September/October 1997

Shelter Shorts
The Reports are In: Homeownership rising, renters suffering, income gaps growing

City Life, Homeownership, and the American Dream

Americans' impressions of cities are improving, according to Fannie Mae's 1997 National Housing Survey, City Life, Homeownership, and the American Dream. Where the 1991 survey found that more people saw cities as the source of problems rather than progress, the 1997 results show respondents' opinions evenly divided on the question. Respondents cited cultural attractions, entertainment, high quality stores and services, and job creation as attractions that set cities above suburbs or small towns. This is not to say that Americans are moving back to the cities in droves. While 66 percent of respondents felt that downtown areas have improved due to an increase in things to do, only 33 percent felt that cities have become better places to live. Most respondents felt that overcrowding, traffic, racial tensions, crime, and environmental problems had increased in cities, while home values, the quality of life, and "a sense of community" had improved in suburban areas.

Available from Fannie Mae, 202-752-7000.

Out of Reach

Across the country, lawmakers designed new welfare assistance levels that fail to pay the rent of moderate two-bedroom homes. Some may say, "good, get a job," but Americans with minimum wage jobs who work full-time cannot afford to maintain an adequate household in any state, according to Out of Reach: Rental Housing at What Cost?, the National Low Income Housing Coalition's annual study of rental housing costs. While the new welfare law's purported goal was to move recipients into good jobs, Out of Reach documents how shortages of affordable housing and living wage jobs could impede welfare reform's success.

In all 50 states, a person earning minimum wage must work at least 60 hours per week to afford the average two-bedroom rental. In high-rent localities such as San Francisco, paying the rent requires working 144 hours a week, leaving 24 hours for essentials like sleeping, eating, and raising children. Even after working full-time all year, minimum wage earners still must borrow or use savings to pay basic living expenses. Families unable to acquire a savings or borrow money, Out of Reach reports, are often left to choose between paying for their housing or other basic needs.

Available from the NLIHC, 202-662-1530.

The State of the Nation's Housing

Homeownership is on the rise, particularly among minority and immigrant households, reports The State of the Nation's Housing: 1997, issued by Harvard University's Joint Center for Housing Studies. In the last three years, the national homeownership rate has climbed by  3.4 million to 65.4 percent, according to the report. Minorities account for close to 30 percent of the overall growth.

The report attributes the growth also to demographic changes that meant that baby-boomers were trading up to larger and more expensive homes, and to an increase in affluent elderly households. The report predicts that homeownership rates will continue to rise, and that lenders and builders will increasingly target this population.

The report notes the trend toward spatial and economic segregation of households, as higher-income homebuyers' exodus to the suburbs and low-income families' isolation in deteriorating center-city regions continues unabated. The report also acknowledges the decrease in opportunities for low-income homebuyers, and says that federal cutbacks, including massive reductions in subsidized units, will likely be devastating to low-income renters nationwide.

Available from the Joint Center, 617-495-7908.

A class action lawsuit recently filed in U.S. District Court alleges that the Hartford, Connecticut, Housing Authority actively discouraged residents from moving to suburban areas when it tore down the 1,000-unit Charter Oak Terrace project and displaced about 360 residents.  Although the housing authority cited an ongoing initiative to desegregate large housing projects as the reason for the move, tenants allege that the housing authority misinformed them about usage rules for Section 8 vouchers and failed to provide information about housing outside of Hartford.

According to the September 28, 1997, New York Times, the lawsuit charges that the Hartford Housing Authority violated civil rights and fair housing laws and seeks damages to assist residents who wish to live outside the city. The charges that many residents were forced to find housing within the city – much of which was substandard – are particularly sensitive because Hartford is one of 18 cities participating in a HUD program designed to provide Section 8 certificate holders with more options on where to live.

The Housing Authority denies the charges, pointing out that 18 percent of the displaced tenants did move to the suburbs outside Hartford. The city responded to the charges of substandard housing by pointing out that all units were inspected and found to be up to code prior to any occupant with a Section 8 certificate moving in.

(Read a Shelterforce review of a book about Charter Oak Terrace.)

Short Takes

Cohesion vs. Violence

"Collective Efficacy," the sense of trust, common values, and cohesion in neighborhoods, is the largest predictor of a lower violent crime rate, a study published in the journal Science concludes. The study, conducted in all areas of Chicago since 1990 and scheduled to continue until 2003, has found that a shared vision, social trust, and a sense of engagement and ownership of public space are paramount, the August 17, 1997, New York Times reported. This undercuts a prevalent theory that factors like poverty, unemployment, single-parent households, or racial discrimination exacerbate crime. Concentrated poverty and joblessness do make it harder to maintain neighborhood cohesion, the report finds, but some Chicago neighborhoods that are largely black and poor report lower crime rates. The most important characteristic of collective efficacy is the willingness by residents to intervene in the lives of children, to stop acts like truancy, graffiti painting, and street-corner "hanging out" by gangs. The report indicates that homeownership or longtime residence in a neighborhood can contribute to this sense of cohesion.

In an effort to crack down on housing discrimination, HUD has awarded $15 million to fair housing groups and promised to double its enforcement actions in the coming year. Announced in September, the initiative aims to boost minority homeownership by removing barriers of prejudice. The Fair Housing Act – which bars housing discrimination on account of race, color, religion, sex, disability, family status, and national origin – covers the sale, rental, financing, and advertising of almost all the nation's housing. HUD investigators, state and city agencies working with HUD, and private fair housing groups receiving HUD funds all conduct Fair Housing investigations. People who believe they have been harmed by housing discrimination can file complaints with HUD via a toll-free national hotline (800-669-9777), which takes complaints in both English and Spanish.

Concerns about inflated CRA ratings have prompted new performance-based regulations, but these guidelines are often misapplied by regulators and have done little to change institutions' CRA ratings, the Woodstock Institute's recent report Is CRA Reform for Real? suggests. The proportion of banks receiving Satisfactory and Outstanding CRA ratings – which reached 98 percent in 1996 – appears extremely high, given the continuing barriers to credit and capital for low- and moderate-income communities, the study concludes. Woodstock Institute is concerned that the new regulations are not being used as intended, to base ratings more on actual lending, investment, and service performance in lower-income communities.  As evidence, the report points to the low number of institutions receiving downgraded ratings. Information: The Woodstock Institute, 407 S. Dearborn St, Chicago, IL 60605; 312-427-8070; www.woodstockinst.org

Comptroller of the Currency Eugene Ludwig recently suggested that the principles underlying CRA should be extended to cover the broader financial services industry, the National Association of Affordable Housing Lenders' (NAAHL) Washington Update newsletter recently reported. During the speech, Ludwig noted that helping "low- and moderate-income Americans have fair and equal access to financial services does not necessarily mean the imposition of a CRA-type of responsibility in a rigid, one-size-fits-all way." He suggested several alternate ways that CRA-type principles could be applied to other financial service providers. Contact: NAAHL, 1050 17th St. NW, Suite 950, Washington, DC 20036; 202-861-5770; fax: 202-861-5768.

For the second time in nine years, HUD has cut off economic development grants to Washington DC, citing mismanagement of funds. Washington officials are scrambling to refocus their remaining federal grants on four neighborhoods, in an effort to increase the impact of that money and convince HUD, which has expressed concern about the city spreading federal dollars too thinly, to reinstate the funding. HUD also suspended funds to the city from 1989 to 1992.

After 18 months under HUD's control, The San Francisco Housing Authority is back under the city's control. A HUD review of the agency in 1996 determined that, as a result of incompetent management, tenants were living in housing that was not "decent, safe, or sanitary." The takeover was supposed to last six months but was extended to a year and a half when officials found crime, tenant mistrust, and mismanagement to be deeper than they had anticipated. As a result of the takeover, "The units are safer, cleaner, and there's greater input by the tenants in the decision making," the Associated Press quoted Mayor Willie Brown. The housing authority does still have problems, however, such as crime and safety issues, and questions as to who will handle its day-to-day operations.

Construction of the first new commercial real estate development in Harlem in two decades began this past August, with the groundbreaking on a $15 million, 64,000-square-foot development to include a Pathmark Supermarket, Chase Manhattan Bank, and other retail tenants. The project, developed by two local community-based nonprofits, the Community Association of the East Harlem Triangle and the Abyssinian Development Corporation, received financing from a public-private partnership that included the Local Initiatives Support Corporation (LISC), several New York City banks, the U.S. Department of Health and Human Services, and the City of New York. Information: Darren Walker, East Harlem Triangle, 212-368-4471 x113.