to bring more stability and revenue to the community. The City Council also has pursued changes to make Stanley's mobile home park ordinance less restrictive.
Employers Offer Benefit to Help Workers Achieve Home Ownership
Companies around the nation are taking an active role in helping employees achieve the American Dream by offering a benefit known as Employer-Assisted Housing.
Fannie Mae, a private, shareholder-owned company, has helped 556 companies create EAH plans since launching the program in earnest in March 2000. Craige Naylor, senior deputy director for Fannie Mae, said the Boise office is in the preliminary stages of creating plans for three Idaho employers.
EAH benefits help employers reduce recruitment, turnover and training costs while boosting employee morale and enhancing the company's reputation. Fannie Mae has developed software to help companies calculate potential savings.
The benefit typically is offered as a forgivable, deferred or repayable second loan, a grant, a matched savings plan, or home-buyer education. Fannie Mae works with the employer to create the EAH plan and identify lenders and other partners. EAH benefits also can help employees with rental housing.
