As U.S. home prices have bounced back, activists, advocates, and community developers have struggled to make housing more affordable. But many families in the United States still cannot afford a decent place to live. New funding is hard to come by, and much of the available funding is spent to maintain and recapitalize existing affordable housing properties.
A new report for the Bipartisan Policy Center collects ideas from around the country that could help affordable housing programs help more people—without spending more money. “There are innovative policy approaches that could help the nation house more people, within current funding levels,” says author Jeffrey Lubell, director of housing and community initiatives for Abt Associates, a mission-driven public policy research and consulting organization.
The report, Housing More People More Effectively through a Dynamic Housing Policy, outlines several strategies, ranging from ideas that are still in the conceptual stage to proven concepts that could be put into much broader use.
Most of the ideas in Lubell’s report focus on how changes over long periods of time affect lower-income people, affordable housing properties, or the neighborhoods where low-income people live. In contrast, today’s housing programs often focus on “individual transactions or narrow time periods,” according to Lubell.
“He is tying together a lot of policy solutions, all trying to extend the life cycle of money going into affordable housing,” says Michelle McDonough Winters, senior visiting fellow for housing at the Urban Land Institute (ULI) Terwilliger Center for Housing.
For example, many properties built under the auspices of affordable housing programs such as low-income housing tax credits (LIHTCs) need to be recapitalized with a fresh infusion of cash after they finish their initial 15-year period of compliance. Lubell calls for something different: “life-cycle underwriting,” in which properties have enough resources when they open to operate successfully for the likely useful life of the property—say, 50 years—without requiring recapitalization to replace building systems like the roof and heating systems.
“This substantially reduces the likelihood that an additional recapitalization of the property through a new LIHTC transaction will be needed, freeing up LIHTC funds to go toward the development of additional LIHTC units,” says Lubell.
The report also calls for the expansion of programs that can help strengthen households. The Family Self-Sufficiency Program, which now aims to help households in federal rental subsidy programs increase their income, could be expanded to help many more people. Eviction prevention programs, which provided targeted assistance to help people keep their homes, could also be more prevalent.
Lubell also considers a few ideas that have not yet been put into practice, such as portable mortgages—i.e., home loans that follow homeowners as they move from home to home. “Of course, there are numerous obstacles that would need to be overcome,” says Lubell. “Including how to finance the mortgages, the need to account for differences in the purchase price of subsequent homes, and the desire by some residents to refinance their mortgages if rates go down or they need to access some of their equity.”
An example of one the oldest ideas in the report was recently recognized by ULI. The shared-equity homeownership program run by the Vermont Housing and Conservation Board was a finalist for a 2014 Robert C. Larson Housing Policy Leadership Award from the Terwilliger Center.
The idea has been tried many times over the years, and shared-equity properties have been succeeding for years in jurisdictions across the country. Shared-equity homeownership programs create housing that is affordable to homeowners over and over again. Affordability is written into the home’s deed. The price of a shared-equity home is based on the home’s affordability, for the life of the home.
In contrast, today there are thousands of programs across the country, which collectively hand out millions of dollars in downpayment assistance grants. Each grant helps a single buyer purchase a home.
Over 30 years, shared-equity homeownership could help about two to three times as many homeowners as the same amount of downpayment assistance provided in the form of grants to individual homeowners.