Mortgage News Daily (CFED)
By: Jann Swanson
June 24, 2011
According to the Department of Housing and Urban Development's (HUD) research publication, Evidence Matters, the U.S. has not examined its national rental policy since the housing crisis began. As a result of that crisis, an ever-increasing number of renters are facing a shortage of decent, safe, and affordable homes.
In addition to the fallout from the housing crisis, there are other reasons for revisiting this topic. Derek R.B. Douglas, a special assistant to the president who serves on the White House Domestic Policy Council and leads an interagency rental policy working group says, "It is not just homeowners who are struggling in the economy; a third of the population rents. We need to start the conversation, and the thinking, about what we can do at the federal level, and what can be done by the state, local, and private sectors to support those renters who are now looking for affordable housing options, or having trouble making rents, or living in communities where rental prices are going up, as more people who were homeowners move into the rental markets."
This was the impetus for a conference titled Informing the Next Generation of Rental Housing Policy held last October under sponsorship of the Departments of Agriculture, Treasury, and HUD at which more than a dozen experts from the nonprofit development, financial, and academic worlds offered ideas for budget-neutral initiatives in the areas of rental housing for low-income households, the relationship between rental housing and neighborhoods, and the financial and regulatory barriers in the housing industry.
That conference featured a panel of experts from the nonprofit, development, financial, and academic worlds that looked at rental housing in three different ways: rental housing and low-income households, the relationship between rental housing and neighborhoods, and the financial and regulatory barriers inherent to the industry. This panel discussion forms the basis for the final article in the spring edition of Evidence Matters.
The primary theme that emerged from the panel discussion was using rental policy to promote better outcomes across a whole array of domains - asset-building for low income families, good schools, better neighborhood conditions, more positive outcomes for children and an end to chronic homelessness.
Nancy O. Andrews, president of the Low Income Investment Fund, said she envisioned a "children's healthy start voucher" that would link affordable housing to an array of early interventions: prenatal nutritional support; quality early childcare; community health care; replications of the family nurse visitation program which trains caregivers to parent effectively; and quality schools.
There is evidence supporting the efficacy of this approach. Nutritional support programs such as the Special Supplemental Nutrition Program for Women, Infants, and Children, as well as increases in family income in the early childhood years appear to have more long-term effects than similar initiatives aimed at adults. Likewise, studies and experiments "have shown long-term effects, even into adulthood, of high-quality early childhood education," said Jeanne Brooks-Gunn, a social scientist at Columbia University Teachers College. Finally, each early intervention initiative "saves government spending later" on remedial programs, criminal justice, unemployment, and welfare, according to Tama Leventhal, assistant professor of child development at Tufts University.
Andrews conceived the idea of using rental housing as a platform for a healthy start voucher based on a 17-year longitudinal study by Professor Gary Evans at Cornell University which suggests that the stresses of poverty pose a serious threat to children's brain development. The research shows that the high stresses of poverty on children "actually create physical impairments in child brain formation. In other words, poverty poisons children's brains" including inhibiting executive function and working memory, the parts of the brain used in learning. Making matters worse is that the diminished function appears to be long lasting, perhaps permanent.
The Evans study and others bring the importance of housing affordability and safe communities into focus. Andrews said, "I began to see the connections among housing, community, and human potential." When implemented together, the services embedded in her voucher concept may counteract the stresses on children's brains and the resultant deficits. As a result, Andrews believes that lower-income children will enter kindergarten ready to learn, which may help diminish the achievement gap over the long term.
Although it may not seem as critical as quality childcare or education, research shows that net worth is a key predictor of long-term educational attainment. The article cites a study showing that parental net worth has a significant effect on total years of schooling, post-high school years of schooling, and college attendance," and net worth and non-liquid assets also affect whether parents can obtain loans to support their children's college attendance. Given the huge and growing disparity in income in this country and the distribution of wealth, building assets is a hurdle to low income households and, given the link between net worth and educational attainment this becomes a vicious cycle. .
To help build assets among the 4 million people receiving rental assistance and the 8 million families who spend more than half their income on rent and utilities, Andrea Levere, president of the Corporation for Economic Development, proposed embedding asset-building strategies within rental housing; creating opportunities for renters to build assets through positive behaviors like contributing to a building's maintenance, paying rent on time, helping to manage properties, and reducing energy usage for individually metered apartments. These activities would be rewarded with credits, convertible to cash, that are deposited in savings accounts which residents, after financial counseling, could borrow against for asset-building investments, including education, debt reduction, homeownership, and launching a business.
Levere also suggested eliminating restraints on asset building such as limits for subsidized housing that discourage savings accounts or even owning a car. Income limits also discourage people from earning more money which might force them to leave their subsidized rental homes. Expanding the Family Self-Sufficiency program would allow people to stay in subsidized housing as their income rises, banking those extra funds in escrow accounts which might ultimately enable them to put a downpayment on a house or a deposit on a market-rate apartment.
Another advocate of basing a range of social services within rental housing, Rosanne Haggerty, MacArthur Fellow and founder and president of Common Ground, proposed blending nine different housing and services programs to create long-term supportive housing with the ultimate goal of ending long-term homelessness. Mental health, health care, and other programs would share risk and pool their resources she said and when those services are tied to the places where people live, the evidence of the effectiveness of supportive housing is overwhelming
Haggerty pointed to a recent 3-year Seattle study of a supportive housing development for homeless alcoholics which found that the development saved taxpayers more than $4 million in its first year - funds that would otherwise have gone toward emergency care, the criminal justice system, and other services. The savings began to appear within the first six months despite the start-up costs. Another study found that the costs of housing a homeless person for one year were nearly the same as the systemic costs of the individual remaining homeless for a year.
The idea of supportive housing, Haggarty said, "Is an approach to housing that is relevant to so many more people and families than the homeless. All of us at some point are going to need supportive housing - to have options other than nursing homes or being a burden to our kids. Individuals and families are able to lead more stable and productive lives when they have a secure home and the help that they need to manage challenges, whether they be related to health or employment."