Is There A Place for Non-Profits in the Housing Industry?
Is There A Place for Non-Profits in the Housing Industry?
After reading the chapter on “Housing and Community Development” and thinking about the housing market in this country, I am beginning to think that the affordable/subsidized housing model that non-profits are attempting to use – while the cause is certainly much needed and is a good thing to do – is a lopsided “lose/lose” paradigm that has very little possibility of helping to make housing more affordable in this country for those who need it most.
The following facts (1-4) are pulled from the chapter reading. 5-7 are my personal opinion based upon information gleaned over the years from a variety of sources:
1. There have never been enough resources to help all of the people who are really in need of affordable housing. The supply of unsubsidized housing low cost dwellings is diminishing and the quantity of low cost housing that nonprofits can supply is much less than the quantity that is needed.
2. No single existing public sector housing subsidy program provides deep enough assistance to make housing affordable for those families
3. Federal housing subsidies reach only 20% of the families eligible for them.
4. Most low-income households live in market-rate housing where they pay relatively high rent AND live in substandard, poor quality.
5. One of the Greatest American Dreams continues to be to own your own home; property ownership…and yet fewer and fewer people will ever realize this dream because of rising housing costs. Personal Finance 101 teaches us that one’s monthly housing costs should never exceed more than 1/3 (or 30-33%) of one’s take-home monthly income. I suspect that there is a significant number of Americans who would be relegated to substandard housing if they could only use 1/3 of their monthly income on housing.
6. The fundamental economic principles upon which our real estate industry is established make it fiscally illogical to place homes of unequal value in the same neighborhood or vicinity.
7. Real estate is considered the number one investment opportunity in America. It is low-risk investment with almost guaranteed returns that far exceed the initial financial investment. It is based upon the premise that a home continues to appreciate in value. That appreciation is largely dependent upon the LOCATION of the home.
I’m not convinced that there is an honest, legitimate place for non-profit entities in the housing industry; the highly profitable industry of real estate for which nonprofits are responsible for less than 2% of the nation’s housing stock! I think I would rather see the following:
· Place nonprofit emphasis on community development (i.e., quality of life factors, training and development, economic development, etc.) so that families who must dwell in subsidized housing can live with the same pride, dignity and safety of those who live in market-rate housing.
· Enforce financial disincentives and reasonable penalties for housing authorities that do not manage public housing in a manner that is safe, crime-free and civilized.
· Overhaul the CDCs (their purpose and successes as they relate to housing are highly questionable). Housing doesn’t seem to be a core competency for them. Instead, place resources and emphasis on the nonprofit financial intermediaries as a means for bringing together creative financing and viable long-term partnerships for developing affordable housing.
After reading the chapter on “Housing and Community Development” and thinking about the housing market in this country, I am beginning to think that the affordable/subsidized housing model that non-profits are attempting to use – while the cause is certainly much needed and is a good thing to do – is a lopsided “lose/lose” paradigm that has very little possibility of helping to make housing more affordable in this country for those who need it most.
The following facts (1-4) are pulled from the chapter reading. 5-7 are my personal opinion based upon information gleaned over the years from a variety of sources:
1. There have never been enough resources to help all of the people who are really in need of affordable housing. The supply of unsubsidized housing low cost dwellings is diminishing and the quantity of low cost housing that nonprofits can supply is much less than the quantity that is needed.
2. No single existing public sector housing subsidy program provides deep enough assistance to make housing affordable for those families
3. Federal housing subsidies reach only 20% of the families eligible for them.
4. Most low-income households live in market-rate housing where they pay relatively high rent AND live in substandard, poor quality.
5. One of the Greatest American Dreams continues to be to own your own home; property ownership…and yet fewer and fewer people will ever realize this dream because of rising housing costs. Personal Finance 101 teaches us that one’s monthly housing costs should never exceed more than 1/3 (or 30-33%) of one’s take-home monthly income. I suspect that there is a significant number of Americans who would be relegated to substandard housing if they could only use 1/3 of their monthly income on housing.
6. The fundamental economic principles upon which our real estate industry is established make it fiscally illogical to place homes of unequal value in the same neighborhood or vicinity.
7. Real estate is considered the number one investment opportunity in America. It is low-risk investment with almost guaranteed returns that far exceed the initial financial investment. It is based upon the premise that a home continues to appreciate in value. That appreciation is largely dependent upon the LOCATION of the home.
I’m not convinced that there is an honest, legitimate place for non-profit entities in the housing industry; the highly profitable industry of real estate for which nonprofits are responsible for less than 2% of the nation’s housing stock! I think I would rather see the following:
· Place nonprofit emphasis on community development (i.e., quality of life factors, training and development, economic development, etc.) so that families who must dwell in subsidized housing can live with the same pride, dignity and safety of those who live in market-rate housing.
· Enforce financial disincentives and reasonable penalties for housing authorities that do not manage public housing in a manner that is safe, crime-free and civilized.
· Overhaul the CDCs (their purpose and successes as they relate to housing are highly questionable). Housing doesn’t seem to be a core competency for them. Instead, place resources and emphasis on the nonprofit financial intermediaries as a means for bringing together creative financing and viable long-term partnerships for developing affordable housing.
posted by Anonymous @ 4:43 PM
3 Comments:
At 7:40 PM, October 01, 2006,
Evelyn said…
Gina talks about the property ownership in the US, so I felt curious about the topic and checked the UF library and found an interesting document. I downloaded the most recent edition of the U.S. Housing Market Conditions (2nd Quarter, 2006). This is a publication of the U.S. Department of Housing and Urban Development.). The report includes the 2005 AMERICAN HOUSING SURVEY RESULTS (page 4) and I wanted to share some of the findings from this huge report (very interesting by the way). I downloaded it from this link
http://www.huduser.org/periodicals/ushmc/ushmc_Q206.html.
- The American housing stock consists of more than 124 million housing units, of which approximately 15 million are vacant or for seasonal use. These homeowners generally live in single-family housing; occupy fairly new homes; live in suburbs of metropolitan areas; and live in homes that have between 4 and 6 rooms, 3 or more bedrooms, and 1 or more complete bathrooms. Households pay approximately 21 % of their incomes toward housing costs.
- Housing is generally located in metropolitan areas (91.6 million units, or 73.7 percent of the stock). Housing units located outside metropolitan areas account for more than one-fourth (26.3 percent) of American housing.
- Regionally, the South has the greatest number (46.4 million) and percentage (37.3 percent) of housing units. The Northeast has the fewest, with 22.8 million units, or 18.4 percent of all housing units. These percentages are changed little from the 2003 AHS and show a decrease in the Northeast of about 0.4 percentage point, an increase in the South of 0.3 percentage point, and almost no change in the Midwest and West.
- The median income for home owners is $55,000.00 and for renters is $26,000.00
This is one of the most complete housing reports I found on the Web. I thought it was interesting to see the US housing statistics and compare them with other developed countries (I’ll see if I can find a different report). I would like to ask you, do any of these results call your attention?
At 4:15 PM, October 02, 2006,
Anonymous said…
OtieP:
Gina's post makes several interesting and telling points. I strongly agree that nonprofits should focus on community development and make housing communities that already exist better places. I feel like this is the most import aspect of nonprofit involvement in this realm.
Gina and Leslie both discuss location of homes or subsidized housing. If these low-quality, dirty (for lack of a better word) areas were cleaned up, think of what progress would be made. However, crime is another issue in many of these areas and that presents a whole other problem.
At 5:28 PM, October 02, 2006,
Evelyn said…
I agree with Nadya when she mentioned that nonprofit organizations should become more active in legislation. The influence of people and organizations working together as one could be powerful when solving social problems such as housing.
During my internship with Habitat for Humanity Bolivia, I noticed that this organization was making huge efforts to work with the government. Habitat wanted to get the government contracts to build houses for low-income citizens. Habitat is not a construction company, but the organization needs funds to keep the program alive, so they are taking this approach to get more money. They will get the money, build the houses and then deliver them to the government and let the Housing Minister decide the distribution of houses (not Habitat).
I think that Habitat needs these kinds of alliances with the government because they do not get donations from individuals or companies in Bolivia. The funding that they get comes from international donations and a few national fundraising events. In this case I think that Habitat needs more support from the government and should make an effort to influence the legislation in its advantage. I believe that other nonprofits should definitively influence legislation to become a partner for social projects such as
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