As Affordable Housing Crisis Grows, HUD Sits on the Sidelines - the New York Times

12/10/2018 As Affordable Housing Crisis Grows, HUD Sits on the Sidelines - The New York Times

As Affordable Housing Crisis Grows, HUD Sits on the Sidelines

By Glenn Thrush

July 27, 2018

WASHINGTON — The country is in the grips of an escalating housing affordability crisis. Millions of low-income Americans are paying 70 percent or more of their incomes for shelter, while rents continue to rise and construction of affordable rental apartments lags far behind the need.

The Trump administration’s main policy response, unveiled this spring by Ben Carson, the secretary of housing and urban development: a plan to triple rents for about 712,000 of the poorest tenants receiving federal housing aid and to loosen the cap on rents on 4.5 million households enrolled in federal voucher and public housing programs nationwide, with the goal of moving longtime tenants out of the system to make way for new ones.

As city and state ofﬁcials and members of both parties clamor for the federal government to help, Mr. Carson has privately told aides that he views the shortage of affordable housing as regrettable, but as essentially a local problem.

A former presidential candidate who said last year that he did not want to give recipients of federal aid “a comfortable setting that would make somebody want to say, ʻI’ll just stay here; they will take care of me,’” he has made it a priority to reduce, rather than expand, assistance to the poor, to break what he sees as a cycle of dependency.

And when congressional Democrats and Republicans scrambled to save his department’s budget and rescue an endangered tax credit that accounts for nine out of 10 affordable housing developments built in the country, Mr. Carson sat on the sidelines, according to legislators and congressional staff members.

Local ofﬁcials seem resigned to the fact that they will receive little or no help from the Trump administration.

“To be brutally honest, I think that we aren’t really getting any help right now out of Washington, and the situation has gotten really bad over the last two years,” said Chad Williams, executive director of the Southern Nevada Regional Housing Authority, which oversees public housing developments and voucher programs that serve 16,000 people in the Las Vegas area.

https://www.nytimes.com/2018/07/27/us/politics/hud-affordable-housing-crisis.html 1/6 12/10/2018 As Affordable Housing Crisis Grows, HUD Sits on the Sidelines - The New York Times Nevada, ground zero in the housing crisis a decade ago, is now the epicenter of the affordability crunch, with low-income residents squeezed out of once-affordable apartments by working-class refugees ﬂeeing from California’s own rental crisis.

“I think Carson’s ideas, that public housing shouldn’t be multigenerational, are noble,” Mr. Williams said. “But right now these programs are a stable, Band-Aid ﬁx, and we really need them.”

Underlying the conﬂict between Mr. Carson and ofﬁcials like Mr. Williams are fundamental disagreements over the role the federal government should play.

Mr. Carson believes federal aid should be regarded only as a temporary crutch for families moving from dependency to work and sees the rent increases as a way to expand his agency’s budget. Low-income renters and many local ofﬁcials who run housing programs see the federal assistance as a semi-permanent hedge against evictions and homelessness that needs to be expanded in times of crisis.

This year, the White House proposed to slash $8.8 billion from the Department of Housing and Urban Development’s most important housing programs. While aides say Mr. Carson privately pushed for a restoration in programs for seniors and disabled people, he publicly supported the gutting of his own department, reiterating to lawmakers last month that he felt as much responsibility toward taxpayers as tenants.

“I continue to advocate for ﬁscal responsibility as well as compassion,” Mr. Carson told a House committee in June. He declined to comment for this article.

Under Mr. Carson’s most signiﬁcant policy proposal as secretary, so-called minimum rents paid by the poorest households in public housing would rise to $150 a month from $50.

His proposal has received little support from local housing operators. Over the past month, Mr. Carson has huddled with Representative Dennis A. Ross, Republican of Florida, who is drafting less stringent legislation that would allow, but not mandate, local housing authorities to raise rents and carry out reforms to streamline the process of verifying the poverty of applicants, aides said.

Still, both proposals represent a paradigm shift in federal housing policy, ending the requirement that low-income tenants spend no more than 30 percent of their net income on rent.

Tying rents to incomes has been a central part of the system since 1981, especially for the Section 8 housing voucher program, enabling 2.1 million low-income families to rent private apartments they could not otherwise afford. Mr. Carson’s proposal would peg rents to 35 percent of gross income for all tenants. The Ross bill excludes voucher recipients, at the request of local housing authority ofﬁcials.

https://www.nytimes.com/2018/07/27/us/politics/hud-affordable-housing-crisis.html 2/6 12/10/2018 As Affordable Housing Crisis Grows, HUD Sits on the Sidelines - The New York Times “We need sensible reforms to make the system more efﬁcient for agencies and residents,” said Adrianne Todman, chief executive of the National Association of Housing and Redevelopment Ofﬁcials. “But now is not the time for arbitrary federal rent hikes.”

“This isn’t about dependence,” said Diane Yentel, president of the nonproﬁt National Low Income Housing Coalition, a Washington-based advocacy group that has released several recent reports documenting the affordability crunch. “Today’s housing crisis is squarely rooted in the widening gap between incomes and housing costs.”

And the crisis didn’t begin under Mr. Trump’s presidency.

Median national rents rose by 32 percent in constant dollars from 2001 to 2015, while wages remained ﬂat, according to the Pew Charitable Trusts. The pace has picked up over the last few years, buoyed by an improving economy.

The rent increases are hitting poor and elderly people, African-Americans and low-income wage earners the hardest. A survey by the National Low Income Housing Coalition found that a worker earning the state minimum wage could afford a market-rate one-bedroom apartment in only 22 of the country’s 3,000 counties.

An affordable housing building under construction in San Francisco in January. Construction of affordable rental apartments lags far behind the need. Jim Wilson/The New York Times

https://www.nytimes.com/2018/07/27/us/politics/hud-affordable-housing-crisis.html 3/6 12/10/2018 As Affordable Housing Crisis Grows, HUD Sits on the Sidelines - The New York Times The Obama administration initially proposed steep increases for Section 8 and other programs, but pulled back after the Republicans won control of the House in 2010.

During the 2008 campaign, Mr. Obama promised to fund an affordable housing trust fund for the construction of new units. But the $200-million-a-year program, funded by the proﬁts of Fannie Mae and Freddie Mac, was blocked by Republican lawmakers until 2014. In 2017, it was on track to ﬁnance the construction of about 1,000 units of affordable housing in 32 states, according to federal data.

Its sister program, the Capital Magnet Fund, which has leveraged private investment to create 17,000 new units, is in the cross hairs of Mr. Trump’s budget director, Mick Mulvaney, who tried to cut it by $141.7 million this year as part of his unsuccessful budget recession effort this summer.

Under Mr. Trump, funding for public housing, vouchers and new construction has risen slightly — against the president’s wishes.

In March, Republican and Democratic negotiators rejected Mr. Trump’s budget, adding $1.25 billion to HUD’s rental assistance programs and injecting an additional $425 million to the HOME program, which funds state, local, nonproﬁt and private partnerships to build affordable housing.

Those moves, while signiﬁcant, are likely to have a limited impact on the larger problem of the increasing number of families who cannot afford a place to live.

While prices are cooling at the high end of the market in many big cities, the low- and middle- income housing markets in Nevada, Texas, California, Florida and Colorado are so hot, local ofﬁcials say, that landlords routinely reject subsidized tenants because they can charge more to other renters.

Rental construction has focused on attracting high-income tenants. From 2001 to 2013, the number of rental apartments for high-wage earners increased by 36 percent, while units for poor people shrank by nearly 10 percent, according to federal housing statistics.

With affordable stock scarce, prices are spiking. An estimated 12 million Americans, most of them poor, now spend more than half of their earnings on housing, according to HUD statistics.

One of them is Judith Toro Fortyz, 75, who receives $848 a month in Social Security and pays $594.88 of it to remain in the small two-bedroom apartment on Staten Island that she once shared with her mother.

Mrs. Toro Fortyz has been turned down for federal vouchers, reﬂecting a shortage in assistance that has shut out three of every four eligible applicants for Section 8. Even with an additional housing stipend from the city, she is spending 70 percent of her income on rent.

That has forced her to make wrenching decisions, like forgoing her favorite fruit, oranges, after a price spike at her local supermarket.

https://www.nytimes.com/2018/07/27/us/politics/hud-affordable-housing-crisis.html 4/6 12/10/2018 As Affordable Housing Crisis Grows, HUD Sits on the Sidelines - The New York Times “I stay home a lot. I’d rather not go out because going out means you have to spend money,” said Mrs. Toro Fortyz, a retired data storage worker. “I have a friend who gets Section 8 and, oh my God, they pay $200 a month. I can’t even imagine having that much money to live on.”

Mr. Carson’s proposal alarmed many low-income tenants, especially older ones, who could face signiﬁcant rent increases under the plan. “We basically wouldn’t be able to get by,” said Patrick Greene, 69, a retired truck driver who lives in a small HUD-subsidized apartment with his wife in Montgomery, Ala.

A more immediate threat to affordable housing, critics say, is the huge tax bill passed by Congress last year, which imperils one of the most important sources of long-term funding, the Low Income Housing Tax Credit.

Novogradac & Company, a firm that provides analytics for the construction and finance industries, estimated that demand for the $9-billion-a-year credit could dry up as investors realize savings through the tax cuts. The firm estimates that nearly 235,000 fewer apartments could be built over the next decade as a result of the tax code rewrite.

A bipartisan coalition, led by Senator Maria Cantwell, Democrat of Washington, and Senator Orrin Hatch, Republican of Utah, was able to expand the credit by an additional $400 million. But that is not likely to offset the damage done by the tax measure.

The administration is observing these efforts from the sidelines. Mr. Trump, scion of a New York real estate family that made its fortune in the 1950s and 1960s building affordable housing for white working-class neighborhoods, has shown little interest in tackling the problem.

He made only passing mention of the issue during the 2016 campaign and has pressed Mr. Carson to move more aggressively to impose work requirements on federal aid recipients.

For his part, Mr. Carson publicly acknowledges the crisis in most of his speeches. “Alarmingly high numbers of Americans continue to pay more than half of their incomes toward rent,” he told a House panel in October. “Many millions remain mired in poverty, rather than being guided on a path out of it.”

But he is focused less on federal solutions than on prodding local governments to ease barriers to construction. He has ordered his policy staff to come up with proposals to push local governments to reduce zoning restrictions on new projects, especially low-cost manufactured housing. HUD will also begin working with landlords around the country to come up with ways to make housing vouchers more attractive and more inclusive, aides said.

“Subsidies are a piece of the puzzle,” said Rafﬁ Williams, a spokesman for Mr. Carson, “but we must also address the regulatory barriers relative to zoning and land use in higher-cost markets that are preventing the construction of new affordable housing. This is not just a federal problem — it’s everybody’s problem.”

https://www.nytimes.com/2018/07/27/us/politics/hud-affordable-housing-crisis.html 5/6 12/10/2018 As Affordable Housing Crisis Grows, HUD Sits on the Sidelines - The New York Times Correction: July 29, 2018 An earlier version of this article described incorrectly a policy proposal by the housing and urban development secretary, Ben Carson. It is the so-called minimum rents paid by the poorest households that would rise to $150, not the maximum rents.

A version of this article appears in print on July 27, 2018, on Page A1 of the New York edition with the headline: Housing Crisis Grows as HUD Sits on Sideline

https://www.nytimes.com/2018/07/27/us/politics/hud-affordable-housing-crisis.html 6/6

THE A Shortage of Affordable Homes MARCH 2017

GAPANDREW AURAND, Ph.D., MSW NLIHC BOARD OF Vice President for Research DIRECTORS DAN EMMANUEL, MSW Brenda J. Clement, Chair, Boston, MA William C. Apgar, Orleans, MA Research Analyst Dara Baldwin, Washington, DC DIANE YENTEL, MSSW David Bowers, Washington, DC Delorise Calhoun, Cincinnati, OH President and CEO Emma “Pinky” Clifford, Pine Ridge, SD Lot Diaz, Washington, DC ELLEN ERRICO Chris Estes, Washington, DC Creative Services Manager Daisy Franklin, Norwalk, CT Dora Leong Gallo, Los Angeles, CA Matt Gerard, Minneapolis, MN ABOUT NLIHC Deidre “DeeDee” Gilmore, Charlottesville, VA Lisa Hasegawa, Washington, DC The National Low Income Housing Coalition is dedicated Isabelle Headrick, Austin, TX solely to achieving socially just public policy that assures Moises Loza (Honorary), Washington, DC people with the lowest incomes in the United States have Rachael Myers, Seattle, WA affordable and decent homes. Marla Newman, Baton Rouge, LA Ann O’Hara, Boston, MA Founded in 1974 by Cushing N. Dolbeare, NLIHC educates, Robert Palmer, Chicago, IL organizes and advocates to ensure decent, affordable housing Greg Payne, Portland, ME for everyone. Eric Price, Washington, DC Tara Rollins, Salt Lake City, UT Our goals are to preserve existing federally assisted homes Michael Steele, New York, NY and housing resources, expand the supply of low income Martha Weatherspoon, Clarksville, TN housing, and establish housing stability as the primary purpose of federal low income housing policy. NLIHC STAFF Andrew Aurand, Vice President for Research Josephine Clarke, Executive Assistant Dan Emmanuel, Research Analyst Ellen Errico, Creative Services Manager Ed Gramlich, Senior Advisor Sarah Jemison, Housing Advocacy Organizer Paul Kealey, Chief Operating Officer Joseph Lindstrom, Manager of Field Organizing Lisa Marlow, Communications Specialist Sarah Mickelson, Policy Director Khara Norris, Director of Administration James Saucedo, Housing Advocacy Organizer The National Low Income Housing Coalition Christina Sin, Development Coordinator 1000 Vermont Avenue, NW • Suite 500 Elayne Weiss, Senior Policy Analyst Washington, DC 20005 Renee Willis, Vice President for Field and 202-662-1530 • www.nlihc.org Communications © 2017 National Low Income Housing Coalition Diane Yentel, President and CEO

Cover Design by Youness Mou, Graphic Design Intern and Ellen Errico, NLIHC Creative Services Manager. Design and Layout by Ellen Errico TABLE OF CONTENTS

Introduction...... 2 Shortage of Affordable Rental Homes ...... 3 Cost Burdens...... 5 Every State Has A Housing Shortage for Extremely Low Income Renters ...... 6 Housing Poverty ...... 7 Fifty Largest Metropolitan Areas Have A Housing Shortage for Extremely Low Income Renters...... 8 Causes of the Housing Shortage for the Lowest Income Renters...... 9 Investing to Meet Our Most Critical Housing Needs ...... 10 Conclusion...... 13 About the Data...... 13 For More Information ...... 13 References...... 14 Appendix A: State Comparisons...... 16 Appendix B: Metropolitan Area Comparisons ...... 17

NATIONAL LOW INCOME HOUSING COALITION | THE GAP: THE AFFORDABLE HOUSING GAP ANALYSIS 2017 1 INTRODUCTION KEY FINDINGS INCLUDE: or the first time since the recession, U.S. • 11.4 million ELI renter households accounted for 26% of all U.S. renter households and nearly household income increased significantly 10% of all households. during 2015. Gains were seen even among Fthe lowest income households, with the poverty • The U.S. has a shortage of 7.4 million affordable rate declining from 14.8% to 13.5% (Proctor, and available rental homes for ELI renter households, resulting in 35 affordable and available Semega, & Kollar, 2016). Millions of people, units for every 100 ELI renter households. however, continue to struggle economically. Household income for the poorest 10% of • Seventy-one percent of ELI renter households are severely cost-burdened, spending more than households remains 6% lower today than in 2006, half of their income on rent and utilities. These and more than 43 million Americans remain in 8.1 million severely cost-burdened households poverty, many of whom struggle to afford their account for 72.6% of all severely cost-burdened homes. renter households in the U.S. Each year, the National Low Income Housing • Thirty-three percent of very low income (VLI) Coalition (NLIHC) measures the availability of renter households; 8.2% of low income (LI) rental housing affordable to extremely low income renter households, and 2.4% of middle income (ELI) households and other income groups (see (MI) renter households are severely cost- Box 1). This year’s analysis is slightly different burdened (see Box 1). from previous years in that NLIHC adopted the • ELI renter households face a shortage of federal government’s new statutory definition for affordable and available rental homes in ELI, which are households whose income is at or every state. The shortage ranges from just 15 below either the poverty guideline or 30% of their affordable and available homes for every 100 ELI 1 area median income (AMI), whichever is higher. renter households in Nevada to 61 in Alabama. Based on 2015 American Community Survey • The housing shortage for ELI renters ranges (ACS) data, this report provides information on from 8,700 rental homes in Wyoming to 1.1 the affordable housing supply and housing cost million in California. burdens at the national, state, and metropolitan levels. This year’s analysis continues to show BOX 1: that ELI households face the DEFINITIONS largest shortage of affordable and 2 Area Median Income (AMI): The median family income in the available rental housing and metropolitan or nonmetropolitan area have more severe housing cost Extremely Low Income (ELI): Households with income at or below the burdens than any other group. Poverty Guideline or 30% of AMI, whichever is higher Very Low Income (VLI): Households with income between 31% and 50% of AMI Low Income (LI): Households with income between 51% and 80% of AMI Households with income between 81% and 100% of 1 Defined in the Consolidated Appropriations Act Middle Income (MI): of 2014. AMI 2 An affordable rental home is one which a Above Median Income: Households with income above 100% of AMI household at the defined income threshold Spending more than 30% of household income on housing can rent without paying more than 30% of its Cost Burden: income on housing and utility costs. A rental costs home is affordable and available if it is both Severe Cost Burden: Spending more than 50% of household income on affordable and vacant, or is currently occupied housing costs by a household at or below the defined income threshold.

2 NATIONAL LOW INCOME HOUSING COALITION | THE GAP: THE AFFORDABLE HOUSING GAP ANALYSIS 2017 • ELI renter households face a shortage of NLIHC supports improvements to LIHTC affordable and available rental homes in every that include income averaging, which would major metropolitan area. Among the 50 largest encourage a greater mix of incomes in LIHTC metropolitan areas, the shortage ranges from developments, and a 50% basis boost in tax 12 affordable and available homes for every 100 ELI renter households in Las THE U.S. HAS A SHORTAGE OF 7.4 Vegas, NV to 46 in Boston, MA. MILLION AFFORDABLE RENTAL HOMES AVAILABLE TO ELI RENTER • The housing shortage for HOUSEHOLDS, RESULTING IN ELI renters ranges from 35 26,300 homes in Raleigh, AFFORDABLE AND AVAILABLE NC to 638,500 in the UNITS FOR EVERY 100 ELI RENTER New York, NY-NJ-PA . metropolitan area. HOUSEHOLDS Federal housing expenditures should better target households with the most credits for developments that set aside and make critical housing needs. NLIHC’s United for Homes affordable at least 20% of their housing units for (UFH) campaign proposes rebalancing federal ELI households. housing policy by making modest reforms to the mortgage interest deduction (MID) and putting the new revenue into housing programs that serve SHORTAGE OF AFFORDABLE ELI households. The MID is a $65 billion annual RENTAL HOMES federal tax expenditure that predominantly benefits Of the nearly 43.6 million renter households living homeowners with income greater than $100,000 in the U.S., 11.4 million are ELI. Assuming housing (Joint Committee on Taxation, 2017). Reducing costs should be no more than 30% of household the amount of a mortgage eligible for a tax benefit income (the accepted standard for housing from $1 million to $500,000 and converting the affordability), only 7.5 million rental homes are deduction to a tax credit would provide a new tax affordable to ELI renters. This leaves an absolute benefit for 15 million lower income homeowners shortage of 3.9 million affordable rental homes who currently receive none, and a tax cut for (Figure 1). The shortage of affordable housing 10 million more homeowners. These changes turns into a surplus further up the income ladder, would generate $241 billion in new revenue over giving higher income households a broader range of ten years to reinvest into programs such as the affordable housing options. national Housing Trust Fund (HTF), Housing Choice Vouchers (HCV) and other rental assistance Eight million rental homes rent at a price that is programs, and Public Housing (Lu & Toder, 2016). affordable specifically to the income range of the 6.5 million VLI renter households with income Low Income Housing Tax Credit (LIHTC) reforms between 31% and 50% of AMI. VLI households can could better target federal housing expenditures also afford the units affordable to ELI households. In to households with the most critical need as well. total, 15.5 million rental homes are affordable to VLI LIHTC is the largest rental housing production households. subsidy in the U.S., and it allows rents that are higher than what ELI households can afford. More than 19 million rental homes are affordable to the 8.9 million LI renter households with income

NATIONAL LOW INCOME HOUSING COALITION | THE GAP: THE AFFORDABLE HOUSING GAP ANALYSIS 2017 3 FIGURE 1: RENTER HOUSEHOLDS AND AFFORDABLE RENTAL HOMES, 2015

50.0 45.8 Homes 45.0 40.7 5.1 Households (Hhlds) Homes 40.0 Affordable Rental Homes (Homes) 34.9 5.9 5.9 Homes 35.0

30.0

25.0 19.3 19.3 19.3 20.0 15.5 COUNT (MILLIONS) Homes 15.0 11.4 12.3 Hhlds Hhlds 8.0 8.9 8.0 8.0 8.0 10.0 7.5 6.5 Hhlds Homes Hhlds 4.4 5.0 Hhlds 7.5 7.5 7.5 7.5 7.5 0.0 EXTREMELY LOW VERY LOW LOW MIDDLE ABOVE MEDIAN INCOME INCOME INCOME INCOME INCOME

Source: NLIHC tabulations of 2015 ACS PUMS data. between 51% and 80% of AMI. LI households can households, making them unavailable to ELI also afford rental homes that are affordable to ELI renters. As a result, there are only 4 million and VLI households, effectively expanding the affordable and available rental homes for the 11.4 supply of affordable rental homes for LI households million ELI renter households. This results in a to 34.9 million. There are 5.9 million rental homes shortage of 7.4 million affordable and available affordable to the 4.4 million MI renter households rental homes for ELI households, or only 35 for with income between 81% and 100% of AMI. MI every 100 ELI renter households. households can also afford rental homes affordable This shortage does not account for homeless to ELI, VLI, and LI households, resulting in 40.7 individuals and families, because ACS housing data million affordable homes for MI renter households. do not include persons without an address or living In short, ELI renters face the most severely in group quarters. On a given night in January constrained supply of affordable housing. 2015, approximately 422,617 households were homeless (National Alliance to End Homelessness, Affordable But Not Available 2016).3 Including these households, the shortage of Higher income households are free to occupy rental affordable and available rental homes for ELI and homes in the private market that are affordable to homeless households is 7.8 million. lower income households. Of the 7.5 million rental homes affordable to ELI households, 3.5 million A shortage of affordable and available rental homes are occupied by households of higher income. also exists – but less dramatically – for renter Approximately 1.1 million VLI households, 1.1 households with income up to 50% of AMI and with million LI households, 400,000 MI households, income up to 80% of AMI. Fifty-five, 93, and 101 and 1.0 million above median income households 3 Based on the estimated number of homeless individuals and families with occupy rental homes that are affordable to ELI children.

4 NATIONAL LOW INCOME HOUSING COALITION | THE GAP: THE AFFORDABLE HOUSING GAP ANALYSIS 2017 FIGURE 2: AFFORDABLE AND AVAILABLE RENTAL HOMES PER 100 RENTER HOUSEHOLDS, 2015

At Extremely Low Income 35 At 50% AMI 55 At 80% AMI 93 At 100% AMI 101 020406080100 120

Source: NLIHC tabulations of 2015 ACS PUMS data. AMI = Area Median Income affordable and available rental homes exist for every ELI renters are far more likely to experience 100 renter households with income up to 50% of severe cost burdens than any other income group. AMI, 80% of AMI, and 100% of AMI, respectively Approximately 71.2% of ELI renter households, (Figure 2). 33.3% of VLI renter households, 8.2% of LI renter households, and 2.4% of MI renter households are COST BURDENS severely cost-burdened. ELI renter households have little, if any, money left Because of the shortage of affordable and available for other necessities after paying the rent. A severely homes, many lower income households spend more cost-burdened ELI household with monthly income on housing than they can afford without sacrificing of $1,6904 spends a minimum of $846 per month other necessities. A household is considered to be on rent, leaving at most $844 for all other expenses. cost-burdened when it spends more than 30% of The U.S. Department of Agriculture’s (2016) thrifty its income on rent and utilities and severely cost- food budget for a family of four (two adults and burdened when it spends more than 50%. two children) is $655, leaving at most $189 for More than 9.9 million ELI renter households, 5 transportation, child care, and other necessities. million VLI renter households, 4.2 million LI renter To make ends meet, severely cost-burdened renters households, and 900,000 MI renter households make significant sacrifices on other basic necessities. are cost-burdened (Figure 3). More than eight Severely cost-burdened renters in the lowest quartile million ELI renter households are severely of expenditures spend 41% less on food and health cost-burdened, accounting for 72.6% of all care than similar households who are not cost- severely cost-burdened renters in the country. burdened (Joint Center for Housing Studies, 2016). In comparison, 2.2 million VLI renter households, 700,000 LI renter households, and only 100,000 MI renter households are severely cost-burdened. 4 National weighted average of 30% of AMI for four person household.

NATIONAL LOW INCOME HOUSING COALITION | THE GAP: THE AFFORDABLE HOUSING GAP ANALYSIS 2017 5 FIGURE 3: RENTER HOUSEHOLDS WITH COST BURDEN BY INCOME GROUP, 2015 12,000,000 Cost Burden Severe Cost Burden

10,000,000 9,939,068

8,147,865 8,000,000

6,000,000 5,050,106 4,240,264 4,000,000

2,167,860 2,000,000 968,677 734,480 795,394 106,575 68,855 0 Extremely Low Very Low Income Low Income Middle Income Above Median Income Income Source: NLIHC tabulations of 2015 ACS PUMS data.

and Florida (27 homes for every 100 ELI renter EVERY STATE HAS A households). The states with the greatest supply of HOUSING SHORTAGE FOR affordable and available rental homes for ELI renters EXTREMELY LOW INCOME still have a significant shortage. They are Alabama (61 homes for every 100 ELI renter households), RENTERS West Virginia (59 homes for every 100 ELI renter Every state and the District of Columbia has a households), Kentucky (57 homes for every 100 ELI shortage of affordable and available rental homes renter households), Mississippi (51 homes for every for ELI households (Figure 5 and Appendix A). 100 ELI renters households), and South Dakota (51 The shortage ranges from 8,731 in Wyoming to homes for every 100 ELI renter households). 1,110,803 in California. The states where ELI renters The majority of ELI renter households are face the greatest challenge in finding affordable and severely cost-burdened in every state and the available homes are Nevada, with only 15 affordable District of Columbia. The states with the greatest and available rental homes for every 100 ELI renter percentage of ELI renter households with a severe households, California (21 homes for every 100 ELI cost burden are Nevada (83%), Florida (79%), renter households), Arizona (26 homes for every California (77%), Oregon (76%), Hawaii (75%), 100 ELI renter households), Oregon (26 homes Colorado (75%), and Virginia (75%). for every 100 ELI renter households), Colorado The shortages of affordable and available rental (27 homes for every 100 ELI renter households), homes disappear as households move up the

6 NATIONAL LOW INCOME HOUSING COALITION | THE GAP: THE AFFORDABLE HOUSING GAP ANALYSIS 2017 HOUSING POVERTY The rule of thumb that households should not spend more than 30% of their income on housing has been a foundation of U.S. housing policy for more than three decades (Pelletiere, 2008). This standard, however, ignores the different financial capabilities among families of varying income and size. Higher income households can often spend more than 30% of their income on housing and still have adequate resources for other basic necessities, such as food and medical care. Extremely low income households cannot afford to spend even 30%. Michael Stone developed a “residual income” approach for determining whether a household’s housing costs were too high (Stone, 1993). Stone calculated the cost of a minimally adequate standard of living, excluding housing, from family budgets developed by the Bureau of Labor Statistics (BLS). The budgets included such necessities as food, transportation, medical FIGURE 4: care, and other goods and services. Stone COST BURDENS AND HOUSING POVERTY BY defined households RENTER INCOME GROUP, 2015 12,000,000 unable to cover these 11,425,914 costs, after paying for housing, as living in 10,000,000 9,939,068 Housing Costs > 30% of Income shelter poverty. Nandinee Housing Poverty Kutty (2005) proposed a similar approach, but 8,000,000 set the cost of minimally adequate non-housing 6,000,000 5,889,859 needs at two-thirds of the 5,050,106 official poverty threshold 4,240,264 4,000,000 A central challenge of 3,267,724 the residual income approach is defining 2,000,000 968,677 minimally adequate 795,394 179,284 18,785 0 needs. The poverty Extremely Low Income Very Low Income Low Income Middle Income Above Median Income threshold is the official Source: NLIHC tabulations of 2015 ACS PUMS data. U.S. measure of income inadequacy; an income below which a household clearly cannot subsist. Many contend the poverty threshold is too low, so some organizations measure income inadequacy as twice the poverty threshold (Renwick & Short, 2013). NLIHC identified households living in housing poverty, who are unable to afford non-housing basic necessities after paying for housing, using Kutty’s approach but with inadequate income set at twice the poverty threshold. These households have the clearest and most immediate need. More ELI and VLI renter households live in housing poverty than are cost-burdened by the traditional 30% standard. More than 11.4 million ELI households live in housing poverty, almost 1.5 million of whom spend less than 30% of their income on housing (Figure 4). By comparison, fewer than 180,000 MI renter households live in housing poverty even though nearly 1 million of them spend more than 30% of their income on housing.

NATIONAL LOW INCOME HOUSING COALITION | THE GAP: THE AFFORDABLE HOUSING GAP ANALYSIS 2017 7 income ladder. Every state has a shortage of Every major metropolitan area in the U.S. has a affordable and available rental homes at the VLI shortage of affordable and available rental homes income threshold of 50% of AMI, 22 states have a for ELI renter households (Table 1 and Appendix shortage of housing at 80% of AMI, and 9 have a B). Of the 50 largest metropolitan areas, ELI shortage at median income. renters face the largest relative shortages in Las Vegas, NV with 12 affordable and available rental FIFTY LARGEST homes for every 100 ELI renter households, Los Angeles, CA (16 homes for every 100 ELI renter METROPOLITAN AREAS households), Houston, TX (18 homes for every HAVE A HOUSING 100 ELI renter households), and Orlando, FL SHORTAGE FOR EXTREMELY (18 homes for every 100 renter households). The LOW INCOME RENTERS metropolitan areas with the greatest availability of homes affordable to ELI renters still have

FIGURE 5: UNITS AFFORDABLE AND AVAILABLE PER 100 ELI RENTER HOUSEHOLDS BY STATE

WA 30 NH VT 30 ME MT ND 40 46 44 48 OR MN 26 ID SD 36 MA–46 34 WI NY 51 35 WY 34 MI RI–43 38 43 CT–36 IA PA NE 39 39 NJ–29 NV OH 41 IN 15 UT IL 43 DE–33 38 CO WV CA 31 32 VA 27 59 21 KS MO KY 37 MD–34 44 43 57 NC TN 46 AZ OK 49 26 NM 48 AR SC 45 50 49 GA MS AL 38 51 61 LA TX 46 29 AK FL 32 27

HI 35 30 or Fewer Between 31 and 40 Between 41 and 45 Between 46 and 61 Source: NLIHC tabulations of 2015 ACS PUMS data. The 2017 figures should not be compared to previous years, because of a change in the definition of extremely low income.

8 NATIONAL LOW INCOME HOUSING COALITION | THE GAP: THE AFFORDABLE HOUSING GAP ANALYSIS 2017 a significant shortage. Boston, MA has 46 affordable and available homes for every 100 CAUSES OF THE HOUSING ELI renter households and Pittsburgh, PA has SHORTAGE FOR THE LOWEST 45. The majority of ELI renter households are INCOME RENTERS severely cost-burdened in all 50 of the largest metropolitan areas, ranging from 61% of ELI The private market rarely produces new rental renter households in Boston, MA to 86% in Las housing affordable to the lowest income households Vegas, NV. without public subsidy. On average, the most an unassisted four-person ELI household can afford All 50 of the largest metropolitan areas also have to pay in monthly rent without experiencing a cost a shortage of available rental homes affordable burden is $507 (National Low Income Housing at 50% of AMI. The supply ranges from 22 Coalition, 2016). New apartments typically require (Los Angeles, CA) to 84 (Cincinnati, OH-KY- rents higher than this amount to cover development IN) affordable and available rental homes for costs and operating expenses. The median rent every 100 VLI renters. Thirty-five of the largest for an apartment in a multifamily structure built metropolitan have a shortage of affordable and in 2015 was $1,381 per month (Joint Center for available homes at 80% of AMI, and 11 of them Housing Studies, 2016). have a shortage at median income.

TABLE 1: METROPOLITAN AREAS WITH THE LOWEST AND HIGHEST AVAILABILITY OF RENTAL HOMES AFFORDABLE TO HOUSEHOLDS AT OR BELOW EXTREMELY LOW INCOME, 2015 Lowest Highest Metropolitan Area Units Affordable Metropolitan Area Units Affordable and Available and Available per 100 Renter per 100 Renter Households Households Las Vegas-Henderson-Paradise, NV 12 Boston-Cambridge-Newton, MA-NH 46 Los Angeles-Long Beach-Anaheim, CA 16 Pittsburgh, PA 45 Houston-The Woodlands-Sugar Land, TX 18 Providence-Warwick, RI-MA 44 Orlando-Kissimmee-Sanford, FL 18 Buffalo-Cheektowaga-Niagara Falls, NY 44 San Diego-Carlsbad, CA 19 Cleveland-Elyria, OH 44 Dallas-Fort Worth-Arlington, TX 19 Louisville/Jefferson County, KY-IN 42 Riverside-San Bernardino-Ontario, CA 19 Nashville-Davidson—Murfreesboro—Franklin, TN 42 Sacramento--Roseville--Arden-Arcade, CA 20 Cincinnati, OH-KY-IN 41 Austin-Round Rock, TX 20 Hartford-West Hartford-East Hartford, CT 40 Miami-Fort Lauderdale-West Palm Beach, FL 21 Oklahoma City, OK 38 Phoenix-Mesa-Scottsdale, AZ 21 Kansas City, MO-KS 38

Source: NLIHC Tabulations of 2015 ACS PUMS data

NATIONAL LOW INCOME HOUSING COALITION | THE GAP: THE AFFORDABLE HOUSING GAP ANALYSIS 2017 9 Some argue that any new housing development, Maximum rents in the LIHTC and HOME programs including high-end rental homes, can help address are tied to the maximum allowable household the shortage of housing for low income renters income rather than tenants’ actual income, through a process known as filtering. The filtering resulting in rents that can be higher than 30% of theory suggests that new development results ELI households’ income and what ELI households in a chain of household moves: higher income can afford without additional housing assistance. households move into new, more expensive homes, The maximum LIHTC rent must be affordable to leaving behind their older and presumably less households with income at 50% or 60% of AMI, expensive housing, which is then occupied by other while HOME maximum rent must be affordable households who leave even older housing behind, to households with income no higher than 50% and so on. Eventually this process is assumed to or 65% of AMI. Two separate studies found that increase the availability of the oldest and lowest approximately 70% of ELI households living priced housing to low income renters. in LIHTC housing relied on additional rental Filtering, however, fails to increase the availability assistance, such as vouchers, to afford their home of housing affordable to the lowest income renters (Furman Center, 2012; Bolton et al., 2014). (Apgar, 1993). Housing rarely becomes cheap ELI households are better served by deep subsidies enough for them to afford. In strong markets, determined by the tenant’s income. These subsidies owners have an economic incentive to redevelop cover the difference between a household’s rental their properties for higher income renters. In weak cost and what the tenant can afford to pay, set at markets, owners have an incentive to abandon their 30% of adjusted income. Deep subsidy programs properties when rent revenues no longer cover include Housing Choice Vouchers, Public Housing, basic operating costs and maintenance. From 2003 Project-Based Rental Assistance (Section 8), Section to 2013, filtering increased the supply of low- 202 Supportive Housing for the Elderly, Section 811 cost rental units with monthly rents of less than Supportive Housing for People with Disabilities, $800 by 4.6%, which was not enough to offset the and Permanent Supportive Housing. Unfortunately, permanent loss of of other similarly priced units these programs are not funded at the level needed to (Joint Center for Housing Studies, 2016). serve all of the nation’s lowest income renters. Meanwhile, federal subsidies on which developers most often rely to produce new affordable rental INVESTING TO MEET OUR housing are not designed to serve ELI households. MOST CRITICAL HOUSING These programs include LIHTC, the HOME NEEDS Investment Partnerships Program (HOME), and the Federal Home Loan Bank’s Affordable Housing ELI renter households face a critical shortage of Program (AHP). While these programs serve an affordable and available rental homes, resulting in important purpose, fewer than 48% of LIHTC units severe housing cost burdens and housing instability. are occupied by ELI households (U.S. Department Significant investment in the production of ELI of Housing and Urban Development (HUD), housing would greatly reduce housing cost burdens 2016a); since 1992, less than 44% of rental homes among ELI renter households and help higher funded by HOME have been initially occupied by income households as well. Of the nation’s 11.4 ELI households (HUD, 2016b); and in 2014 and million ELI renter households, nearly 7.9 million 2015, 23% and 27% of new rental units receiving occupy housing above their affordability range. AHP funding were affordable to ELI households Approximately 2.4 million live in rental homes not (Federal Housing Finance Agency (FHFA), 2015; affordable to them but affordable to VLI renters, 4.1 FHFA, 2016). million live in rental homes affordable to LI renters,

10 NATIONAL LOW INCOME HOUSING COALITION | THE GAP: THE AFFORDABLE HOUSING GAP ANALYSIS 2017 FIGURE 6: EXTREMELY LOW INCOME RENTER HOUSEHOLDS OCCUPYING UNITS AFFORDABLE TO HIGHER INCOME GROUPS

4,500,000 4,055,676 4,000,000

3,500,000

3,000,000

2,500,000 2,420,417

2,000,000

1,500,000

1,000,000 851,584

500,000 536,716

0 Affordable to Affordable to Affordable to Affordable to Very Low Income Low Income Middle Income Median Income (30.1%-50% of AMI) (50.1% to 80% of AMI) (80.1-100% AMI) and Above (Over 100.1% AMI) Source: NLIHC tabulations of 2015 ACS PUMS data. and slightly fewer than a million live in homes claim the standard deduction. The MID is a federal affordable to MI renters (Figure 6). These rental tax expenditure of more than $65 billion per year, units could become available to households who 84% of which goes to households with annual can better afford them if new production provided income greater than $100,000 (Joint Committee housing to which ELI households could afford to on Taxation, 2017). By comparison, less than move. $38 billion was spent on all of HUD’s housing programs for the lowest income households in NLIHC supports the realignment of federal housing 2014, including Public Housing, Housing Choice expenditures to meet our most critical housing Vouchers, Section 8 Project Based Rental Assistance, needs. Currently, higher income homeowners Section 202 Supportive Housing for the Elderly, and receive a significantly greater share of federal Section 811 Supportive Housing for People with housing expenditures than low income renters, Disabilities (Fischer & Sard, 2016). predominantly through the mortgage interest deduction (MID) (Fischer & Sard, 2016). The NLIHC-led United for Homes (UFH) campaign Homeowners are eligible to subtract the interest proposes greater investment in housing programs paid on their mortgage from their federal taxable for the lowest income households with savings income if they itemize their deductions rather than from modest MID reforms. The UFH campaign

NATIONAL LOW INCOME HOUSING COALITION | THE GAP: THE AFFORDABLE HOUSING GAP ANALYSIS 2017 11 proposes reducing the amount of a mortgage eligible recipients to use their voucher, particularly in strong for a tax benefit from $1 million to $500,000 and housing markets. The payment standard for HCVs is converting the deduction to a non-refundable tax approximately the Fair Market Rent (FMR), set at the credit. The reduction to $500,000 would impact few 40th percentile of rents for current movers. FMRs are homeowners (NLIHC, 2015). The conversion of the published by HUD each year for every metropolitan deduction to a tax credit would result in a tax cut for area and nonmetropolitan county. A single FMR, nearly 25 million homeowners who currently don’t adjusted for number of bedrooms, is applied itemize their deductions or don’t get the full benefit throughout an entire FMR area, despite varying rents of MID (Lu & Toder, 2016). These two reforms, within the area. This standard constrains recipients phased in over 5 years, would generate $241 billion to neighborhoods and localities with lower housing in new revenue over ten years to invest in affordable costs. Anecdotal reports from high-cost areas in housing programs (Lu & Toder, 2016), such as the California indicate that a high percentage of voucher national Housing Trust Fund (HTF), vouchers, and holders transfer (or “port”) their vouchers from high- other subsidy programs that serve ELI households. cost jurisdictions to less costly ones. The national HTF was designed and created HUD recently published a rule requiring local public precisely to fill the gap of rental homes affordable housing agencies in 24 metropolitan areas to use to the lowest income households. In 2016 the first Small Area FMRs to set voucher payment standards. allocation of HTF dollars was distributed to the Small Area FMRs reflect rents for U.S. Postal ZIP 50 states, the District of Columbia, and the U.S. Codes within metropolitan regions. HUD’s intent with territories. At least 90% of HTF funds must be used Small Area FMRs is to better align voucher payment for rental housing and at least 75% of the funds for standards with neighborhood-scale rental markets, rental housing must benefit ELI households; 100% resulting in relatively higher subsidies in higher of HTF funds must benefit ELI households while the opportunity neighborhoods with more expensive rents HTF is capitalized under $1 billion a year. The HTF and lower subsidies in less costly neighborhoods. is funded by a small mandatory contribution from Small Area FMRs are expected to help households use Fannie Mae and Freddie Mac, based on the volume vouchers in a broader range of neighborhoods. of their business. The HTF received nearly $174 Vouchers’ effectiveness could be further improved million in contributions in 2016. While a step in the with additional reforms. Regional voucher right direction, the national HTF needs much more administration would enhance mobility and revenue to meet the housing needs of ELI renters. reduce administrative costs; protection against Tenant-based vouchers are another important, and discrimination based on source of income would underfunded, approach to meeting the housing needs make available more rental homes to voucher of ELI renters. At their best, they give recipients holders, because landlords in many jurisdictions are an opportunity to afford quality housing in a now free to refuse vouchers; and in high-cost areas, neighborhood of their choice. Recipients find a rental cost-based vouchers matched with new production home and contribute 30% of their income toward would stretch current voucher funding to a larger housing costs. The voucher pays the remaining number of eligible households. costs up to the local housing agency’s payment NLIHC also supports efforts to expand and reform standard. Vouchers typically cost less than new LIHTC, the nation’s largest affordable housing housing production, making them a preferred form of production subsidy. Important improvements to housing assistance in weak housing markets with an better serve ELI households include a 50% basis abundance of vacant, physically adequate housing. boost in tax credits for developments that set Barriers exist, however, that can make it difficult for aside at least 20% of their housing units for ELI

12 NATIONAL LOW INCOME HOUSING COALITION | THE GAP: THE AFFORDABLE HOUSING GAP ANALYSIS 2017 renters, and income averaging, which would allow a production subsidy, LIHTC, to better serve ELI development to use tax credits to serve households households. In short, the billions of dollars in federal with income up to 80% of AMI, as long as the housing expenditures must be rebalanced to serve average household income limit of the development those most in need. is either 50% or 60% of AMI. These reforms were included in a comprehensive bill, “The Affordable ABOUT THE DATA Housing Credit Improvement Act” (S. 3237), introduced in the 114th Congress by Senators Maria This report is based on data from the 2015 Cantwell (D-WA) and Orrin Hatch (R-UT). American Community Survey (ACS) Public Use Microdata Sample (PUMS). The ACS is an annual Funding to preserve the existing federally assisted nationwide survey of approximately 3.5 million housing supply is also essential. Public Housing, addresses. It provides timely data on the social, Section 8 Project-Based Rental Assistance, Section 202 economic, demographic, and housing characteristics Housing for the Elderly, and Section 811 Housing for of the U.S. population. PUMS contains individual People with Disabilities provide affordable housing to ACS questionnaire records for a subsample of more than 1.7 million ELI households (HUD, 2015). housing units and their occupants. Unfortunately, nearly 46,000 rental homes subsidized by Section 8 Project-Based Rental Assistance were lost PUMS data are available for geographic areas from the affordable stock between 2005 and 2014, called Public Use Microdata Sample Areas because owners opted out of the program (Ray, Kim, (PUMAs). Individual PUMS records were matched Nguyen, & Choi, 2015). And despite its critical role to their appropriate metropolitan area or given in providing much needed housing to low income nonmetropolitan status using the Missouri Data renters, Public Housing received $1.6 billion less Center’s MABLE/Geocorr12 online application. If at for operations in 2016 than in 2010. Funding used least 50% of a PUMA was in a Core Based Statistical to repair and renovate the public housing stock has Area (CBSA), we assigned it to the CBSA. Otherwise, declined by 53% since 2000 (Center on Budget and the PUMA was given nonmetropolitan status. Policy Priorities, 2016). Households were categorized by their income relative to the metropolitan area’s median family income CONCLUSION or state’s nonmetropolitan median family income, adjusted for household size. Housing units were ELI renter households face a shortage of 7.4 million categorized according to the income needed to afford affordable and available rental homes. Seventy- the rent and utilities without spending more than one percent of them spend more than half of their 30% of income. The categorization of units was done income on housing, accounting for nearly 73% of without regard to the incomes of the current tenants. all severely cost-burdened renter households in the U.S. The possibility of tax reform in the coming years More information about the ACS PUMS files is provides the opportunity to realign federal housing available at https://www.census.gov/programs- expenditures to meet this critical housing need. This surveys/acs/technical-documentation/pums/about. realignment includes reforming the MID, which html overwhelmingly benefits higher income households who need assistance the least, and investing the FOR MORE INFORMATION savings in housing programs that serve those who need it the most, such as the HTF and rental For further information regarding this report or assistance programs. We also have the opportunity the methodology, please contact Andrew Aurand, to expand and reform the nation’s largest housing NLIHC vice president for research, aaurand@nlihc. org, 202-662-1530 x245.

NATIONAL LOW INCOME HOUSING COALITION | THE GAP: THE AFFORDABLE HOUSING GAP ANALYSIS 2017 13 REFERENCES Apgar Jr., W.G. (1993). An abundance of housing Joint Center for Housing Studies of Harvard for all but the poor. In G. T. Kingsley & M.A. Turner University. (2016). The state of the nation’s housing: (Eds.), Housing Markets and Residential Mobility (pp. 99 2016. Cambridge, MA: Author. Retrieved from – 123). Washington, DC: The Urban Institute Press. http://www.jchs.harvard.edu/research/state_nations_ Bolton, M., Bravve, E., & Crowley, S. (2014). housing. Aligning federal low income housing programs with Joint Committee on Taxation. (2017). Estimates housing need. Washington, D.C.: National Low of Federal tax expenditures for fiscal years Income Housing Coalition. 2016-2020. Washington, DC: Author. Retrieved Center on Budget and Policy Priorities. (2016). from https://www.jct.gov/publications. html?func=startdown&id=4971. Chart book: Cuts in federal assistance have exacerbated families’ struggles to afford housing. Washington, DC: Kutty, N. (2005). A new measure of housing Author. Retrieved from http://www.cbpp.org/research/ affordability: Estimates and analytical results. housing/chart-book-cuts-in-federal-assistance-have- Housing Policy Debate, 61(1), 113–142. exacerbated-families-struggles-to-afford. Lu, C. & Toder, E. (2016). Effects of reforms of the Fischer, W. & Sard, B. (2016). Chart book: home mortgage interest deduction by income group Federal housing spending is poorly matched to need. and state. Washington, DC: Tax Policy Center. Washington, DC: Center on Budget and Policy Retrieved from http://www.taxpolicycenter.org/ Priorities. publications/effects-reforms-home-mortgage- interest-deduction-income-group-and-state. Federal Housing Finance Agency. (2015). 2014 Low- income housing and community development activities National Alliance to End Homelessness. (2016). of the Federal Home Loan Banks. Washington, DC: The state of homesslessness in America: 2016. Author. Retrieved from https://www.fhfa.gov/ Washington, DC: Author. Retrieved from http:// AboutUs/Reports/ReportDocuments/Low-Income- www.endhomelessness.org/page/-/files/2016%20 Housing-Comm-Dev-2014.pdf. State%20Of%20Homelessness.pdf. Federal Housing Finance Agency. (2016). 2015 Low- National Low Income Housing Coalition. (2016). income housing and community development activities Out of reach 2016: No refuge for low income renters. of the Federal Home Loan Banks. Washington, DC: Washington, DC: Author. Retrieved from http:// Author. Retrieved from https://www.fhfa.gov/ nlihc.org/sites/default/files/oor/OOR_2016.pdf. AboutUs/Reports/ReportDocuments/2015-Low- National Low Income Housing Coalition. (2015). Income-Hsg-and-Comm-Devmt-Activities-of-the- A Rare Occurrence: The Geography and Race of FHLBank-System-Report.pdf. Mortgages over $500,000. Washington, DC: Author. Furman Center for Real Estate and Urban Policy. http://nlihc.org/research/rare-occurrence. (2012). What can we learn about the low income Pelletiere, D. (2008). Getting to the heart of housing’s housing tax credit program by looking at the tenants? fundamental question: How much can a family New York City, NY: Author. http://furmancenter. afford? Washington, DC: National Low Income org/files/publications/LIHTC_Final_Policy_Brief_ Housing Coalition. Retrieved from http://nlihc. v2.pdf. org/article/getting-heart-housing-s-fundamental- question-how-much-can-family-afford.

14 NATIONAL LOW INCOME HOUSING COALITION | THE GAP: THE AFFORDABLE HOUSING GAP ANALYSIS 2017 Proctor, B., Semega, J.L., & Kollar, M.A. U.S. Department of Housing and Urban (2016). Income and poverty in the United States: Development. (2015). A picture of subsidized 2015. Washington, DC: U.S. Census Bureau. households [Data file]. Washington, DC. Retrieved Retrieved from http://www.census.gov/library/ from https://www.huduser.gov/portal/datasets/ publications/2016/demo/p60-256.html. picture/yearlydata.html. Ray, A., Kim, J., Nguyen, D., & Choi, J. (2015). U.S. Department of Housing and Urban Opting in, opting out a decade later. Washington, Development. (2016a). Data on tenants in LIHTC DC: Office of Policy Development and Research, units as of December 31, 2013. Washington, DC: Department of Housing and Urban Development. Author. Retrieved from https://www.huduser.gov/portal/ U.S. Department of Housing and Urban publications/mdrt/opting_in_opting_out.html. Development. (2016b). HOME National Stone, M.E. (1993). Shelter poverty: New ideas Production Report – All States – November on housing affordability. Philadelphia, PA: Temple 30, 2016. Washington, DC: Author. Retrieved University Press. from https://www.hudexchange.info/ programs/home/home-national-production- U.S. Department of Agriculture. (2016). Official reports/?filter_DateYearEach=2016-11- USDA food plans: Cost of food at home at four levels, 30&program=HOME&group=Prod. U.S. average, January 2016. Washington, DC: Author. Retrieved from https://www.cnpp.usda.gov/ sites/default/files/CostofFoodJan2016_0.pdf.

NATIONAL LOW INCOME HOUSING COALITION | THE GAP: THE AFFORDABLE HOUSING GAP ANALYSIS 2017 15 APPENDIX A: STATE COMPARISONS States in RED have less than the national level of affordable and available units per 100 households at or below the ELI threshold

Surplus (Deficit) of Affordable Affordable and Available Units per 100 % Within Each Income Category with and Available Units Households at or below Threshold Severe Housing Cost Burden At or below At or below At or At or below At or below At or below >ELI to 50% 51% to 80% 81% to 100% State At ELI ELI 50% AMI below ELI 50% AMI 80% AMI 100% AMI AMI AMI AMI Alabama (76,642) (63,869) 61 77 109 110 66% 23% 3% 1% Alaska (15,972) (13,559) 32 62 93 102 67% 27% 9% 0% Arizona (168,367) (176,504) 26 48 99 107 72% 39% 9% 2% Arkansas (61,063) (56,497) 50 66 105 108 65% 29% 3% 1% California (1,110,803) (1,564,813) 21 30 68 86 77% 47% 17% 5% Colorado (120,987) (140,128) 27 52 93 101 75% 33% 7% 4% Connecticut (87,872) (77,702) 36 65 102 106 71% 30% 6% 1% Delaware (17,380) (14,241) 33 65 102 109 74% 35% 7% 1% District of Columbia (27,737) (21,775) 44 70 91 99 64% 27% 7% 0% Florida (441,565) (618,872) 27 35 79 96 79% 55% 17% 5% Georgia (238,606) (267,820) 38 52 98 105 74% 36% 8% 1% Hawaii (23,925) (40,962) 35 37 74 88 75% 61% 21% 9% Idaho (33,271) (29,524) 34 61 102 104 71% 24% 2% 0% Illinois (324,178) (293,199) 32 61 98 103 74% 27% 6% 1% Indiana (142,336) (94,315) 38 74 107 109 71% 22% 3% 1% Iowa (64,763) (25,841) 39 85 105 105 67% 12% 3% 3% Kansas (48,887) (32,186) 44 79 104 106 65% 18% 3% 1% Kentucky (75,914) (63,209) 57 75 105 107 62% 19% 4% 1% Louisiana (107,787) (112,932) 46 60 101 107 70% 33% 7% 2% Maine (25,036) (24,971) 46 67 101 104 57% 26% 4% 0% Maryland (119,241) (141,378) 34 55 97 105 73% 32% 6% 1% Massachusetts (158,769) (180,684) 46 60 92 99 62% 32% 8% 1% Michigan (207,639) (185,187) 38 64 101 104 72% 27% 5% 2% Minnesota (108,977) (82,759) 36 72 100 101 64% 19% 4% 1% Mississippi (60,365) (68,898) 51 56 98 107 67% 31% 8% 1% Missouri (125,578) (91,514) 43 74 104 105 69% 20% 3% 2% Montana (18,273) (15,962) 44 72 100 104 69% 20% 4% 2% Nebraska (38,742) (24,960) 41 79 103 103 69% 15% 2% 1% Nevada (85,176) (98,990) 15 39 96 107 83% 42% 8% 1% New Hampshire (25,614) (18,500) 30 72 100 102 66% 20% 2% 0% New Jersey (212,237) (300,470) 29 39 86 99 74% 43% 8% 3% New Mexico (40,060) (41,091) 45 60 102 109 68% 32% 9% 1% New York (630,152) (752,943) 35 50 81 95 72% 40% 12% 4% North Carolina (196,339) (205,340) 46 63 103 107 68% 31% 7% 1% North Dakota (16,372) (4,932) 48 90 108 112 64% 16% 6% 0% Ohio (269,383) (170,693) 43 76 103 104 68% 18% 3% 1% Oklahoma (69,768) (65,592) 48 68 106 108 65% 21% 3% 1% Oregon (105,536) (137,540) 26 41 89 98 76% 39% 9% 4% Pennsylvania (267,324) (234,855) 39 67 98 103 69% 29% 4% 2% Rhode Island (29,992) (29,895) 43 63 98 105 63% 31% 4% 0% South Carolina (83,678) (85,287) 49 64 102 106 68% 34% 7% 2% South Dakota (15,782) (8,991) 51 82 103 103 57% 18% 5% 0% Tennessee (124,706) (125,390) 49 65 102 106 65% 26% 5% 2% Texas (626,192) (677,391) 29 51 97 105 72% 32% 6% 1% Utah (47,180) (42,133) 31 62 100 104 68% 20% 3% 1% Vermont (10,866) (13,083) 40 59 93 101 58% 26% 6% 1% Virginia (156,646) (188,507) 37 54 97 104 75% 35% 7% 1% Washington (163,924) (188,477) 30 53 93 99 71% 32% 5% 2% West Virginia (26,950) (23,980) 59 73 103 108 63% 23% 4% 0% Wisconsin (123,516) (83,100) 34 75 101 103 68% 19% 3% 1% Wyoming (8,731) (1,702) 43 93 110 111 65% 12% 1% 0% USA Totals (7,386,799) (8,023,143) 35 55 93 101 71% 33% 8% 2% Source: NLIHC Tabulations of 2015 ACS PUMS data ELI is no more than 30% of AMI or the poverty guideline, whichever is higher APPENDIX B: METROPOLITAN AREA COMPARISONS Metropolitan areas in RED have less than the national level of affordable and available units per 100 households at or below the ELI threshold Surplus (Deficit) Affordable and Available Units % Within Each Income Category of Affordable and per 100 Households at or below with Severe Housing Cost Burden Available Units Threshold At or below At or below At or At or below At or below At or below >ELI to 51% to 81% to Metro Area At ELI ELI 50% AMI below ELI 50% AMI 80% AMI 100% AMI 50% AMI 80% AMI 100% AMI Atlanta-Sandy Springs-Roswell, GA (134,905) (155,692) 25 47 98 105 79% 39% 6% 1% Austin-Round Rock, TX (48,449) (65,233) 20 41 97 105 81% 37% 4% 2% Baltimore-Columbia-Towson, MD (59,204) (58,518) 37 62 96 104 71% 30% 7% 2% Boston-Cambridge-Newton, MA-NH (111,942) (124,187) 46 61 90 97 61% 31% 9% 2% Buffalo-Cheektowaga-Niagara Falls, NY (32,785) (15,842) 44 82 104 105 70% 17% 2% 1% Charlotte-Concord-Gastonia, NC-SC (52,447) (58,215) 30 53 101 104 71% 29% 7% 1% Chicago-Naperville-Elgin, IL-IN-WI (264,442) (267,554) 26 53 96 102 76% 31% 7% 1% Cincinnati, OH-KY-IN (48,224) (21,562) 41 84 105 106 70% 19% 4% 0% Cleveland-Elyria, OH (51,661) (36,961) 44 74 102 104 68% 18% 3% 1% Columbus, OH (53,311) (38,343) 30 69 102 105 73% 23% 4% 0% Dallas-Fort Worth-Arlington, TX (173,297) (185,007) 19 50 99 105 77% 29% 6% 2% Denver-Aurora-Lakewood, CO (62,818) (78,605) 24 48 91 100 74% 34% 7% 3% Detroit-Warren-Dearborn, MI (104,830) (94,453) 34 60 98 101 74% 31% 6% 2% Fresno, CA (35,536) (41,251) 23 27 76 94 72% 60% 13% 4% Hartford-West Hartford-East Hartford, CT (28,881) (19,261) 40 76 109 110 70% 26% 4% 0% Houston-The Woodlands-Sugar Land, TX (185,197) (180,872) 18 50 96 104 78% 30% 5% 1% Indianapolis-Carmel-Anderson, IN (50,654) (35,062) 27 72 107 108 76% 24% 4% 0% Jacksonville, FL (28,228) (36,100) 37 49 101 108 78% 35% 5% 1% Kansas City, MO-KS (44,616) (23,583) 38 80 105 106 67% 18% 2% 1% Las Vegas-Henderson-Paradise, NV (66,125) (83,383) 12 32 95 108 86% 50% 10% 1% Los Angeles-Long Beach-Anaheim, CA (415,476) (634,949) 16 22 56 77 82% 53% 21% 8% Louisville/Jefferson County, KY-IN (26,591) (16,986) 42 76 106 107 63% 14% 3% 1% Memphis, TN-MS-AR (33,264) (32,821) 37 58 102 107 72% 33% 5% 3% Miami-Fort Lauderdale-West Palm Beach, FL (161,403) (237,177) 21 23 53 78 81% 70% 29% 10% Milwaukee-Waukesha-West Allis, WI (52,943) (37,317) 22 67 97 101 74% 26% 3% 2% Minneapolis-St. Paul-Bloomington, MN-WI (78,997) (66,470) 31 67 99 101 66% 21% 4% 1% Nashville-Davidson--Murfreesboro--Franklin, TN (35,224) (38,418) 42 62 99 103 65% 27% 5% 3% New Orleans-Metairie, LA (39,579) (48,223) 30 42 95 103 80% 44% 8% 4% New York-Newark-Jersey City, NY-NJ-PA (638,500) (890,371) 32 40 75 93 73% 46% 13% 5% Oklahoma City, OK (26,690) (28,621) 38 63 107 109 67% 21% 4% 0% Orlando-Kissimmee-Sanford, FL (53,607) (81,378) 18 23 78 102 82% 59% 15% 2% Philadelphia-Camden-Wilmington, PA-NJ-DE-MD (147,768) (134,360) 30 60 97 103 75% 35% 7% 2% Phoenix-Mesa-Scottsdale, AZ (116,080) (119,237) 21 48 101 107 74% 39% 9% 2% Pittsburgh, PA (51,727) (32,526) 45 77 99 102 62% 18% 3% 3% Portland-Vancouver-Hillsboro, OR-WA (52,848) (78,806) 27 41 90 98 75% 37% 8% 2% Providence-Warwick, RI-MA (44,414) (42,359) 44 66 98 104 63% 31% 3% 0% Raleigh, NC (26,317) (17,592) 28 72 108 109 71% 27% 2% 1% Richmond, VA (29,138) (31,716) 31 55 99 103 78% 31% 5% 2% Riverside-San Bernardino-Ontario, CA (109,579) (145,192) 19 27 70 88 79% 52% 18% 8% Sacramento--Roseville--Arden-Arcade, CA (73,767) (84,519) 20 43 90 100 78% 30% 11% 2% San Antonio-New Braunfels, TX (43,706) (59,749) 33 44 98 106 69% 39% 5% 3% San Diego-Carlsbad, CA (86,542) (142,052) 19 24 66 84 80% 50% 20% 6% San Francisco-Oakland-Hayward, CA (130,794) (166,067) 29 44 77 89 69% 39% 11% 3% San Jose-Sunnyvale-Santa Clara, CA (45,125) (61,360) 27 40 82 94 76% 40% 10% 1% Seattle-Tacoma-Bellevue, WA (87,797) (101,800) 29 53 91 97 73% 34% 5% 3% St. Louis, MO-IL (61,934) (41,920) 37 74 105 105 72% 20% 4% 2% Tampa-St. Petersburg-Clearwater, FL (66,690) (96,695) 28 35 90 102 78% 50% 13% 3% Tucson, AZ (31,500) (33,587) 22 44 98 106 73% 40% 10% 1% Virginia Beach-Norfolk-Newport News, VA-NC (37,760) (53,290) 33 44 92 105 78% 48% 10% 1% Washington-Arlington-Alexandria, DC-VA-MD-WV (119,185) (154,412) 31 50 95 103 73% 33% 6% 1% USA Totals (7,386,799) (8,023,143) 35 55 93 101 71% 33% 8% 2% Source: NLIHC Tabulations of 2015 ACS PUMS data ELI is no more than 30% of AMI or the poverty guideline, whichever is higher

JOINT CENTER FOR HOUSING STUDIES OF HARVARD UNIVERSITY

THE STATE OF THE NATION’S HOUSING 2018

STATE OF THE NATION’S HOUSING REPORTS

1988–2018 CONTENTS

Executive Summary 1 JOINT CENTER FOR HOUSING STUDIES The Joint Center for Housing Studies of Harvard University advances Housing Markets 7 OF HARVARD UNIVERSITY understanding of housing issues and informs policy. Through its research, education, and public outreach programs, the center helps leaders in government, business, and the civic sectors make decisions that effectively Demographic Drivers 13 HARVARD GRADUATE SCHOOL OF DESIGN address the needs of cities and communities. Through graduate and executive HARVARD KENNEDY SCHOOL courses, as well as fellowships and internship opportunities, the Joint Center Homeownership 19 also trains and inspires the next generation of housing leaders.

Rental Housing 25 Principal funding for this report was provided by the Ford Foundation and the Policy Advisory Board of the Joint Center for Housing Studies. STAFF POSTDOCTORAL FELLOWS FELLOWS Additional support was provided by: Whitney Airgood-Obrycki Hyojung Lee Barbara Alexander Housing Challenges 30

Matthew Arck √ Kristin Perkins Frank Anton AARP Foundation Kermit Baker William Apgar Additional Resources 37 Federal Home Loan Banks STUDENTS James Chaknis Michael Berman Housing Assistance Council Katie Gourley Kerry Donahue Rachel Bratt MBA’s Research Institute for Housing America Jill Schmidt Angela Flynn Michael Carliner National Association of Home Builders Donald Taylor-Patterson Riordan Frost Kent Colton National Association of Housing and Redevelopment Officials (NAHRO) EDITOR Christopher Herbert Daniel Fulton National Association of REALTORS® Marcia Fernald Alexander Hermann George Masnick National Council of State Housing Agencies Elizabeth La Jeunesse DESIGNER Shekar Narasimhan National Housing Conference John Skurchak Mary Lancaster Nicolas Retsinas National Housing Endowment David Luberoff Mark Richardson National League of Cities Daniel McCue National Low Income Housing Coalition Eiji Miura National Multifamily Housing Council Jennifer Molinsky Shannon Rieger FOR ADDITIONAL COPIES, PLEASE CONTACT Jonathan Spader Joint Center for Housing Studies Alexander von Hoffman of Harvard University Abbe Will One Bow Street, Suite 400 © 2018 by the President and Fellows of Harvard College. Cambridge, MA 02138 The opinions expressed in The State of the Nation’s Housing 2018 do not necessarily represent the views of Harvard University, the Policy Advisory Board of the Joint Center for Housing Studies, the Ford Foundation, or the other sponsoring organizations. www.jchs.harvard.edu

twitter: @Harvard_JCHS 1 EXECUTIVE SUMMARY SUMMARY

As we mark the 30th anniversary THE PERSISTENCE OF HOUSING CHALLENGES As the inaugural State of the Nation’s Housing report noted, the major- of the State of the Nation’s Housing ity of Americans were well housed in 1988, and a number of metrics point to improving conditions since then. More than 40 million units series, this year’s report presents have been built over the past three decades, accommodating 27 an opportunity to reflect on how million new households, replacing older homes, and improving the quality of the nation’s stock. The typical home today is larger and housing market conditions in more likely to have air conditioning, multiple bathrooms, and other amenities. Structurally inadequate housing was rare 30 years ago the United States have evolved and even rarer now. over the decades. In addition to Nevertheless, several challenges highlighted in the Joint Center’s our usual look at current trends, first report persist today. In the 1980s, high mortgage interest rates put the cost of homeownership out of reach for many. With fewer the analysis examines how some young adults buying homes, demand for rental housing remained of today’s conditions echo the high—as did rents despite a boom in multifamily construction. Rapid losses of low-cost rentals forced millions more lower-income past and are a yardstick for the households to spend outsized shares of their incomes on housing. Despite their growing numbers, only about one in four very low- progress we as a nation have and income renters benefited from subsidies to close the gap between market rents and what they could afford to pay. have not made in fulfilling the promise of a decent, affordable Homeownership rates among young adults today are even lower than in 1988, and the share of cost-burdened renters is significantly home for all. higher. Soaring housing costs are largely to blame, with the national median rent rising 20 percent faster than overall inflation in 1990– 2016 and the median home price 41 percent faster. Although better housing quality accounts for some of this increase, sharply higher costs for building materials and labor, coupled with limited productivity gains in the homebuilding industry, have made housing construction considerably more expensive. Land prices have also skyrocketed as population growth in metro areas has intensified demand for well-located sites. In addition, new regulatory barriers have also served to limit the supply of land available for homes and increased the time, complexity, and risks of housing development.

Along with soaring housing costs, weak income growth among low- and moderate-income households has also contributed to affordability pressures. The real median income of households in the bottom quartile increased only 3 percent between 1988 and 2016, while the median income among young adults in the key

JOINT CENTER FOR HOUSING STUDIES OF HARVARD UNIVERSITY 1 25–34 year-old age group was up just 5 percent. Meanwhile, gross the next decade as growth of the native-born population continues domestic product per capita, a measure of total economic gains, to slow. As a result, immigrants will increasingly drive household increased some 52 percent in 1988–2017. If incomes had kept pace growth, especially after 2025 when native-born population growth more broadly with the economy’s growth over the past 30 years, decelerates further. As it is, the foreign-born share of household they would have easily matched the rise in housing costs—under- growth has already climbed from 15 percent in the 1980s to 32 per- scoring how income inequality has helped to fuel today’s housing cent in the 1990s and to nearly half so far this decade (Figure 1). affordability challenges. Relatively low headship rates among millennials also contribute to lower projected household growth. Despite the recent pickup in DEMOGRAPHICS LIFTING HOUSEHOLD GROWTH incomes, adults under age 35 are still not forming households at The size and age structure of the adult population, together with rates as high as previous generations at that age. This suggests that the rates at which people form households, determine how much other forces are at play, including higher rates of college and gradu- new housing is needed to meet increased demand. In 2016, the Joint ate school attendance and lower rates of marriage and childbearing. Center projected robust growth of 13.6 million households over the High housing costs may also be a factor, given the smaller share of next decade, assuming a pickup in household formations among the young adults heading up households in expensive housing markets. millennial generation (born 1985–2004), longer periods of indepen- Indeed, just 31 percent of adults aged 25–29 head their own house- dent living among the baby-boom generation (born 1946–1964), and holds in the nation’s 25 least affordable metros (measured by the moderate growth in foreign immigration. However, based on the share of renters with cost burdens), compared with 41 percent in Census Bureau’s new, lower population estimates and additional the 25 most affordable metros. declines in household formation rates among young adults, the latest Joint Center projections put household growth in 2017–2027 Because of their sheer numbers, however, millennials have still significantly lower at 12.0 million. This total is more in line with the helped to boost household growth. With the leading edge of this 1.1 million average annual increase over the last three years. large generation now in its early 30s, adults under age 35 formed 10.5 million new households in 2012–2017, 1.5 million more than Most of this new outlook reflects lower net foreign immigration and in the previous five-year period. Given that millennials born at the higher mortality rates among native-born whites. In combination, peak are now in their late 20s and the youngest are just 13, this these changes mean slower growth in the number of older white generation will continue to lift household growth for years to come. households as well as of Hispanic and Asian households of most ages. Although lower than the 1.3 million per year previously projected, The overall aging of the US population has important implications net immigration is still expected to average 1.0 million annually over for housing markets, with 65–74 year olds now the fastest-growing age group. Since older adults generally live in established households and strongly prefer to remain in their homes as they age, they have not historically added significantly to new housing demand. FIGURE 1 But given the size of the baby-boom generation, households headed by persons age 65 and over will continue to grow at an unprec- Immigration Has Become an Increasingly Important edented pace in the next decade, increasing the presence of older Source of Household Growth households in both the homeowner and rental markets. Average Annual Growth (Millions) Percent Since older households own many of the nation’s existing homes, 2.0 50 they will also drive strong growth in spending on improvements 1.8 45 and repairs—and, increasingly, home modifications that ensure 1.6 40 1.4 35 their ability to age safely in place. For the millions of older own- 1.2 30 ers with limited incomes and wealth, however, these expenditures 1.0 25 may present a financial challenge. And whether they own or rent, 0.8 20 the growing population of older adults will require better access 0.6 15 to transportation and support services, adding to the pressures on 0.4 10 local governments to expand the supply of good-quality, affordable, 0.2 5 and accessible housing. 0 0 1970–1980 1980–19901990–2000 2000–20102010–2016 DEMAND SHIFT FROM RENTING TO OWNING ● Foreign-Born Households ● Native-Born Households After a decade of soaring rental demand, US households are edging ● Foreign-Born Share of Growth (Right scale) their way back into the homebuyer market. Growth in the number of renter households slowed from 850,000 annually on average in Source: JCHS tabulations of US Census Bureau, 1970–2000 Decennial Censuses, and 2000–2016 American Community Survey 1-Year Estimates. 2005–2015 to just 220,000 in 2015–2017, while the number of owner

2 THE STATE OF THE NATION’S HOUSING 2018 households rose 710,000 annually on average in the past two years. This reversal lifted the national homeownership rate to 63.9 per- FIGURE 2 cent last year, with gains spread across most age, race, and ethnic groups. While too early to tell whether this is the start of a rebound, Homeownership Rates for Both Young Adults... the homeownership rate appears to have at least stabilized. Homeownership Rate (Percent)

85 If today’s national homeownership rate is the new normal, it is set- 80 tling close to the 64 percent that prevailed just before the housing 75 boom and bust started in 1994. Even so, the current homeowner- 70 ship rate for adults aged 25–34 is 4.2 percentage points lower than 65 in 1994 and 6.3 percentage points lower than in 1987 (Figure 2). The 60 differences for the 35–44 year-old age group are even larger, with 55 the current rate down 5.5 percentage points from 1994 and 8.2 per- 50 centage points from 1987. Households 65 and over are the only age 45 group with higher homeownership rates today, up 3.3 percentage 40 points from 1987. In fact, the only reason the national rate is near 35 the 1994 level is because older adults now make up such a large 198519831987 19911989 1993 1995 19991997 20032001 20052007 20092011 2013 2015 2017 share of households. ● 25–34 ● 35–44 ● 45–54 ● 55–64 ● 65 and Over

Although the changes in homeownership by race and ethnicity Source: JCHS tabulations of US Census Bureau, Housing Vacancy Surveys. are mostly positive, black households are the one group that has made no appreciable progress (Figure 3). Compared with 1994, black homeownership rates have increased just 0.3 percentage point while white rates have risen 2.2 percentage points, widen- FIGURE 3 ing the black-white gap to 29.2 percentage points. This disparity is even more troubling given that the gap was 23.5 percentage points …and Black Households Are Near 30-Year Lows in 1983, when the black homeownership rate was 2.6 percentage Homeownership Rate (Percent) points higher than today. Although rates for both Hispanics and Asians have risen somewhat since 1994, the disparities with white 85 rates are still substantial at 26.1 percentage points and 16.5 percent- 80 age points, respectively. 75 70 The choice between owning and renting depends on a variety of 65 factors, including relative costs, expected length of stay, tolerance 60 for financial risk, and the perceived benefits of each option. As 55 such, there is no “ideal” homeownership rate. But the wide gap in 50 white-minority homeownership rates conflicts with evidence from 45 consumer surveys that renters of all races and ethnicities want to 40 own homes in the future. Given both the desire to own and the abil- 35 ity of many renters to sustain homeownership, restricted homebuy- 198519831987 19911989 1993 1995 19991997 20032001 20052007 20092011 2013 2015 2017 ing opportunities for minorities should be a critical public concern. ● Black ● Hispanic ● Asian/Other ● White

Regardless of race or ethnicity, though, the latest runup in house Notes: Blacks, whites, and Asians/others are non-Hispanic. Hispanics may be of any race. Source: JCHS tabulations of US Census Bureau, Housing Vacancy Surveys prices has made homeownership more difficult to attain. In 1988, when the first State of the Nation’s Housing report highlighted historically high homeownership costs, the national home price-to-income ratio was 3.2, with just one metro posting a ratio above 6.0. In 2017, the national price-to-income ratio stood at 4.2, and 22 metros had CONTINUING CONSTRAINTS IN THE SINGLE-FAMILY MARKET ratios above 6.0. So far, however, low interest rates have kept the Supplies of existing single-family homes for sale remain extremely median monthly payments on a modest home relatively afford- tight. In fact, both key measures of inventories are at their lowest able—in fact $250 lower in real terms than in 1988. However, the levels since the National Association of Realtors began its tracking ongoing rise in both interest rates and home prices may change this. in 1982 (Figure 4). In 2017, the supply of for-sale homes averaged In addition, higher prices mean higher downpayments and closing only 3.9 months—well below the 6 months considered a balanced costs, an even more difficult hurdle than monthly payments for market. Zillow puts supply even lower at just 3 months, with inven- many first-time homebuyers. tories in roughly a third of 93 metros under 2 months.

JOINT CENTER FOR HOUSING STUDIES OF HARVARD UNIVERSITY 3 Lower-cost homes are especially scarce. Virtually all of the 88 met- The slow growth in single-family construction reflects in part ros with data available had more homes for sale in the top third of homebuilder caution following the dramatic housing bust. But risk the market by price than in the bottom third. In 46 of these metros, aversion aside, a significant constraint on new residential construc- more than half of the available supply was at the high end. The tion may be the dwindling supply of buildable lots. According to largest imbalances were in moderately sized, moderately priced, Metrostudy data, the inventory of vacant lots in the 98 metro areas and fast-growing metros such as Boise, Charlotte, Des Moines, and tracked fell 36 percent in 2008–2017. Indeed, 21 of the nation’s 25 Durham, where about 65 percent of existing homes for sale were at largest metros reported inventories that would support less than 24 the upper end of the market. months of residential construction.

Why inventories are so tight is not entirely clear. CoreLogic data Along with limited land, respondents to builder surveys cite rising show that the number of owners underwater on their mortgages input costs as adding to the difficulty of constructing entry-level shrank from more than 12.1 million in 2011 to 2.5 million in 2017, homes. As a result, the share of smaller homes (under 1,800 square so negative equity should no longer be a significant drag on sales. feet) built each year fell from 50 percent in 1988 to 36 percent in Still, conversion of 3.9 million single-family homes to rentals in 2000 to 22 percent in 2017. Of this latest drop, 9 percentage points 2006–2016 could be constraining the number of entry-level homes occurred in 2010–2013 alone. on the market. The ongoing decline in residential mobility rates may also play a role, with fewer households putting their homes up for sale each year. MULTIFAMILY CONSTRUCTION LEVELING OFF Unlike single-family homebuilding, multifamily construction Another factor is the low level of single-family construction. Despite ramped up quickly after the crash as rental demand surged. From six consecutive years of increases, single-family starts stood at just a low of 109,000 units in 2009, construction of multifamily units 849,000 units in 2017, well below the long-run annual average of peaked at 397,000 starts in 2015 and accounted for more than half 1.1 million. Indeed, only 610,000 single-family homes were added the gains in housing starts over that period. However, the multifam- to the stock annually in 2008–2017. Limited new construction may ily construction wave is now moderating, with starts down 1 percent hold back existing home sales by reducing the tradeup options for in 2016 and 10 percent in 2017. current owners, deterring them from putting their own homes on the market. This slowdown comes in response to both weaker overall rental demand and increasing slack at the upper end of the market. The

FIGURE FIGURE 5

Inventories of Single-Family Homes for Sale The Recent Rental Market Easing Is Largely Dropped Again in 2017 at the High End Millions of Units Months of Supply Vacancy Rate (Percent)

3.5 14 12

3.0 12 10 2.5 10 8 2.0 8 6 1.5 6 4 1.0 4

0.5 2 2

0.0 0 0 1988 1990 1992 1994 1996 1998 2000 2002 2004 200820062010 2012 2014 2016 2017 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

● Existing Homes for Sale ● Months of Supply (Right scale) ● Class A ● Class B ● Class C ● All Rentals Note: Months of supply measures how long it would take the number of homes on the market to sell at the current rate, where 6 months is typically considered a balanced market. Notes: Vacancy rates are smoothed 4-quarter trailing averages. The vacancy rate for all rental units includes single-family rentals and is from Source: JCHS tabulations of National Association of Realtors (NAR), Existing Home Sales. the HVS. Vacancy rates for Class A, B, and C units are from RealPage, and refer to professionally managed apartments. Source: JCHS tabulations of US Census Bureau, Housing Vacancy Surveys, and RealPage data.

4 THE STATE OF THE NATION’S HOUSING 2018 Census Bureau reports that the national rental vacancy rate rose All of the drop in cost-burdened households is among homeowners, last year for the first time since 2009, ticking up from 6.9 percent to whose numbers fell by 5.5 million in 2010–2016. The pickup in income 7.2 percent. Most of the easing is among high-end (Class A) rentals, growth and the low interest rate environment no doubt helped, but although vacancies in middle-market (Class B) apartment proper- this improvement also reflects the fact that millions of distressed ties were up slightly as well (Figure 5). In 2013, units renting for owners lost their homes to foreclosure during the housing crisis $1,000 or more had the lowest vacancy rate of all rentals, while and, more recently, that lenders have imposed stricter payment- units renting for less than $600 had the highest rate. The situation to-income requirements for new buyers. Moreover, the number (4.1 has now reversed, with vacancies at 6.8 percent in the low-cost million) and share (84 percent) of cost-burdened homeowners earn- market and 7.7 percent in the high-cost market. ing under $15,000 was unchanged over this period. Nearly half of burdened owners at this income level are age 65 and over, and of that The recent strength of rental construction has done little to group, three-quarters are single-person households. address the shortage of lowest-cost units. Between 2006 and 2016, the total number of occupied rentals was up by 21 percent, but the The improvements in affordability for renters are much more mod- number renting for under $650 in real terms fell by 5 percent. Over est. Although the share of cost-burdened renters retreated from a this same period, the lowest-cost rental stock shrank by more than peak of 51 percent in 2011 to 47 percent in 2016, strong growth in 10 percent in 153 of the nation’s 381 metros and by more than 20 renters overall meant that the number with burdens continued to percent in 89 metros. These losses indicate that older rental units rise through 2014. Their numbers did drop by 500,000 in 2014–2016, have not filtered down to more affordable levels in many parts of but the previous increase of 6.5 million in 2001–2014 dwarfed this the country. progress. In addition, more than half of the growth in cost-burdened renters since 2001 was among households paying more than half their incomes for housing. Indeed, the number of severely burdened AFFORDABILITY PRESSURES EASE, BUT REMAIN WIDESPREAD renters rose by 3.6 million between 2001 and 2016. At last measure in 2016, some 38.1 million households spent more than 30 percent of their incomes on housing (the standard Housing affordability problems are part of a longer-term trend that definition of cost burdened). While down by 800,000 from 2015 was evident well before publication of the first State of the Nation’s and by 4.6 million from the peak in 2010, the number of cost- Housing report. The cost-burdened share of renters doubled from burdened households was still some 6.5 million higher in 2016 23.8 percent in the 1960s to 47.5 percent in 2016 as housing costs than in 2001. and household incomes steadily diverged, with the largest increases occurring in the 2000s. Adjusting for inflation, the median rent payment rose 61 percent between 1960 and 2016 while the median renter income grew only 5 percent (Figure 6). The pattern for home- FIGURE 6 owners is similar, with the median home value increasing 112 percent and the median owner income rising only 50 percent. The Sharp Divergence in Housing Costs and Incomes Has Fueled a Long-Term Increase in Cost-Burdened Renters POLICY CHALLENGES Percent Change Percent Expanding the supply of lower-cost housing would help relieve the cost burdens of some households of modest means, but subsidies 75 60 are the only way to close the affordability gap for the nation’s 60 50 lowest-income families and individuals. Even so, increases in federal rental assistance have lagged far behind growth in the number 45 40 of renters with very low incomes, the group typically eligible for subsidies. Between 1987 and 2015, the number of very low-income 30 30 renters grew by 6 million while the number assisted rose only 15 20 950,000, reducing the share with assistance from 29 percent to 25 percent (Figure 7). 0 10

-15 0 The two main rental assistance programs are housing choice 1960 1970 1980 1990 2000 2010 2016 vouchers administered by the Department of Housing and Urban Development and low-income housing tax credits (LIHTC) admin- ● Median Renter Income ● Median Gross Rent istered by the Treasury Department. Between 2000 and 2017, the ● Share with Cost Burdens (Right scale) number of vouchers in use only edged up from 1.8 million to 2.2 mil-

Note: Rents and incomes are adjusted for inﬂation using the CPI-U for all items. lion, as funding increases fell short of the higher costs per voucher Source: JCHS tabulations of US Census Bureau, 1960–1990 Decennial Censuses, and 2000–2016 American Community Surveys. caused by a widening gap between renter incomes and fair market

JOINT CENTER FOR HOUSING STUDIES OF HARVARD UNIVERSITY 5 rents (FMRs). Meanwhile, the number of LIHTC-funded units avail- programs, however, serve less than 50,000 households annually. able for occupancy grew steadily from 880,000 in 2000 to about 2.5 Mortgage revenue bond programs, administered by state housing million in 2017. finance agencies, also provide below-market-rate loans to lower- income households, but support only a limited number of buyers Although last year’s Tax Cuts and Jobs Act reduced corporate tax each year. rates and therefore the value of investments in LIHTC properties, higher annual allocations under this year’s federal budget offset a Expanding homeownership opportunities for young adults and fraction of the falloff in value. The budget also provides develop- minorities will thus require broader and better-targeted policies ers greater flexibility in setting rents, which will help to expand to encourage saving and provide financial assistance as necessary. support for households with a broader range of incomes. But with Counseling programs would also help potential buyers navigate the affordability periods of more than a million subsidized units the homebuying process and fulfill the ongoing requirements of expiring over the next decade and the growing shortfall in low-cost homeownership. housing, the current rate of LIHTC production of about 80,000 units per year falls well short of need. THE OUTLOOK For their part, many state and local governments are finding new By many metrics, the housing market is on sound footing. With the ways to leverage and supplement federal funds to spur develop- economy near full employment, household incomes are increasing ment of below-market-rate housing. These strategies include rais- and boosting housing demand. On the supply side, a decade of his- ing new revenues through bond issuances, real estate transfer torically low single-family construction has left room for expansion taxes, and linkage fees, as well as using their regulatory powers to of this important sector of the economy. Although multifamily con- either incentivize or mandate inclusion of affordable units in new struction appears to be slowing, vacancy rates are still low enough market-rate developments. However, state and local initiatives are to support additional rentals. In fact, to the extent that growth in generally modest in scale. supply outpaces demand, a slowdown in rent growth should help to ease affordability concerns. Programs supporting homeownership are also limited in scope. Research has consistently found that the largest barrier for first- Indeed, the cumulative effect of strong growth in housing costs and time buyers is insufficient savings to meet downpayment require- modest gains in household incomes has left nearly half of today’s ments and other upfront costs. Federal downpayment assistance renters with cost burdens, including a quarter with severe burdens. The rising cost of homes for sale also raises downpayment and closing costs, making it more difficult for individuals and families to FIGURE 7 make the transition to owning.

Despite a Sharp Rise in Income-Eligible Households, National efforts are necessary to close the affordability gap. Housing the Number of Renters with Housing Assistance Has policymakers have many opportunities to address the cost side of the Been Essentially Flat for Two Decades equation, including the increasing size and quality of homes; lack of Very Low-Income Renter Households (Millions) Share (Percent) productivity improvements in the residential construction sector; escalating costs of labor, building materials, and land; and barriers 15.0 30.0 created by a complex and restrictive regulatory system. However, tackling this broad mix of conditions will require collaboration of the 12.5 27.5 public, private, and nonprofit sectors in a comprehensive strategy 10.0 25.0 that fosters innovation in the design, construction, financing, and regulation of housing. 7.5 22.5

5.0 20.0 But even if successful, these efforts will not produce decent, affordable homes for the millions of households that simply cannot pay 2.5 17.5 enough to cover the costs of producing that housing. For these families and individuals, there will always be a need for public 0.0 15.0 1983 1987 1991 1995 1999 2003 2007 2011 2015 subsidies. The federal government’s failure to respond adequately to this large and growing challenge puts millions of households at ● Assisted ● Unassisted risk of housing instability and the threats it poses to basic health ● Share Assisted (Right scale) and safety. Many state and local governments are doing their part to expand assistance, but a more robust federal response is essen- Notes: Very low-income renter households earn 50% or less of area median income. Assisted households may receive assistance from state and local as well as federal programs. tial to any meaningful progress in combatting the nation’s housing Source: JCHS tabulations of US Department of Housing and Urban Development (HUD), Worst Case Housing Needs Report to Congress. affordability crisis.

6 THE STATE OF THE NATION’S HOUSING 2018 2 HOUSING MARKETS

New construction, home sales, MODEST GROWTH IN NEW CONSTRUCTION Although marking the eighth year of growth, total housing starts and housing prices ticked up only edged up from 1.17 million units in 2016 to 1.20 million in 2017. In percentage terms, last year’s increase was the smallest annual modestly in 2017, but a slowdown gain since the recession. Even so, single-family homebuilding continued to strengthen in 2017, rising 8.6 percent to 848,900 units in the multifamily sector and (Figure 8). Starts rose across the country, with the largest increase the rising costs of residential in the West (14 percent), followed by the Midwest and South (8 percent), and then the Northeast (3 percent). At the current pace of construction are preventing growth, however, single-family starts would not regain their 2000 level of 1.23 million units until 2022. a stronger upturn in housing Meanwhile, multifamily starts declined 9.7 percent to 354,100 units markets. Intense competition last year, but were still slightly above the 342,000 annual average for the historically low supply of in 1997–2006. Multifamily activity fell the most in the Midwest (20 percent) and the least in the West (2 percent). Nevertheless, the existing homes on the market has multifamily pipeline remains strong. Completions were up by more than 11 percent in 2017, to 357,600 units—the highest level since the pushed up home prices in most 1980s. In addition, 604,000 multifamily units were under construction last year, slightly below the 2016 level but otherwise higher metros, raising further concerns than at any point since the early 1970s. about affordability. The modest growth in new construction helped to increase real residential fixed investment (RFI) for the sixth straight year, lifting the total from $721 billion in 2016 to nearly $748 billion in 2017. This increase also reflects the ongoing strength of homeowner improvement and repair spending, estimated at $315 billion last year. Indeed, 2017 was the tenth consecutive year that homeowner outlays exceeded spending on single-family construction.

Still, the 3.7 percent increase in RFI last year was the smallest annual gain since the recovery began in 2011. As a result, the sector contributed just 0.07 percentage point of the 2.3 percent real growth in gross domestic product (GDP) in 2017. As a share of the economy, RFI alone accounted for 3.9 percent of GDP. Adding in spending on housing services and furnishings, the combined housing-related share of GDP totaled 18.2 percent last year.

JOINT CENTER FOR HOUSING STUDIES OF HARVARD UNIVERSITY 7 GEOGRAPHIC DISTRIBUTION OF NEW HOUSING metros and 6 percent in all other metro areas. Construction is even just 7 percent in the Northeast. Nearly two-thirds of manufactured Housing permits rose from 1.21 million in 2016 to 1.28 million units further below average levels from the 2000s, with permitting down housing shipments between 2009 and 2017 were also to the South. in 2017, with 61 of the nation’s 100 largest metro areas reporting 23 percent in non-core counties and 24 percent in other metros. increases. Single-family permitting was up in 78 of these markets, Single-family permitting, which remained low across the board in As a result, manufactured homes make up 9 percent of the total while multifamily permitting increased in only 48. The largest num- 2017, accounted for an important share of activity outside of core housing stock in the South, with especially large shares in South bers of permits were issued in Dallas (62,500), New York (50,600), areas. Last year, permits for single-family homes contributed just 43 Carolina (16 percent) and in West Virginia and Mississippi (14 percent Houston (42,400), Atlanta (33,800), and Los Angeles (31,100). percent of total permits issued in core counties, but 73–75 percent of each). While the share in other regions is only 4 percent, a few states permits in non-core counties and other metro areas. also have high concentrations of manufactured housing, including New construction remained strong in the core counties of large New Mexico (17 percent) and Wyoming (13 percent). Manufactured metro areas, with 437,700 permits issued in 2017—about a third of Given the recent uptick in single-family homebuilding and the mod- housing also provides 14 percent of homes in non-metro communi- Percent Change the nationwide total. Permitting in these counties rose at a double- eration in multifamily permitting, new construction has increased ties, more than double the share in the country as a whole. 2014 2015 2014–15 digit pace in 2010–2015, declined in 2016, but then grew 4.9 percent more rapidly outside central counties. In 2014–2017, residential in 2017. As a result, residential construction in core counties was 28 permitting rose 18 percent in core counties, but fully 25 percent in Residential Construction (Thousands of units) percent above levels averaged in the 1990s and nearly on par with non-core counties and 26 percent in other metro areas. IMPEDIMENTS TO HOMEBUILDING Total Starts 1,003 1,112 10.8 those in the 2000s, reflecting significant increases in multifamily Four main constraints stand in the way of a stronger upturn Single-Family 648 715 10.3 activity since 2010 (Figure 9). in housing construction. First is the shortage of skilled work- Multifamily 355 397 11.8 ADDITIONS TO THE MODERATE-COST SUPPLY ers. In a 2017 survey of homebuilders, 82 percent of respondents Permitting outside of the core counties of large metros is still below In the aftermath of the recession, developers targeted the high end cited the cost and availability of labor as a significant problem. Total Completions 884 968 9.5 the 1990s average, down 16 percent in the non-core counties of large of the single-family market by building larger homes. Indeed, the Unemployment in the construction industry fell to 6 percent last Single-Family 620 647 4.5 typical size of newly constructed single-family housing reached an year, while inflation-adjusted construction wages and benefits were Multifamily 264 320 21.2 all-time high of 2,466 square feet in 2015. up 7 percent from 2001—somewhat less than the 9 percent increase for all private industry workers. These pay raises have not been suf- Home Sales But with many buyers looking for more moderate-cost homes, new ficient to attract new workers, and the number of job openings in New (Thousands) 437 501 14.6 FIGURE 8 construction is beginning to add to the supply of smaller homes the construction industry approached 200,000 by the end of 2017— Existing (Millions) 4.9 5.3 6.3 Most Housing Market Indicators Remained (Figure 10). Completions of single-family homes under 1,800 square the highest level in a decade. Median Sales Price (Thousands of dollars) Positive in 2017 feet were up 20 percent in 2016, outpacing the 12 percent increase in larger homes. Shipments of manufactured housing also rose 15 Second, the cost of building materials has risen. The Bureau of New 283.1 296.4 4.7 percent for the second straight year in 2017, but completions of Labor Statistics reports that the prices of raw and manufactured Existing 208.5 222.4 6.6 Percent Change multifamily condominiums declined 15 percent. goods used as inputs for residential construction increased 4 per- Construction Spending (Billions of dollars) 2016 2017 2015–16 2016–17 cent last year, with the price of softwood lumber alone up 13 per- Residential Fixed Investment 550.6 600.1 9.0 Residential Construction (Thousands of units) Nonetheless, entry-level housing still accounts for a small share of new construction. Only 163,000 small single-family homes were Homeowner Improvements 134.8 147.8 9.6 Total Starts 1,174 1,203 5.6 2.5 completed in 2016, or 22 percent of single-family construction— Single-Family 782 849 9.4 8.6 down significantly from the 33 percent share averaged in 1999–2007. FIGURE 9 Notes: Components may not add to total due to rounding. Dollar values are adjusted for inflation by the Multifamily 392 354 -1.3 -9.7 CPI-U for All Items. Moreover, manufactured home shipments totaled just 93,000 units Sources: US Census Bureau, New Residential Construction and New Residential Sales data; National Total Completions 1,060 1,153 9.5 8.8 in 2017, far below the 291,000 annual average in the 1990s and even High Levels of Multifamily Construction Have Boosted Development in Core Counties of Large Metros Association of Realtors®, Existing Home Sales; Bureau of Economic Analysis, National Income and Product Accounts. Single-Family 738 795 14.0 7.7 the 137,000 annual average in the 2000s. Average Annual Housing Permits Issued (Thousands) Multifamily 321 358 0.3 11.3 Modest-sized homes are considerably more affordable for first-time 600 Home Sales (Thousands) and middle-market buyers. According to the Survey of Construction, 500 New Single-Family 561 613 12.0 9.3 the median price for a small home sold in 2016 was $191,700. The All Existing 5,450 5,510 3.8 1.1 average sales price for a new manufactured home in 2017 was even 400 Median Sales Price (Thousands of dollars) lower, at $72,000. By comparison, the median price for all other 300 single-family homes was $324,700 in 2016. New Single-Family 314.4 324.0 3.3 3.1 200 All Existing 238.8 247.2 3.8 3.5 With few additions of smaller units, most modestly priced homes Existing Home Inventory are found in the existing housing stock. Indeed, small homes make 100 Homes for Sale (Thousands) 1,650 1,460 -6.3 -11.5 up nearly half of single-family homes. In 2015, there were 37.3 mil- 0 lion single-family homes under 1,800 square feet. The stock of small Months of Supply 4.4 3.9 -8.3 -11.4 1990s 2000s 2017 1990s22000s 017 1990s 2000s 2017 homes is generally older, with nearly two-thirds (65 percent) built Construction Spending (Billions of dollars) before 1980 compared with 43 percent of larger homes. Residential Fixed Investment 720.9 747.6 8.0 3.7 ● Multifamily ● Single-Family ● Total Notes: Components may not add to totals due to rounding. Dollar values are adjusted for inflation using the CPI-U for all items. Residential fixed Manufactured housing is prevalent primarily in the South, where investment includes spending on new housing construction and homeowner improvements, plus broker commissions on home sales. some 58 percent of the 6.6 million units nationwide are located. Notes: Large metro areas have populations over 1 million. Core counties of large metro areas contain either the largest city or any city with 250,000 residents. Non-core counties are all other counties in large metro areas. Sources: US Census Bureau, New Residential Construction and New Residential Sales; NAR, Existing Home Sales; Bureau of Economic Analysis, Source: JCHS tabulations of US Census Bureau, Building Permits Surveys. National Income and Product Accounts. Another 21 percent are in the West, 14 percent in the Midwest, and

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8 THE STATE OF THE NATION’S HOUSING 2018

Notes: Homeownership rates are 3-year trailing averages. Source: JCHS tabulations of US Census Bureau, CPS/ASEC. just 7 percent in the Northeast. Nearly two-thirds of manufactured cent. However, input price increases vary with building cycles and housing shipments between 2009 and 2017 were also to the South. their growth over longer time periods has been more moderate.

As a result, manufactured homes make up 9 percent of the total Third, developed land has become scarcer. Metrostudy data for housing stock in the South, with especially large shares in South 98 metro areas indicate that the number of vacant developed lots Carolina (16 percent) and in West Virginia and Mississippi (14 percent declined from 1.26 million in 2008 to just 802,000 in 2017. As mea- each). While the share in other regions is only 4 percent, a few states sured by months of supply (where 24–36 months is considered a also have high concentrations of manufactured housing, including balanced market), the inventory shrank in 73 of those 98 markets New Mexico (17 percent) and Wyoming (13 percent). Manufactured in 2016–2017. The shortage of land for new housing is especially housing also provides 14 percent of homes in non-metro communi- acute in the Western metros of San Francisco (9 months), San Diego ties, more than double the share in the country as a whole. (10 months), Seattle (10 months), Los Angeles (12 months), and Las Vegas (13 months). In contrast, developed land is more readily available in many Southern and Midwestern markets, like Chicago (62 IMPEDIMENTS TO HOMEBUILDING months), Atlanta (44 months), and Minneapolis (28 months). Four main constraints stand in the way of a stronger upturn in housing construction. First is the shortage of skilled work- Finally, local zoning and other land use regulations can reduce the ers. In a 2017 survey of homebuilders, 82 percent of respondents amount of new construction by constraining the type and density of cited the cost and availability of labor as a significant problem. new housing allowed. Local governments also add to costs by delay- Unemployment in the construction industry fell to 6 percent last ing approvals and charging sizable fees. For example, a 2015 Duncan year, while inflation-adjusted construction wages and benefits were Associates survey of 271 communities found that the average up 7 percent from 2001—somewhat less than the 9 percent increase impact fee for construction of a moderate-sized single-family home for all private industry workers. These pay raises have not been suf- was $11,900, with charges ranging as high as $31,800 on average in ficient to attract new workers, and the number of job openings in California. While new residential developments should contribute to the construction industry approached 200,000 by the end of 2017— the costs of providing infrastructure and public services, high fees the highest level in a decade. make it even more challenging to provide housing.

Second, the cost of building materials has risen. The Bureau of All of these impediments push up the costs of residential construc- Labor Statistics reports that the prices of raw and manufactured tion. Setting aside the cost of land and development, RSMeans esti- goods used as inputs for residential construction increased 4 per- mates that building an economy-quality, 1,200 square-foot home cent last year, with the price of softwood lumber alone up 13 per- would cost $141,300 in 2018, assuming prevailing wages and a 15

FIGURE 9

High Levels of Multifamily Construction Have Boosted Development in Core Counties of Large Metros Average Annual Housing Permits Issued (Thousands)

600

500

400

300

200

100

0 1990s 2000s 2017 1990s22000s 017 1990s 2000s 2017

● Multifamily ● Single-Family ● Total

Notes: Large metro areas have populations over 1 million. Core counties of large metro areas contain either the largest city or any city with 250,000 residents. Non-core counties are all other counties in large metro areas. Source: JCHS tabulations of US Census Bureau, Building Permits Surveys.

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JOINT CENTER FOR HOUSING STUDIES OF HARVARD UNIVERSITY 9

Notes: Homeownership rates are 3-year trailing averages. Source: JCHS tabulations of US Census Bureau, CPS/ASEC. percent contractor fee. While on par with 2017, this represents a 12 more than 6.0 months in 2017. Markets in many Western metros FIGURE 11 percent jump from 2014 after adjusting for inflation. were especially hot, with supplies of less than a month in both San Francisco and San Jose. Home sales in Salt Lake City, Seattle, and Inventories of Homes for Sale Continue to Shrink in Markets Across the Country Modular housing, constructed in factory conditions before being Stockton also closely tracked the number of homes on the market. Months of Supply transported and assembled on site, could provide at least part of At the other extreme, the metros with the largest inventories of the answer. Including the value of land, the median price for a new available homes were Bridgeport (6.9 months), El Paso (5.6 months), 8 modular unit was $217,200 in 2016—nearly $90,000 less than for a New Haven (5.3 months), Virginia Beach (4.8 months), and Scranton 7 new site-built home. To date, however, homebuilders have been (4.8 months). 6 slow to adopt this innovation, with only 15,000 modular homes 5 added in 2016. Indeed, modular housing has never accounted for Constrained by limited inventory, growth in home sales slowed more than 4 percent of single-family construction in the United from 4.5 percent in 2016 to only 1.9 percent in 2017, to a total of 6.1 4 States. By comparison, modular housing accounts for 9 percent of million units. Although increasing for the third consecutive year, 3 new homes in Germany, 12–16 percent in Japan, and 20 percent in existing home sales led the slowdown with just 1.1 percent growth, 2 the Netherlands. to 5.5 million units. The only appreciable upticks in sales (2–3 per- 1 cent) were in the South and West. 0 New ork Boston Cleveland St. ouis Dallas Atlanta Denver San Francisco United States PERSISTENTLY LOW INVENTORIES AND SLOWING SALES In contrast, new home sales rose 9.3 percent from 2016, to 613,000 The National Association of Realtors reports that the number of units. This was the sixth straight year of growth from the five- homes on the market fell from 1.65 million in 2016 to 1.46 million decade low of 306,000 units in 2011. More than half (55 percent) of in 2017. The single-family inventory alone shrank 11 percent, from new home sales were in the South, and about a quarter were in the ● 2013 ● 2015 ● 2017

1.45 million to 1.29 million. In December 2017, for-sale inventories West. Of the remaining sales, 12 percent were in the Midwest and Notes: Homes for sale include both new and existing units. Months of supply measure how long it would take homes on the market to sell at the current rate, where 6 months is generally considered a balanced market. were at their lowest levels since at least 1999 for all homes and since only 7 percent in the Northeast. Source: JCHS tabulations of Zillow data. 1982 for single-family homes. Meanwhile, the for-sale vacancy rate fell to 1.5 percent in the first quarter of 2018, matching the lowest readings since 1994. CONTINUED CLIMB IN HOME PRICES Nominal home prices rose 6.2 percent over the course of 2017, even Supplies were tight nearly everywhere (Figure 11). Of the 93 large faster than the 5.3 percent increase in 2016. In real terms, home price metros tracked by Zillow, only one had a for-sale inventory of appreciation was a strong 4.6 percent. As a result, the median price of an existing home rose from $237,387 in 2016 to $238,800 in 2017.

Recent home price trends vary sharply across the country. JCHS FIGURE 10 analysis of the FHFA All-Transactions Index indicates that nominal home prices in 13 of the nation’s 100 largest metro areas rose more Although Increasing Somewhat, Construction than 10 percent last year. The biggest increases were in the West, of Modest-Sized Housing Remains Limited especially the Seattle (14 percent), Las Vegas (14 percent), and Salt Units Added (Thousands) Lake City (10 percent) metro areas. Appreciation also hit double digits in Dallas, Grand Rapids, Nashville, and Orlando. In contrast, 1,200 home prices fell slightly in McAllen and were essentially flat in 1,000 Bridgeport, Hartford, and New Haven.

800 By the end of 2017, nominal home prices in 59 of the nation’s 100 largest markets exceeded their pre-crisis peaks. Prices were furthest 600 above peak in metros that experienced only a modest downturn 400 after the crash and then a surge in appreciation, such as Denver (62 percent above peak), Austin (58 percent), Dallas (55 percent), and 200 Houston (44 percent). Other metros with above-peak home prices had posted less of a drop but also a milder rebound. In Albany, for 0 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 example, home prices fell just 6 percent during the housing crisis, then climbed 10 percent through 2017 to stand 3 percent above the ● arger Single-Family Homes ● Small Single-Family Homes previous peak. Similar trends are evident in Little Rock, Oklahoma ● Condominiums ● Manufactured Homes City, and Tulsa. In still other metros, home prices rebounded sharply from a severe drop. Los Angeles is one example, where nominal Notes: Small single-family homes are under 1,800 sq. ft., and larger single-family homes are 1,800 sq. ft. and over. Condominiums are home prices fell by 36 percent after the crash, but now exceed the multifamily units built for sale. Manufactured homes are manufactured housing shipments. Single-family completions by home size for 2017 were unavailable at time of publication. previous peak by 3 percent. Source: JCHS tabulations of US Census Bureau, New Residential Construction and Manufactured Housing Surveys.

10 THE STATE OF THE NATION’S HOUSING 2018 FIGURE 11

Inventories of Homes for Sale Continue to Shrink in Markets Across the Country Months of Supply

8 7 6 5 4 3 2 1 0 New ork Boston Cleveland St. ouis Dallas Atlanta Denver San Francisco United States

● 2013 ● 2015 ● 2017

Notes: Homes for sale include both new and existing units. Months of supply measure how long it would take homes on the market to sell at the current rate, where 6 months is generally considered a balanced market. Source: JCHS tabulations of Zillow data.

Home prices in markets that experienced the worst boom-bust FIGURE 12 cycles are lagging the most relative to past peaks. In the most extreme example, prices in Las Vegas plummeted 61 percent and Real Home Prices Have Risen in Most Markets Since more than doubled since, but still stand 22 percent below peak. 2000, But Especially in Highest-Cost Metros Bakersfield, Cape Coral, and Fresno underwent similarly severe cycles, leaving home prices at least 20 percent below peak. Home Price Index 180 Measured in real terms, home price increases since 2000 have been 170 especially steep in the nation’s 10 highest-cost metros (including 160 Boston, New York, San Francisco, and Seattle), where appreciation 150 was an astounding 67 percent (Figure 12). In contrast, prices in the 140 10 lowest-cost metros (including Dayton, El Paso, Memphis, and Syracuse) were up just 3 percent in real terms over this period. 130 120 Real home prices in non-metro areas also climbed by a relatively 110 strong 18 percent in 2000–2017. The largest increases were in the 100 non-metro areas of North Dakota (85 percent), Hawaii (69 percent), 90 Montana (52 percent), and South Dakota (45 percent). Moreover, in 19 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 of the 47 states with non-metro counties, home price appreciation in ● Highest-Cost Metros ● owest-Cost Metros ● Non-Metro Areas ● US Total those areas outpaced statewide increases. Over this period, non-metro home prices declined in only four states—Michigan (down 6 percent), Notes: Prices are adjusted for inﬂation using the CPI-U for all items less shelter. Non-metro prices are weighted averages of all state non-metro prices, with each state's value weighted by the share of detached single-family housing units in Ohio (6 percent), Connecticut (2 percent), and Indiana (2 percent). non-metro areas. Highest- (lowest-) cost metros are the 10 metros with the highest (lowest) median home values in 2017 from Zillow. Source: JCHS tabulations of the FHFA All-Transactions House Price Index.

GROWING CONCERNS ABOUT AFFORDABILITY Rising prices have made homes less affordable, particularly at the low end of the market. In 2017, real home prices for the lowest- cost homes (selling for 75 percent or less of the median sales price)

JOINT CENTER FOR HOUSING STUDIES OF HARVARD UNIVERSITY 11 were up 6.9 percent—more than twice the 3.3 percent increase in were below 3.0 in 25 metro areas last year, including Pittsburgh, prices for highest-cost homes (selling for at least 125 percent of the Rochester, Syracuse, Toledo, and Wichita. By comparison, nearly median). Between 2000 and 2017, real prices for the nation’s lowest- three-quarters of large metro areas had price-to-income ratios cost units soared nearly 80 percent, compared with 28 percent for below 3.0 in 1988, while only 14 metros had ratios over 4.0. highest-cost units.

The runup in prices is most dramatic in the neighborhoods of the THE OUTLOOK nation’s highest-cost metro areas. In markets where the median The housing sector faces significant challenges in the short term. home value was above $250,000 in 2017, home prices appreciated 69 Labor shortages, rising materials costs, limited land availability, and percent on average in lowest-cost neighborhoods and 45 percent in land-use regulations are all holding down growth in new residential highest-cost neighborhoods in 2012–2017. Although prices in these construction. Meanwhile, inventories of existing homes for sale are lowest-cost neighborhoods had dropped sharply after the housing at all-time lows, pushing up prices and making homebuying more crash, the real median home value ballooned from about $179,000 difficult, especially for low- and moderate-income households. in 2012 to $297,000 by the end of 2017. Over the medium and longer terms, however, demographic forces Meanwhile, increases in the median sales price of existing homes will support a pickup in housing construction. The latest Census have outstripped growth in median household income for six years. Bureau projections indicate that the population of 30–44 year olds, As a result, the price of a typical existing home sold in 2017 was the age group most likely to buy new homes, will increase by 8.5 more than four times the median income. Among the 100 largest million over the next decade. Of course, the housing preferences of metros, 33 had price-to-income ratios above 4.0, including five with millennials, as well as the decisions that baby boomers make about ratios above 8.0 (Figure 13). aging in place, will determine the types and locations of homes demanded. The critical question, however, is whether the home- Topping the list is San Jose, where the median sales price was building industry can supply, and local regulations allow, enough 10.0 times the median household income, followed closely by Los new housing to meet the need for homes affordable to a broad range Angeles (9.5 times), Honolulu (9.2 times), San Francisco (8.9 times), of households. and San Diego (8.1 times). On the flip side, price-to-income ratios

FIGURE 13

Median Home Prices in Most Western Metros Are Five Times Greater than Incomes

Home Price-to-Income Ratio ● Under 3.0 ● 3.0–3.9 ● 4.0–4.9 ● 5.0–7.9 ● 8.0 and Over

Note: Home prices are the median sale price of existing homes and incomes are the median household income within markets. Source: JCHS tabulations of NAR, Metropolitan Median Area Prices, and Moody’s Analytics Forecasts.

12 THE STATE OF THE NATION’S HOUSING 2018 3 DEMOGRAPHIC DRIVERS

With its oldest members now MILLENNIALS PROPPING UP HOUSEHOLD GROWTH The latest Census Bureau data point to moderate household growth in their late 20s and early 30s, in 2017. The Housing Vacancy Survey, the most consistent source of estimates, puts the increase at 930,000 households, in line with the millennial generation is growth in 2016 and well above the annual average in 2006–2011. All three major Census Bureau surveys show that household growth forming new households in has picked up over the past three years, with increases ranging greater numbers and moving from 800,000 to 1.1 million annually—above post-recession lows but short of the 1.35 million annual average in 2000–2006. to different states in search of The millennial generation is driving much of the rebound in house- opportunity. At the same time, hold growth, forming an average of 2.1 million net new households annually in 2012–2017. The acceleration of household growth largely nearly 10,000 baby boomers reflects the sheer number of millennials moving into the age groups turn 65 every day, raising the most likely to head their own households (Figure 14). For example, when members at the peak of this large generation were aged 20–24 average age of US households. in 2011, only one in four headed an independent household. At ages 25–29 in 2016, that share increased to 42 percent. By the time they Although wealth is growing, reach the ages of 30–34 in 2021, half of this group will likely head households. homeowners and those at the Even so, millennials are not forming households at the same rates top have captured most of the as past generations at the same ages. In fact, household headship gains, and millions of households rates among young adults are still declining, albeit more slowly than after the recession. Indeed, 26 percent of adults aged 25–34 have little or no wealth. Going were living with parents or other relatives in 2017, while 9 percent were doubling up with non-family members—both shares all-time forward, immigration will highs. Still, population growth among young adults has outweighed relatively low headship rates, lifting new household formations and become an increasingly large, overall household growth. albeit unpredictable, source of The aging of the US population has also boosted the number of population growth and therefore older households because the baby-boom generation is so much larger than the preceding generation. Eight years after the oldest housing demand. baby boomers hit 65, younger members of that generation are now turning 65 at a rate of 3.6 million a year. In the past 10 years alone, the number of older households grew by over 7 million, rising from one in five households to one in four. By 2035, one out of every three households will be at least 65 years old.

JOINT CENTER FOR HOUSING STUDIES OF HARVARD UNIVERSITY 13 FIGURE 1 Immigrants will become an even larger source of US population growth in the future as natural increase among the native- The Millennial Population Is Moving into the Ages When born population slows (Figure 15). Indeed, even given the Census They Are More Likely to Head Households Bureau’s new, lower projections of net immigration, the immigrant Population (Millions) Share Heading Households (Percent) share of population growth will increase from 42 percent in 2018 to 67 percent in 2040. As the foreign-born share of population growth 24 70 rises, so, too, will their share of household growth. 23 60

22 50 INCOMES RISING BUT DISPARITIES REMAIN 21 40 The recent acceleration in income growth is likely to increase hous- 20 30 ing demand because higher incomes enable individuals to form new households and existing households to buy homes or make 19 20 other housing-related purchases. Although flat at $25,300 in 2016, 18 10 real per capita incomes were up 6.5 percent over the previous two 17 0 years and 7.5 percent over the previous three. Per capita income 15–19 20–24 25–29 30–34 35–39 growth in 2013–2016 was especially strong among the age groups most likely to head new households, with median incomes up 12.0 percent among 25–34 year olds and up 11.5 percent among 35–44 ● 2011 ● 2016 ● Projected 2021 year olds (Figure 16). ● Headship Rate (Right scale) At last measure, real median household income grew 3.8 percent in Source: JCHS tabulations of US Census Bureau, Population Estimates and 2017 Population Projections. 2015–2016 to a record $59,000. Income gains across all age groups helped to offset previous declines, although to varying degrees. Increases among households in the 25–34 and 35–44 year-old age groups were especially large, boosting incomes 3–4 percent above THE IMPORTANCE OF IMMIGRATION TO HOUSING previous peaks. In contrast, median incomes of households aged As a major source of adult population growth, immigration has driv- 45–54 and 55–64 were only back to 2006 levels. en a significant share of US household growth over the past three decades. According to Census Bureau data, the number of foreign- Meanwhile, income growth among older households has been on a born households more than doubled from 7.7 million in 1990 to 17.8 steady upward trend. Between 2006 and 2016, the median income million in 2016, accounting for more than a third of the growth in for 65–74 year-old households rose 22 percent while that for the households over that time. American Community Survey estimates 75-and-over age group climbed 15 percent. Indeed, the real incomes show that the foreign-born share of household growth was even of households in these two older age groups were 38 percent and 32 higher in 2006–2016, at 41 percent. percent higher than those for same-age households in 1988.

Immigrants have a sizable presence in housing markets, making Despite substantial gains at the low end of the income spectrum, up 20 percent of renter households and 12 percent of homeowners. the gap between rich and poor has widened. Average incomes for While adding to housing demand during expansions, immigrants also households in the bottom income quintile rose sharply in 2015–2016 bolster demand during downturns. For example, 1.5 million foreign- but, at just $12,900 in inflation-adjusted terms, were still 5 percent born households joined the ranks of homeowners in 2006–2016, below the previous peak in 2006 and 9 percent below the level in offsetting the 1.1 million drop in native-born homeowners. Similarly, 2000. Meanwhile, average real incomes for households in the top immigrants buoyed the weak rental market in the late 1990s and quintile stood at $213,500 in 2016, up 7 percent from the previous early 2000s, adding 1.8 million new renter households at a time when peak and 8 percent from the level in 2000. As a result, the average About a Third of All Households in Most Large Metros Are Cost Burdened the number of native-born renters declined by 0.6 million. income of households in the top quintile was 16.6 times higher than the average income of households in the bottom quintile in 2016, Metro Area Households with Cost Burdens (Percent) Immigrants have also helped to stabilize both urban and rural com- compared with 14.0 times in 2000. munities that would have otherwise lost population. For example, Philadelphia is among the 47 metro areas where international immi- Black-white and Hispanic-white income gaps also remain sizable. gration fully offset domestic outmigration between 2010 and 2017. In 2016, the median income for black households ($39,000) was 40 Also during this period, 3.8 million international immigrants moved percent below the $65,000 median for white households, while that to the core counties of the nation’s largest metros, compared with a for Hispanic households ($47,800) was 27 percent below. These dis- 1.2 million net loss to domestic migration. Another 250,000 interna- parities are only slightly smaller than 30 years ago, when the black- tional migrants moved to rural counties, helping to replace some of white income gap was 44 percent and the Hispanic-white gap was the 800,000 residents lost to outmigration. 33 percent.

14 THE STATE OF THE NATION’S HOUSING 2018 INCREASING INEQUALITY OF WEALTH FIGURE 15 The 2016 Survey of Consumer Finances reports that real median household wealth rose 16 percent between 2013 and 2016, with With the Native-Born Population Increasing homeowners reaping most of the increase. Strong growth in home More Slowly, Immigration Will Be the Main Driver equity lifted the median wealth of homeowners from $201,600 to of Housing Demand $231,400, while the real median wealth of renter households dropped Population rowth (Millions) Share of Population rowth (Percent) from $5,600 to $5,000. With these changes, the median net wealth of homeowner households was 46 times that of renter households. Even 1.6 80 among renters in the top income quartile of all households, median 1.4 70 wealth ($116,900) was well below that of owners ($710,000). 1.2 60 1.0 50 In addition, the median wealth of white households in 2016 ($162,800) was ten times higher than that of black households 0.8 40 ($16,300) and eight times higher than that of Hispanic households 0.6 30 ($21,400). Low minority homeownership rates are a factor, but the 0.4 20 median net wealth of white homeowners was also roughly 2.5 times 0.2 10 that of black and Hispanic owners. Moreover, home equity makes 0.0 0 up a much larger share of household wealth for the average minority homeowner, accounting for 56 percent among blacks, 65 percent 20122011 20132014 2015 2016 2017 20252030 2035 2040 among Hispanics, and 49 percent among all other minorities. By ● Natural Increase ● Net International Immigration comparison, the share among white homeowners is just 38 percent. ● Immigrant Share of Population rowth (Right scale)

Despite recent gains, the net wealth of younger households remains Note: Natural increase is the number of births minus deaths in the resident population. well below historical levels. Indeed, the median wealth of 25–34 year Source: JCHS tabulations of US Census Bureau, Population Estimates and 2017 Population Projections. olds rose 19 percent in 2013–2016, to $17,600—still 39 percent lower than in 1995. Similarly, the median net wealth of 35–44 year olds was up by 23 percent, to $59,700, but still lagged the 1995 level by FIGURE 16 27 percent. Even among the 45–54 year-old age group, median net wealth of $124,040 was still 15 percent lower than in 1995. Higher Real Incomes Are Rising for All Age Groups, student loan debt and lower homeownership rates among house- But Most Rapidly for Younger Adults holds in these age groups account for much of these disparities. Median Income Per Capita (Thousands of 2016 dollars)

In sharp contrast, the median wealth of households age 65 and over 45 was $239,100 in 2016, fully 51 percent above the level in 1995. This 40 increase has occurred despite a 19 percentage-point jump in the share of older owners carrying mortgage debt over this period, to 41 35 percent. In addition, the median amount of mortgage debt among these older owners was $72,000, more than double the inflation- 30 adjusted average of $28,200 in 1995. 25

Notably, households in the top income quartile posted the larg- 20 est increase in net wealth in 2013–2016, up 28 percent to a record 15 high of $621,100. The median net wealth of households in the bot- 1996 1998 20022000 2004 2006 2008 2010 2012 2014 2016 tom income quartile, however, rose a modest 7 percent over this period to stand 43 percent below its 2007 peak. Indeed, top quartile ● 25–34 ● 35–44 ● 45–54 ● 55–64 ● 65 and Over households received outsized shares of the income and wealth Note: Incomes are adjusted for inﬂation using the CPI-U for all items and based on 3-year moving averages. generated by economic growth over the past three decades (Figure Source: JCHS tabulations of US Census Bureau, Current Population Surveys. 17). Measured from 1989, $50 trillion of the $54 trillion gains in real household net worth went to the top 20 percent of households, while some $23.6 trillion went to the wealthiest 1 percent. in the 1990s and early 2000s, the number of households with less than $20,000 in wealth jumped during the last recession from 30.8 million in 2007 to 37.6 million in 2010. In 2016, after several years GROWTH IN LOW-WEALTH HOUSEHOLDS of economic recovery, 38.5 million households (31 percent of house- With so much wealth accruing to so few, the number of US households) had net wealth of less than $20,000, and 14.4 million of this holds with little or no wealth is on the increase. After a modest rise group (11 percent of all households) had zero or negative wealth.

JOINT CENTER FOR HOUSING STUDIES OF HARVARD UNIVERSITY 15 Minorities made up half of the nation’s low-wealth households share of the nation’s poor people living in high-poverty neighbor- in 2016, up from 39 percent in 1995. They also accounted for hoods increased from 43 percent in 2000 to over half in 2016. The more than three-quarters of the growth in low-wealth households number of high-poverty census tracts in the United States also grew between 1995 and 2016. Indeed, as the number of minority house- 53 percent from 13,400 to 20,600 over this period. holds increased over this long span, the shares with low wealth remained consistently high at 52 percent for blacks, 49 percent Regardless of income, though, disproportionately large shares of for Hispanics, and 30 percent for Asians and other minorities. minorities live in high-poverty areas, including 51 percent of blacks Meanwhile, the share among whites also remained steady at a rela- and 44 percent of Hispanics. The shares for whites (17 percent) and tively low 22 percent. for the population as a whole (26 percent) are much more modest. After factoring in income, the share of the poor black population The numbers of working-aged households with little or no wealth living in high-poverty neighborhoods is 72 percent while that of the are rising, particularly among adults approaching retirement—the poor Hispanic population is 65 percent, compared with just 36 per- time of life when wealth traditionally peaks. The number of 45–54 cent of the poor white population. It is noteworthy, however, that the year olds with less than $20,000 in net wealth doubled from 3 mil- number of poor whites living in high-poverty neighborhoods rose 53 lion in 1995 to 6 million in 2016, while the number of 55–64 year percent in 2000–2016, outpacing increases among other groups. olds with low wealth climbed from 2 million to 5 million. While population growth within these age groups accounts for some of this increase, the likelihood of having low wealth also increased. For HISTORIC LOW IN RESIDENTIAL MOBILITY example, the share of low-wealth households aged 45–54 rose from The rate at which US households change residences has been 17 percent to 26 percent over this period, while that of households declining for many years. According to the Current Population aged 55–64 rose from 16 percent to 21 percent. Although the share Survey, 11 percent of the population in 2017 moved to different did not increase, population growth alone pushed up the number of homes within the preceding 12 months, down from 12 percent five low-wealth households age 65 and over from 10 million in 1995 to 15 years earlier and 13 percent in 2007. The American Community million in 2016. As younger cohorts move into this age group, how- Survey also reported a 2 percentage-point decline in the mobility ever, they will drive up both the number and share of retirement- rate from 2006 to 2016. age households with little financial cushion. Given that older adults are less likely to move than younger adults, With rising numbers of households with low incomes and little the overall aging of the population has played a role in this slow- wealth, more people are living in poverty. Between 2000 and 2016, down. But household mobility rates for all age groups have fallen the population with below-poverty-level incomes grew by 28 per- since 1996, with the largest decline among younger households cent (12.8 million). At the same time, the number of poor people (Figure 18). Indeed, the mobility rate for 20–24 year olds dropped living in high-poverty census tracts (with poverty rates of 20 percent from 34 percent in 1996 to 24 percent in 2017. Other declines range or higher) rose by 41 percent or some 10 million. As a result, the from 3 percentage points for households aged 30–34 to just 1 per-

FIGURE 17

Most Gains in Income and Wealth Over the Past Three Decades Have Gone to the Top Fifth of Households Share of Household Income ains in 1989–2016 Share of Household ealth ains in 1989–2016

2 6 2 6 1.7 11

61 20

● Top ● Upper-MiddleUpper-Middle ● MiddleMiddle ● ower-Middle-Middle ● BottomBottom

Notes: Quintiles are ﬁve equal groups of households ranked by income and wealth. Shares may not sum to 100% due to rounding. Source: JCHS tabulations of Federal Reserve Board, Surveys of Consumer Finances, and US Census Bureau, Current Population Surveys.

16 THE STATE OF THE NATION’S HOUSING 2018 FIGURE 18

Young Adults Are Far Less Likely to Move than in the Past Share of People that Moved in the Previous ear (Percent)

0 FIGURE D-1 20–24 25–29 30–34 35–39 40–4445–49 50–5455–59 60–64 65 and Over

● 1996 ● 2006 ● 2016

Note: Mobility rates are for all individuals at least a year old, living in households, and reporting a local, interstate, or international move. Source: JCHS tabulations of US Census Bureau, Current Population Surveys.

centage point for households 65 and over. But given the size of the of the 3.2 million drop in annual moves. Meanwhile, interstate 65-and-over age group, even this modest drop translates to signifi- migration—which has important impacts on housing demand in cantly fewer residential moves. markets that migrants both move to and leave—appears to have stabilized. Both the American Community Survey and the Current Although renters traditionally move more often than owners, their Population Survey report the share of people migrating between mobility rate has also dropped sharply, offsetting the impact of states in 2016 rate was roughly the same as in 2008. higher rentership rates. As a result, even though the number of people living in rental housing rose from 72.5 million in 1996 to Interstate migration has even picked up over the past several years 83.2 million in 2017, the number of renter-movers declined from in some areas, particularly in the West. For example, Washington 24.2 million to 17.9 million. The lower mobility rate among renters has attracted more residents from out of state and lost fewer to thus contributed 3.4 percentage points of the 5.3 percentage point other areas, lifting net domestic inflows from 14,000 in 2012 to decline in overall residential mobility. 64,600 in 2016. The annual net increase in Oregon also jumped from 11,700 to 38,000 over this period, due largely to in-migration from Several social, economic, and demographic trends may explain the other states. decline in residential mobility. The increased tendency for adult children to live with their parents, for example, results in lower Resuming past trends, total net domestic migration to the mobility rates not only for those young adults, but also for their par- Southeastern states of Florida, Georgia, and the Carolinas rebound- ents who might otherwise move to smaller homes or to retirement ed from a low of 86,000 in 2009 to 317,000 in 2017. Meanwhile, communities. Rising student loan debt may also play a role both by domestic outflows from the Northeast and Midwest continued to making it harder for young adults to afford to live independently increase in 2017. The three states with the largest net domestic and by making the transition from renting to owning more difficult. outflows—California, Illinois, and New York—lost 443,000 residents to domestic migration in 2017, more than double the 207,000 net In addition, lower-cost rentals are increasingly scarce in many areas, losses in 2011. making tenants reluctant to move even if the units are no longer suitable. Growth in two-earner households may also limit the ability Across age groups, interstate migration appears to have settled near or willingness to move. Finally, many of the growing number of older the lows reached in 2010, with slight increases among millennials households are staying in their homes longer than previous genera- and baby boomers. The rate of domestic migration among 25–34 tions at their ages, rather than downsizing or moving to rentals. year olds rose modestly from 3.7 percent in 2010 to 4.0 percent in 2016, lifting the number of state-to-state movers from 1.5 million to 1.7 million. The number of domestic migrants in the 65-and-over SPEEDUP IN DOMESTIC MIGRATION age group rose even more, from 390,000 to 600,000, not only because A slowdown in local moves drove almost all of the decline in resi- of strong population growth within this age group, but also because dential mobility between 2006 and 2016, accounting for 3.0 million of an increase in their rates of migration.

JOINT CENTER FOR HOUSING STUDIES OF HARVARD UNIVERSITY 17 A diverse group of states is gaining large numbers of millennials, is expected to increase from roughly half to two-thirds by 2040, including Colorado, Georgia, Maine, Minnesota, New Hampshire, due mainly to slower growth of the native-born population. Oregon, Texas, and Washington (Figure 19). Other states are draw- These projections assume average annual immigration of just ing individuals across the age spectrum, including Arizona, Florida, 1.04 million through 2035, on par with the pace in 2013–2016 but Idaho, Montana, Nevada, North Carolina, Tennessee, and Utah. significantly lower than the 1.32 million annual average from the Bureau’s previous projection. At the county level, recent flows of domestic migrants are in keeping with long-term trends of urbanization and suburbanization. As The latest JCHS household growth projections, which incorporate a group, core counties of large metros consistently lost domestic the Census Bureau’s new population projections and two more migrants on net from 2010 to 2017, as did non-metro (rural) coun- years of data, put the increase in households at 12.0 million in 2017– ties. At the same time, non-core counties of large metros, as well 2027, with a slowdown to 9.9 million in 2027–2037. These numbers as counties in medium-sized metros, continued to draw domestic are significantly lower than previously projected, not only because migrants on net. of lower expected immigration, but also because of higher expected mortality rates among the older native-born population. The largest reductions in projected growth are therefore among middle-aged THE OUTLOOK Hispanic households and older white households. Nevertheless, Although the pace of household growth in 2017 still lagged long- household growth of 1.2 million per year in 2017–2027 is in line with term average rates, the outlook remains largely positive. With the pace averaged over the last three years. incomes and wealth rising, the growth and aging of the US population is expected to drive up household growth and therefore the While future immigration levels remain uncertain, there is no doubt demand for housing. Assuming that the current economic expan- that the number of older adults will reach an unprecedented high sion continues, state-to-state migration should increase further, over the next two decades. With this growth will come different bringing new housing demand to different parts of the country. demands, challenges, and stresses on the housing stock. It is equally certain that millennials—the largest and most diverse, but also so However, future population growth—and therefore the outlook far the least mobile, lowest-wealth, and least likely to own genera- for housing demand—depends largely on the pace of immigration ever—will have a growing impact on both the rental and entry- tion. According to the Census Bureau’s latest population projec- level homeownership markets over the next decade. tions, immigration’s contribution to annual population growth

FIGURE 19

States in the Sunbelt and Paciﬁc Northwest Are Attracting Millennials from Other Parts of the Country

Average Annual Net Domestic Migration of 26–34 Year Olds, 2012–2016 ● Inflow of 5,000 or More (Up to 36,600) ● Inflow of Less than 5,000 ● No Change (+/- 500) ● Outflow of Less than 5,000 ● Outflow of 5,000 or More (Up to 33,900)

Note: The 2012–2016 average excludes 2015 due to data quality issues. Source: JCHS tabulations of Internal Revenue Service, Statistics of Income Migration Data.

18 THE STATE OF THE NATION’S HOUSING 2018 4 HOMEOWNERSHIP

The national homeownership rate HOMEOWNERSHIP AT A TURNING POINT After more than a decade of decline, the national homeownership ticked up in 2017 for the first time rate reached a floor in the second quarter of 2016 (Figure 20). From a 50-year low of 62.9 percent, the rate moved up to 64.2 percent by in 13 years, buoyed by growth the fourth quarter of 2017—in line with rates in the late 1980s and mid-1990s—and held there through the first quarter of 2018. While in the number of homeowner it is too early to tell if this marks the beginning of a significant households. Despite the ongoing rebound, the recent upturn suggests that the homeownership rate has at least stabilized. rise in home prices, low interest A jump in the number of homeowners drove the increase. After rates have helped to keep declining by an average of 154,000 households annually from 2007 to 2015, the number of homeowners rose by 320,000 in 2016 and monthly housing costs relatively then soared to 1.1 million in 2017—the first year since 2005 that affordable for new homeowners. annual growth exceeded the 1.0 million mark. As a result, the total number of homeowner households hit an all-time high of 76.2 mil- Still, the upward climb of interest lion last year. rates, limited inventory of homes The shrinking foreclosure inventory explains part of the stabiliza- tion in homeownership. According to Mortgage Bankers Association for sale, widespread increases in data, the share of loans in foreclosure peaked in the fourth quarter of 2010 at 4.6 percent (2.0 million). At the end of 2017, that share student loan debt, and insufficient had retreated to just 1.2 percent (461,300), in line with pre-crash savings for downpayments raise levels. Meanwhile, CoreLogic reports that the share of mortgaged residential properties with negative equity had receded to 4.9 per- important concerns about the cent at the end of last year, down sharply from 26.0 percent at the end of 2009. ability of many potential buyers to access homeownership. LONG-TERM HOMEOWNERSHIP TRENDS While most demographic groups shared in the recent gains, homeownership trends by race/ethnicity and age have diverged sharply over the past 30 years. The homeownership rate among Asians increased 7.1 percentage points between 1987 and 2017, to 55.8 percent, the rate for Hispanics increased 5.7 percentage points, to 46.2 percent, and the rate for whites increased 3.6 percentage points, to 72.3 percent.

In contrast, black households lost ground over this period, with their homeownership rate of 43.1 percent in 2017 standing 2.7 percentage

JOINT CENTER FOR HOUSING STUDIES OF HARVARD UNIVERSITY 19 FIGURE 20

After Years of Decline, the Homeownership Rate Has Turned Up Households (Millions) Homeownership Rate (Percent)

80 72 76 71 72 70 68 69 64 68 60 67 56 66 52 65 48 64 44 63 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017

● Homeowners ● Homeownership Rate (Right scale)

Notes: Data are 4-quarter moving averages through the ﬁrst quarter of 2018. Break in the homeowner series in 2001–2002 is due to rebenchmarking. Source: JCHS tabulations of US Census Bureau, Housing Vacancy Surveys.

points below the 1987 level. Moreover, the black homeownership age groups over 45 were higher (Figure 21). The fastest growth has rate is also 6.6 percentage points below its mid-2000s peak, consid- been among households in their pre-retirement years (50s and 60s). erably more than the 5.0 percentage point difference for Asians, 3.4 Between 1990 and 2016, the aging of the baby boomers pushed up percentage point difference for Hispanics, and 3.7 percentage point the number of homeowners in their 50s by 75 percent and the num- difference for whites. Taken together, these trends mean that while ber in their 60s by 63 percent. In combination with lower homeown- the Hispanic-white and Asian-white homeownership gaps have nar- ership rates among younger households, these trends mean that the rowed somewhat over the past three decades, the black-white gap share of homeowners aged 65 and over increased from one in four has widened substantially. in 1990 to one in three in 2016.

Meanwhile, households age 65 and over are the only age group that A 2014 AARP survey indicates that 88 percent of today’s age 65 had higher homeownership rates in 2017 than in 1987, with a gain of and over adults want to remain in their homes as they age. The 3.3 percentage points bumping their rate up to 78.7 percent. Indeed, growing number and share of older homeowners are therefore the fact that the national rate is now within 0.1 percentage point of likely to have at least two important consequences for the housing its 1987 level reflects the surge in the number of older homeowners. market. First, assuming that the baby boomers follow through on Homeownership rates for all other age groups fell markedly over their intentions to age in place, the inventory of houses for sale this period. The rate for 35–44 year olds dropped the most, down 8.3 will depend even more heavily on additions to supply over the percentage points to 59.0 percent. The rate for 25–34 year olds also next two decades. Second, aging-related difficulty with activities of stood at only 39.2 percent last year—well below the 45.5 percent daily living may prompt many older homeowners to modify their posted 30 years earlier. However, these younger households saw a homes to improve accessibility, generating sizable growth in the 0.6 percentage point increase in 2017— the largest homeownership remodeling market. gain of any age group. In addition to being older, US homeowners are also more diverse. Between 1990 and 2016, the share of white owners fell from 86.4 CHANGING HOMEOWNER DEMOGRAPHICS percent to 76.7 percent. Over this period, the number of Asian Like the US population overall, homeowners are aging. JCHS analy- owners rose roughly 250 percent (3.3 million) and the number of sis of Decennial Census and American Community Survey data Hispanic owners rose nearly 200 percent (4.6 million). The number shows that the median age of homeowners increased from 50 in of black homeowners increased by a much more modest 39 percent 1990 to 56 in 2016, while that of all households rose from 45 to 52. (1.6 million), but still outpaced the 13 percent increase in white Strikingly, the numbers of homeowners in all five-year age groups homeowners (6.7 million). Hispanic households thus accounted for under 45 were lower in 2016 than in 1990, while the numbers in all 28 percent of homeowner growth in 1990–2016, Asians for 20 per-

20 THE STATE OF THE NATION’S HOUSING 2018 FIGURE 20 FIGURE 21

After Years of Decline, the Homeownership Rate Has Turned Up With the Aging of the Baby Boomers, Homeowners Are Much Older Today than in 1990 Households (Millions) Homeownership Rate (Percent) Homeowner Households (Millions)

80 72 10 76 71 9 72 70 8 68 69 7 6 64 68 5 60 67 4 66 56 3 52 65 2 48 64 1 44 63 0 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 Under 25 25–29 30–34 35–39 40–44 45–49 50–54 55–59 60–64 65–69 70–74 75–79 80–84 85 and Over ● Homeowners ● Homeownership Rate (Right scale) ● 1990 ● 2016 Notes: Data are 4-quarter moving averages through the ﬁrst quarter of 2018. Break in the homeowner series in 2001–2002 is due to rebenchmarking. Source: JCHS tabulations of US Census Bureau, Housing Vacancy Surveys. Source: JCHS tabulations of US Census Bureau, 1990 Decennial Census and 2016 American Community Survey 1-Year Estimates.

Please edit notes in Exhibit note master cent, and blacks for 10 percent. Although their numbers are rising prices, last year’s increase pushed up monthly payments on the much more slowly, white households still contributed 41 percent of median-priced home by about $100 in 2016–2017. If interest rates the total growth in homeowners between 1990 and 2016. rise by a full percentage point over the course of 2018, to 4.99 percent, monthly payments would increase by $142, to $1,761, even if A growing number and share of homes are owned by immi- home prices stay constant. But if interest rates climb to 4.99 percent grants. Indeed, the number of foreign-born homeowners more and home prices also rise at the same rate as in 2017, the median than doubled to 9.1 million in 1990–2016. As a result, the share monthly mortgage payment would increase by $220, to $1,839. of homeowners born outside the US jumped from 7 percent to 12 percent. The 5.0 million foreign-born homeowners added over this While still relatively affordable in the nation as a whole, homeown- period accounted for nearly a third (31 percent) of total homeowner ership in some metros remains far out of reach for the typical house- growth, underscoring the important role that immigration plays in hold (Figure 23). In the high-cost Los Angeles market, for example, the homeownership market. a household with the area median income would be able to afford the monthly mortgage payments on only 11 percent of recently sold homes. And because these homes include studio apartments and RISING PRICES BUT RELATIVE AFFORDABILITY other small units suitable for only one or two people, the affordable Continuing a steady upward climb, the nominal median sales price options for families are even more limited. By contrast, even a low- of existing homes increased from $233,800 in 2016 to $247,200 income (bottom-quartile) household in Pittsburgh would be able to in 2017. Although higher prices mean larger downpayments, the afford 26 percent of recently sold homes. Such dramatic differences recent uptick in incomes and persistently low interest rates have in affordability contribute to large disparities in homeownership kept monthly payments affordable (Figure 22). In fact, the monthly across metro areas. Of the nation’s 50 largest metros, Pittsburgh has payment for the median single-family home purchased in 2017, the highest homeownership rate of 70 percent, while Los Angeles assuming a 30-year loan with a 3.5 percent downpayment at the has the lowest rate of 48 percent. average interest rate, totaled $1,620 in real terms—slightly below the $1,650 averaged in the 30 years from 1987 to 2016, but more than $900 below the real median in 1981 when interest rates were SHRINKING OPPORTUNITIES TO REFINANCE at an all-time high. The drop in mortgage interest rates from above 10 percent in 1988 to below 4 percent in 2012 provided a strong incentive for homeowners However, interest rates on 30-year loans are on the rise, moving to lower their long-term housing costs by refinancing. For example, up from 3.65 percent on average in 2016 to 3.99 percent in 2017, a homebuyer who purchased a median-priced home in 2002 with a and then to 4.47 percent in April 2018. In combination with higher 30-year mortgage, an interest rate of 6.54 percent, and a downpay-

JOINT CENTER FOR HOUSING STUDIES OF HARVARD UNIVERSITY 21 ment of 3.5 percent, would have had a monthly mortgage payment FIGURE 22 of $1,769. Refinancing in 2012 at the average interest rate of 3.66 Low Interest Rates Have Offset Rising Prices, percent, however, would have reduced that payment to $1,332 Keeping Monthly Costs Down assuming a 20-year fixed-rate mortgage or to $1,098 assuming a Index 30-year loan. As a result of this refinancing opportunity, only 15 percent of homeowners in 2016 held mortgages originated in 2007 or 160 earlier, and many of those with older loans had only small balances 140 or already had low interest rates.

120 But not all potential refinancers were able to take advantage of 100 historically low interest rates. Whether because of negative equity, lack of knowledge of refinancing options, or other barriers, nearly 80 3.3 million (5 percent) of homeowners in 2016 still had pre-2008 60 loans with interest rates of at least 5 percent and balances of at 40 least $50,000. According to JCHS analysis of the Survey of Consumer Finances, this group includes 9 percent of black homeowners, 7 20 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 percent of Hispanic homeowners, and 6 percent of Asian homeowners, compared with just 3 percent of white homeowners. Moreover, ● Median House Price ● Median Household Income another 8 percent of homeowners in 2016 had mortgages originated ● Monthly Homeowner Costs ● Interest Rate in 2008 or later with interest rates of at least 5 percent and balances of at least $50,000. Notes: House prices, household income, and monthly homeowner costs are adjusted for inﬂation using the CPI-U for all items less shelter. Monthly homeowner costs assume a 3.5% downpayment on a median-priced, existing single-family home (including condos and co-ops) with property taxes of 1.15%, property insurance of 0.35%, and mortgage insurance of 0.85%. For both groups of homeowners with relatively high-rate loans, Sources: JCHS tabulations of NAR, Existing Home Sales; US Census Bureau, American Community Surveys; Moody’s Analytics Forecasts; Freddie Mac, Primary Mortgage Market Survey (PMMS). the window to secure a lower-cost mortgage is closing. As noted earlier, the average interest rate charged on a 30-year fixed-rate

FIGURE 23

The Affordability of Monthly Homeowner Payments Varies Widely Across Metros

Share of Recently Sold Homes Affordable to Median-Income Households (Percent) ● 75–100 ● 50–74 ● 25–49 ● 0–24

Notes: Median incomes are estimated at the core-based statistical area (CBSA) level. Recently sold homes are deﬁned as homes with owners that moved within the 12 months prior to the survey date. Monthly payments assume a 3.5% downpayment and property taxes of 1.15%, property insurance of 0.35%, and mortgage insurance of 0.85%. Affordable payments are deﬁned as requiring less than 31% of monthly household income. Only CBSAs with at least 30 home sales in the past year are shown. Source: JCHS tabulations of US Census Bureau, 2016 American Community Survey 1-Year Estimates, and Freddie Mac, PMMS.

22 THE STATE OF THE NATION’S HOUSING 2018 FIGURE 2

FHA and VA Shares Remain Stable as Purchase Originations Increase Share of First-ien Purchase Originations (Percent) Number (Millions)

100 5.0 90 4.5 80 4.0 70 3.5 60 3.0 50 2.5 40 2.0 30 1.5 20 1.0 10 0.5 0 0.0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

● Conventional ● FHA ● VA ● Other ● Total Originations (Right scale)

Notes: Conventional includes loans that are not guaranteed or insured by FHA, VA, or another government agency. Many of these loans meet the standards for purchase on the secondary market by Fannie Mae or Freddie Mac. Other includes Farm Service Agency, Rural Housing Service, and manufactured housing loans. Source: JCHS tabulations of Home Mortgage Disclosure Act data.

loan hit 4.47 percent in April 2018 and is likely to move higher if the 2010 to just 1.4 percent in 2017, according to the Mortgage Bankers economy remains strong enough for the Federal Reserve to carry Association National Delinquency Survey. This is approaching the out its expected rate hikes. 0.8 percent share averaged in 2000–2002. Moreover, the number of foreclosure starts stood at 93,000 in the fourth quarter of 2017, even At the same time, it is important to note that some 28 percent of lower than the 135,000 averaged in 2000–2002. homeowners had mortgages with fixed interest rates of 4 percent or lower in 2016. To the extent that interest rates increase significant- The FHA and VA shares of home purchase loan originations have ly, this group may have an incentive to stay in their current homes, also leveled out in recent years following a significant jump during further limiting the for-sale housing inventory. the foreclosure crisis (Figure 24). Indeed, even as the number of 1–4 unit, first-lien, owner-occupied mortgage originations rose from 2.7 million in 2013 to 3.5 million in 2016, the FHA share remained near STABLE BUT TIGHT CREDIT CONDITIONS 20–25 percent. While down sharply from the high of 41 percent in Even as home prices and home purchase loan originations have 2009, the FHA share is still well above the 6 percent low in 2005. risen, the credit environment for potential homebuyers has been The VA share held at 10 percent in 2016, up from 2 percent in 2005. essentially unchanged over the past four years. The Federal Reserve Meanwhile, the conventional share of originations stayed close to Bank of New York reports that the median credit score for new 60 percent. mortgage originations was 755 in the fourth quarter of 2017, and has remained between 750 and 765 since late 2013. However, this range is significantly higher than the 720 averaged in 1999–2006. The 10th FINANCIAL OBSTACLES TO HOMEOWNERSHIP percentile credit score was 645, and has held within the 640–660 Since the housing crash of the mid-2000s, much debate has focused range since 2013. In addition, the National Association of Realtors on whether US households have lost their appetite for homeowner- indicates that the median downpayment stayed at 10 percent of the ship. However, survey evidence points to continued strong interest purchase price over this period, with the median amount paid by in homeowning. The 2018 Survey of Consumer Expectations found first-time buyers closer to 5 percent. that 67 percent of renters would prefer or strongly prefer to own homes assuming they had the financial resources to do so. Only The current credit environment reflects changes in the lending stan- 19 percent would prefer or strongly prefer to rent. Moreover, 61 dards imposed after the foreclosure crisis. These stricter standards percent of renters think buying a home in their ZIP code today is a have helped to reduce the share of outstanding mortgage loans somewhat or very good investment, and just 12 percent believe it is that are 90 or more days delinquent from a high of 4.5 percent in a somewhat or very bad investment.

JOINT CENTER FOR HOUSING STUDIES OF HARVARD UNIVERSITY 23 FIGURE 25

Growing Shares of All Households Face Larger Amounts of Student Loan Debt Share of Households with Student oan Debt (Percent)

50 45 40 35 30 25 20 15 10 5 0 1995 2016 1995 2016 1995 2016 1995 2016 1995 2016 44

● ess than $10,000 ● $10,000–24,999 ● $25,000–49,999 ● $50,000 and Over

Note: Dollar values are adjusted for inﬂation using the CPI-U for all items. Source: JCHS tabulations of Federal Reserve Board, Survey of Consumer Finances.

But many potential homebuyers think they will face financial and other THE OUTLOOK barriers to homeownership. The same survey indicates that 68 percent Sustained growth in the economy has shrunk the foreclosure back- of renter respondents believe it would be very or somewhat difficult log and bolstered demand for homeownership in recent years, halt- to obtain a home mortgage due to their credit histories. In contrast, 17 ing the slide in the national homeownership rate. However, with percent think it would be very or somewhat easy to qualify for a loan. the economic expansion now in its tenth year, continued growth is not assured. Even if they can secure a mortgage, renters must also be able to afford the downpayment and closing costs. The Survey of Consumer While the aging of the millennial generation will lift the number Finances shows that the median net worth of renters was just of households in the prime homebuying years of 25–34 over the $5,000 in 2016, about the same in real terms as in both 1995 and next decade, a number of conditions—including rising home prices, 2007. Moreover, fewer than one in three renters had more than affordability challenges, and the limited inventory of homes for $10,000 in financial assets, and only 21 percent had more than sale—currently constrain access to homeownership. Additional $25,000. As a result, only a small share would be able to cover even a interest rate increases would only worsen the affordability pres- 3.5 percent downpayment and 2 percent closing costs on a median- sures facing potential homebuyers. priced home, which amounted to $13,596 in 2016. Political uncertainty also clouds the outlook for homeownership. Student loan debt may also prevent many would-be buyers from Following the recent tax bill, the Joint Committee on Taxation purchasing homes. The share of US households with outstanding projected that the number of filers claiming the mortgage interest student loans nearly doubled from 12 percent in 1995 to 22 per- deduction will decline by more than half, from 32.3 million in 2017 cent in 2016 (Figure 25). The increase among renters aged 20–39 to 13.8 million in 2018. Similarly, the number of filers who item- was particularly sharp, with a jump from 24 percent to 42 percent. ize is projected to fall from 46.5 million to 18.0 million, primar- Moreover, the amount of debt they carry has also soared, with 18 ily due to the increase in the standard deduction. While reduced percent of renters in that age group owing $25,000 or more and deductibility of mortgage interest and property tax payments may 9 percent owing $50,000 or more. The median young renter with erode some of the incentive for homeownership, particularly in student debt thus faced a monthly payment of $170 in 2016, but areas with high home prices and high property tax rates, the full 15 percent had monthly payments exceeding $500. For potential implications for home prices and demand will be unknown for homebuyers, these payments can limit their ability to save for a some time. In addition, proposals to modernize the Community downpayment, reduce their purchasing power if their total debt- Reinvestment Act, recent efforts to revise Dodd-Frank regulations, to-income ratios exceed lender limits, and impair access to credit if and the prospect of GSE reform bring even more uncertainty to the they are delinquent. housing finance system.

24 THE STATE OF THE NATION’S HOUSING 2018 5 RENTAL HOUSING

There are signs that the rental SLOWDOWN IN RENTAL DEMAND As measured by the Housing Vacancy Survey, the number of renter market is cooling, although households declined in the second half of 2017, producing a net loss for the year of more than 180,000 households and marking primarily at the upper end. The the first period of contraction since 2004 (Figure 26). While their precise estimates differ, the latest American Community Survey number of multifamily starts and Current Population Survey also show a substantial slowdown declined slightly over the past in renter growth. year, and expanding supplies of This signals a noteworthy shift away from strong growth in renting. The share of US households that rent their housing fell slightly from new luxury apartments pushed 36.6 percent in 2016 to 36.1 percent in 2017, and the first-quarter estimate for 2018 suggests that the decline continued. The largest up vacancy rates, helping to drop was among households under age 35. Indeed, the number of slow rent growth. Although younger renter households fell by 224,000, reducing the renter share in this age group by 0.8 percentage point, to 64.7 percent. The renter the number of high-income share of households between the ages of 35 and 64 also decreased slightly last year. Meanwhile, the renter share of households age 65 renters is still growing, lower and over did not change, but their numbers climbed by 230,000 last year as growth in the older population picked up steam. rentership rates among key Changes in rentership rates also differ across household types. The groups—particularly younger renter share of married-couple households held steady at about 20 households—may indicate a percent in 2017—up from 16 percent a decade ago though still below the 21 percent rate averaged in the 1980s and early 1990s. Renter turn toward homeownership. shares of unrelated adults living together also remained at nearly 62 percent last year, significantly higher than in 2005 when the rate Meanwhile, the supply of rentals bottomed out at 57 percent. affordable to the nation’s lowest- The share of single-person households that rent their housing was also unchanged last year, although their overall numbers increased. income households continues The renter share of women under age 35 living alone, however, fell to shrink. by more than 2 percentage points to 80.5 percent. In addition, the renter share of “other family” households (family members with no spouse present) slipped more than a percentage point to 50.6 percent.

While stable in most of the 75 metro areas surveyed by the Census Bureau, renter shares in several of the more affordable markets of the South fell in 2016–2017, including the Columbia (SC), Nashville,

JOINT CENTER FOR HOUSING STUDIES OF HARVARD UNIVERSITY 25 and Virginia Beach metros. Meanwhile, rentership rates in most census tracts of metro areas in 2016—up from just 4.5 million in large, high-cost metros such as Miami, New York City, and San 2000. With this increase, the number of low-income renters living in Francisco remained elevated, with no sign of significant change. the these tracts exceeds the 6.3 million living in the highest-density tracts. Meanwhile, nearly half (48 percent) of the more than 5 million renters living in micropolitan and rural areas also had incomes INCOMES STILL LOW DESPITE GROWTH IN under $25,000 in 2016. HIGHER-INCOME RENTERS The number of higher-income renter households grew again in As the real cost of housing continues to climb, renters increasingly 2017. The number of renters with incomes above $100,000 rose double up with relatives or friends to make ends meet. According nearly 5 percent last year, bringing the cumulative increase in to Current Population Survey data, the share of renter households 2012–2017 to about 2.6 million. Growth among households earning composed of unmarried adults living together (related or otherwise) between $50,000 and $99,999 was similarly strong. Meanwhile, rent- rose from 14 percent in 1987 to 20 percent in 2017. The number of ership rates for both of these income groups hit all-time highs of 19 these households doubled from 4.6 million to 9.2 million over this percent and 33 percent, respectively, last year. period, with an average of 1.8 working adults per household. Some 14 percent of these households now include three or more working But even though higher-income households accounted for the vast adults, up from 11 percent in 1987. majority of renter growth over the past five years, renters overall still have disproportionately low incomes. Fully two-thirds of renter households earned less than $60,000 in real terms in 2017, and CONCENTRATION OF THE NEW RENTAL SUPPLY about one-third earned less than $25,000—slightly below the 36 Although conversions of single-family homes added significantly to percent share averaged in the 1980s and 1990s. By comparison, only the rental stock right after the housing crash, multifamily construc- 41 percent of owners earned less than $60,000 last year, and 14 per- tion ramped up quickly to become the main source of additional cent earned less than $25,000. Of all households earning less than supply. Indeed, the number of multifamily units now under con- $25,000, fully 56 percent rent their homes. This share is well above struction is at a high not seen since the early 1970s. Of the 378,000 the low of 51 percent posted in 2005 and on par with the average new rental units completed in 2017, some 336,000 were in multi- posted in the late 1980s and early 1990s. family buildings and about 42,000 were single-family homes built for the rental market. At 11 percent, the single-family share of new While low-income renter households live in communities of all rentals is about twice the 5 percent share reported in 1988. types, they increasingly reside in suburban locations. According to the latest five-year American Community Survey, 7.0 million rent- According to the Survey of Market Absorption, 97 percent of newly ers with incomes under $25,000 lived in moderate- and low-density completed market-rate apartments (255,600 units) were located in metropolitan areas in 2016, and nearly two-thirds of those units were in the principal cities of those areas. The recent building cycle increased the geographic concentration of multifamily rental construction, with the share of multifamily permits issued in core counties of large metros increasing from 43 percent on average FIGURE 26 in 1980–2009 to 53 percent in 2010–2017. Between 2016 and 2017, Renter Household Growth Is Slowing however, permitting was up only 2 percent in core counties of large metros and declined slightly in the non-core counties of those same Households (Millions) Percent metros. In contrast, multifamily permitting in smaller metro and 2.0 38 non-metro areas was up 4 percent.

1.5 34 New multifamily apartments are increasingly likely to be in large buildings with many amenities. The Survey of Construction indi- 1.0 30 cates that nearly half of the rentals completed in 2016 were in buildings with 50 or more units, compared with just 13 percent in 0.5 26 1999. Most other new units were in buildings with at least five apartments. In addition, 86 percent of new apartments in 2016 were in 0.0 22 properties with swimming pools, up from 69 percent in 1990. Some 29 percent from $1,090 in 2012 to $1,408 in 2016, and then rose 89 percent of new units in 2016 also had in-unit laundry services, by 10 percent to $1,550 in 2017. Asking rents were highest in the -0.5 18 significantly higher than the 61 percent share of existing units with Northeast, where 45 percent of new units were priced at or above 2001 2003 2005 2007 2009 2011 2013 2015 2017 this amenity. $2,450 in 2016 (Figure 27). In the West, 19 percent of new units were ● rowth in Renter Households ● Rentership Rate (Right scale) also priced at the high end. In contrast, more than a third of new Both rising construction costs and added amenities have pushed up units in the South and two-thirds of new units in the Midwest had Source: JCHS tabulations of US Census Bureau, Housing Vacancy Surveys. asking rents. The nominal asking rent for new apartments increased asking rents under $1,250 per month. Even in these areas, however,

26 THE STATE OF THE NATION’S HOUSING 2018 average rents for new units in certain major metros (including FIGURE 27 Chicago, Miami, and Washington, DC) were $2,000 or higher. New Rental Construction in the Northeast and West Remains Concentrated at the Upper End EASING AT THE HIGH END Share of Apartments Completed in 2016 (Percent) The national vacancy rate for all rental units averaged 7.2 percent in 100 the year ending in the first quarter of 2018, up 0.3 percentage point 90 from a year earlier. But the rate for rental units built since 2010, as 80 measured by the Housing Vacancy Survey, hit 21 percent in 2017. 70 While not unprecedented compared with the rates for similarly new 60 units in 2007 and 2008, this high vacancy rate far exceeds the 15 50 percent reported a year earlier. 40 30 Evidence from the Survey of Market Absorption supports this soft- 20 ening in the market, with the share of new units rented within six 10 months shrinking from 82 percent on average in 2013–2014 to just 0 76 percent in 2017. The share of new apartments rented within three Northeast est South Midwest United States months dropped even further, from 63 percent to 55 percent—only slightly above absorption rates at the depth of the Great Recession. ● Under $850 ● $850–1,249 ● $1,250–1,849 ● $1,850–2,449 ● $2,450 and Over The vacancy rate for professionally managed apartments averaged Note: Data include privately ﬁnanced, unsubsidized, unfurnished rental apartments in buildings with ﬁve units or more. 4.8 percent in the year ending in the first quarter of 2018, essen- Source: JCHS tabulations of US Census Bureau, Survey of Market Absorption. tially unchanged from a year earlier. However, in about half of the 150 markets it tracks, RealPage reports higher first-quarter vacancy rates in the Class A segment, which includes new and other high- FIGURE 28 quality units. Metros with the largest increases in Class A vacancies were primarily in the Midwest and South, including Cincinnati, Rent Increases Continue to Moderate Chicago, Indianapolis, Milwaukee, and Nashville. But several met- Annual Change (Percent) ros in the West—such as Albuquerque, Honolulu, and Seattle—also FIGURE RM-1 6 posted higher Class A vacancy rates. Half of the same 150 markets also saw rising vacancies in the Class B segment, while 40 percent 5 reported increases in the Class C segment.

4 Nevertheless, rental markets remain extremely tight at the lower 3 end. At just 4.4 percent on average over the past four quarters, vacancy rates in the Class C segment remain lower than in any year 2 since 2001. Indeed, in 45 of the 150 markets tracked by RealPage, Class C vacancy rates were at or below 3.0 percent in early 2018. In 1 addition, Housing Vacancy Survey data indicate that the vacancy 0 rate for all multifamily and single-family rentals priced under $600 2011 2012 2013 2014 2015 2016 2017 2018 declined again to 6.8 percent in 2017, while that for units priced above $1,000 increased slightly to 7.5 percent. ● Rents for Single-Family Homes ● Rents for Professionally Managed Apartments ● Rent Index for Primary Residence

Note: The 2018 change in single-family rents is based on ﬁrst quarter data only. COOLDOWN IN RENT GROWTH Source: JCHS tabulations of US Bureau of Labor Statistics, RealPage, and CoreLogic data. The Consumer Price Index for rent of primary residence posted a year-over-year increase of 3.7 percent in April 2018 (Figure 28). While still rapid, this marks a slight deceleration from 3.9 percent 29 percent from $1,090 in 2012 to $1,408 in 2016, and then rose in late 2007. With rental completions slightly outpacing demand, by 10 percent to $1,550 in 2017. Asking rents were highest in the rent growth for professionally managed apartments also slowed Northeast, where 45 percent of new units were priced at or above from 2.8 percent in the first quarter of 2017 to 2.6 percent in the first $2,450 in 2016 (Figure 27). In the West, 19 percent of new units were quarter of 2018. Rents were up the most in the West (3.4 percent), also priced at the high end. In contrast, more than a third of new essentially matched the general inflation rate in the Midwest and units in the South and two-thirds of new units in the Midwest had South (2.1 and 2.3 percent, respectively), and rose the least in the asking rents under $1,250 per month. Even in these areas, however, Northeast (1.8 percent).

JOINT CENTER FOR HOUSING STUDIES OF HARVARD UNIVERSITY 27 Among the 150 apartment markets tracked by RealPage, eight units were affordable and available in 2016—a nationwide shortfall ment property prices rose at an 11 percent annual rate in the first reported a year-over-year decline in nominal rents in the first of more than 7.2 million units (Figure 29). Conditions for very low- quarter of 2018—little changed from the 12 percent rate averaged quarter of 2018. Increases in another 59 (including Miami, New income renter households were little better, with 56 affordable and in 2014–2017. As a result, apartment prices now stand 30 percent York, Philadelphia, Portland, San Francisco, and Washington, DC) available rentals per 100 households. above the mid-2000s peak in real terms. were under the 2.2 percent rate of general inflation. As might be expected, rent growth was generally slowest in markets where According to the same study, extremely low-income renters far At the same time, slowing rent growth and rising vacancy rates new apartments outnumbered new renters on net, such as Austin, outnumber the units they can afford in all of the nation’s 50 in high-end rentals have helped to reduce apartment property Dallas, Nashville, Raleigh, and Seattle. In contrast, nominal rents largest metros. The lack of housing is most acute in the Western pricing in certain submarkets. Real prices were down 4 percent in in a few large markets—including Jacksonville, Las Vegas, Orlando, and Southern metros of Dallas, Houston, Las Vegas, Los Angeles, Palm Beach County, 5 percent in Manhattan, and 8 percent in San and Sacramento—were rising at more than a 5 percent annual rate Orlando, and Sacramento, where fewer than 20 affordable units Francisco proper in the first quarter of 2018 from a year earlier. Real in early 2018. Reno and Santa Rosa were at the top of the list with were available for every 100 lowest-income households in 2016. But price declines in the 0.5–1.5 percent range also occurred in Chicago, rent growth approaching 10 percent. even in metros with larger supplies of affordable housing, the short- Jacksonville, parts of downtown Los Angeles, and the San Francisco fall is severe. For example, three of the 50 largest metros—Boston, metro area as a whole. CoreLogic data indicate that rent increases for single-family homes Louisville, and Providence—had no more than 47 units available for also slowed from 4.0 percent in early 2016 to 2.6 percent in January every 100 extremely low-income renter households. Nevertheless, prices continued to rise sharply for certain types of 2017, and held at or below 2.8 percent through February 2018. Single- properties (Figure 31). For the first time in five years, the largest family homes remain an important niche in the rental market, Ongoing losses of low-cost units have fueled this scarcity. According price increases for multifamily properties in 2017 were in neighbor- typically offering a more suburban environment and lower rents per to Census Bureau data, more than 2.5 million units priced below hoods characterized as “car-dependent” suburbs (up 8.6 percent), square foot than apartments in multifamily buildings. After several $800 in real terms—affordable to households earning up to $32,000 and “somewhat walkable” suburbs, where some errands can be years of larger declines, vacancy rates in this segment edged down by per year—were lost on net between 1990 and 2016 (Figure 30). done on foot (up 9.4 percent). Real prices for garden-style proper- only 0.1 percentage point in 2016–2017 to 6.1 percent. Although adding new supply at the upper end should, in theory, ties—typically located in suburban communities—also increased cause older housing to filter down the rent scale, this process has by 8.7 percent in the first quarter of 2018, outpacing the 5.4 percent not produced an adequate supply of rentals at the low end. increase for mid- and high-rise properties. SHORTFALL IN LOW-COST RENTALS The nation’s supply of low-cost rental housing shrank significantly Markets are also failing to produce new units with rents that many Both investors and lenders, however, have become more cautious. after the Great Recession and has remained essentially unchanged households can pay. Only 31 percent of renters could afford (at 30 The Federal Reserve’s survey of senior loan officers indicates that a since 2015. A National Low Income Housing Coalition study found percent of income) the $1,550 median asking rent for a new apart- modest net fraction (5.6 percent) of domestic banks tightened their that for every 100 extremely low-income renters, only 35 rental ment in 2017. By comparison, 41 percent of renters could afford the standards for loans secured by multifamily residential structures $1,064 real median asking rent for new units in 1990. for the eleventh consecutive quarter. And for the sixth consecutive quarter, a somewhat larger share (10.0 percent) reported weaker Changes to the low-cost stock are also a contributing factor. A demand for such loans. Even so, credit risk remains low. The delin- FIGURE 29 Hudson Institute analysis found that about 60 percent of low-cost quency rate for FDIC-insured multifamily-backed loans was just units in 1985 were lost from the stock by 2013 through a combina- 0.15 percent in late 2017. In other evidence of market health, pre- Lowest-Income Renters Increasingly Outnumber tion of permanent removals (27 percent), conversions to other uses liminary estimates from the MBA’s quarterly survey of originations the Supply of Units They Can Afford (18 percent), and upgrading to higher rents (12 percent). Moreover, show a 14 percent year-over-year increase in the dollar volume of Millions just under a third of affordable rentals in 2013 had been low-cost multifamily property loans at the end of 2017. 12 units in 1985, underscoring the importance of affordable housing preservation. Preservation efforts are particularly critical in gentri- 10 fying neighborhoods, where owners often invest in capital improve- THE OUTLOOK ments with the intention of raising rents. While rent growth continues to outpace inflation, the uptick in 8 vacancy rates over the past year—particularly among new units—sig- 6 nals a subtle shift in rental market conditions. Although still high by RENTAL PROPERTY PRICES AT ALL-TIME HIGH historical standards, rentership rates have fallen among key groups. 4 With vacancy rates rising and rent increases slowing, growth in rent- Increasing softness, particularly at the high end, has led many to sug- al property revenues also cooled throughout 2016–2017. The National gest that multifamily markets are in store for a slowdown. 2 Council of Real Estate Investment Fiduciaries reports that net oper- 0 ating income for investment-grade multifamily properties grew 3.4 The longer-term picture for rental housing demand is positive as Extremely ow-Income Affordable Extremely ow-Income Affordable percent annually as of the first quarter of 2018—down from a high of increasing numbers of the large millennial generation form new Renter Households Units Renter Households Units more than 10 percent in 2015. In addition, the annual rate of return households and more older households switch from owning to rent- on rental property investments, which also exceeded 10 percent from ing. There is also tremendous pent-up demand for affordable rental 2010 to 2015, slid in 2016–2017 to settle at 6.4 percent in early 2018. housing, not only among the nation’s 15.5 million very low- and ● Available ● Unavailable extremely low-income households, but also among households with Notes: Extremely low-income renter households earn no more than 30% of area median income. Affordability is deﬁned as paying no more Even so, rental property prices and sales remain strong. Real more means but are struggling with cost burdens. Conditions at the than 30% of income for rent and utilities after adjusting for household size. Unavailable units are affordable but occupied by higher-income renters. Capital Analytics (RCA), which tracks prices for rental properties low end of the market should therefore remain exceptionally tight Source: JCHS tabulations of National Low Income Housing Coalition, The Gap: A Shortage of Affordable Homes 2018. and portfolios of at least $2.5 million, reports that nominal apart- in the face of strong demand and diminishing supply.

28 THE STATE OF THE NATION’S HOUSING 2018

Lorem ipsum ment property prices rose at an 11 percent annual rate in the first FIGURE 30 quarter of 2018—little changed from the 12 percent rate averaged in 2014–2017. As a result, apartment prices now stand 30 percent The National Rental Housing Stock Continues above the mid-2000s peak in real terms. to Shift to Higher-Cost Units Number of Occupied Units (Millions) At the same time, slowing rent growth and rising vacancy rates 14 in high-end rentals have helped to reduce apartment property pricing in certain submarkets. Real prices were down 4 percent in 12 Palm Beach County, 5 percent in Manhattan, and 8 percent in San 10 Francisco proper in the first quarter of 2018 from a year earlier. Real 8 price declines in the 0.5–1.5 percent range also occurred in Chicago, Jacksonville, parts of downtown Los Angeles, and the San Francisco 6 metro area as a whole. 4

Nevertheless, prices continued to rise sharply for certain types of 2 properties (Figure 31). For the first time in five years, the largest 0 price increases for multifamily properties in 2017 were in neighbor- ess than $400 $400–799 $800–1,199 $1,200–1,599 $1,600–1,999 $2,000–2,399 $2,400 or More hoods characterized as “car-dependent” suburbs (up 8.6 percent), and “somewhat walkable” suburbs, where some errands can be done on foot (up 9.4 percent). Real prices for garden-style proper- ● 1990 ● 2016 ties—typically located in suburban communities—also increased by 8.7 percent in the first quarter of 2018, outpacing the 5.4 percent Notes: Rent cutoffs are adjusted for inﬂation using the CPI-U for all items less shelter. Data exclude households paying no cash rent. Source: JCHS tabulations of US Census Bureau, Decennial Census and 2016 American Community Survey 1-Year Estimates. increase for mid- and high-rise properties.

Both investors and lenders, however, have become more cautious. The Federal Reserve’s survey of senior loan officers indicates that a modest net fraction (5.6 percent) of domestic banks tightened their standards for loans secured by multifamily residential structures FIGURE 31 for the eleventh consecutive quarter. And for the sixth consecutive Apartment Properties Continue to Appreciate quarter, a somewhat larger share (10.0 percent) reported weaker demand for such loans. Even so, credit risk remains low. The delin- More Rapidly than Single-Family Homes quency rate for FDIC-insured multifamily-backed loans was just Index 0.15 percent in late 2017. In other evidence of market health, pre- 260 liminary estimates from the MBA’s quarterly survey of originations 240 show a 14 percent year-over-year increase in the dollar volume of 220 multifamily property loans at the end of 2017. 200 180 160 THE OUTLOOK 140 While rent growth continues to outpace inflation, the uptick in 120 vacancy rates over the past year—particularly among new units—sig- 100 nals a subtle shift in rental market conditions. Although still high by 80 historical standards, rentership rates have fallen among key groups. 60 Increasing softness, particularly at the high end, has led many to sug- 2001 2003 2005 2007 2009 2011 2013 2015 2017 gest that multifamily markets are in store for a slowdown. ● Mid-/High-Rise ● arden ● Single-Family

The longer-term picture for rental housing demand is positive as Note: Index values are adjusted for inflation using the CPI-U for all items. RCA indices are based on apartment prices for properties and increasing numbers of the large millennial generation form new portfolios of $2.5 million and greater. Garden (mid-/high-rise) apartments have three floors or less (four floors or more). Source: JCHS tabulations of Real Capital Analytics, Commercial Property Price Indices, and the S&P CoreLogic Case-Shiller US National Home households and more older households switch from owning to rent- Price Index. ing. There is also tremendous pent-up demand for affordable rental housing, not only among the nation’s 15.5 million very low- and extremely low-income households, but also among households with more means but are struggling with cost burdens. Conditions at the low end of the market should therefore remain exceptionally tight in the face of strong demand and diminishing supply.

JOINT CENTER FOR HOUSING STUDIES OF HARVARD UNIVERSITY 29 6 HOUSING CHALLENGES

More than 38 million US RENTERS STILL WIDELY COST BURDENED Nearly one-third of all US households paid more than 30 percent of households have housing cost their incomes for housing in 2016. For renters alone, however, the cost-burdened share is 47 percent (Figure 32). And of the 20.8 million burdens, leaving little income renter households with burdens, some 11.0 million pay more than half their incomes for housing and are severely burdened. Although left to pay for food, healthcare, the share of cost-burdened owners is considerably lower at 23 per- and other basic necessities. As cent, their numbers still total 17.3 million and include 7.5 million with severe burdens. it is, federal housing assistance In a mark of progress, the overall number of cost-burdened house- reaches only a fraction of the holds fell by 4.6 million between 2010 and 2016. Much of this improvement, however, reflects a 3.8 million decline in the number large and growing number of cost-burdened owners with incomes above $45,000. With this of low-income households in drop, the share of owners with cost burdens fell from a peak of 30 percent in 2010 to 23 percent in 2016—just under the share posted need. Between the shortage in 2001. In contrast, the share of cost-burdened renters has hardly receded from its 51 percent peak in 2011 and remains well above its of subsidized housing and the 41 percent share in 2001.

ongoing losses of low-cost Whether they own or rent, most low-income households pay outsized shares of income for housing. Fully 80 percent of renters rentals through market forces, earning less than $30,000 were cost burdened in 2016, including 55 low-income households have percent with severe burdens. Owners earning less than $30,000 also have a high cost-burden rate of 63 percent, with 42 percent severely increasingly few housing options. burdened. Among low-income owners with mortgages, a staggering 93 percent are cost burdened. Meanwhile, the rising incidence Of all the household types, single-parent families are the most likely and intensity of natural disasters to be cost burdened. Indeed, more than half of these households (53 percent) pay at least 30 percent of income for housing, reflecting the pose new threats to the housing absence of multiple earners and the need for larger units. By com- stocks of entire communities. parison, less than a fifth (18 percent) of married households without children are cost burdened.

Age is also related to cost burdens. At one end of the spectrum, some 44 percent of households under age 30 are cost burdened. Most of these households have low incomes and are single-person or single-parent renters. At the other end, 54 percent of households age 65 and over that rent and 43 percent of owners still paying off mortgages are burdened as well.

30 THE STATE OF THE NATION’S HOUSING 2018 FIGURE 32

Nearly Half of Renter Households and a Quarter of Owner Households Are Cost Burdened Share of Households with Cost Burdens (Percent)

10 RENTERS STILL WIDELY COST BURDENED 0 Nearly one-third of all US households paid more than 30 percent of 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 their incomes for housing in 2016. For renters alone, however, the cost-burdened share is 47 percent (Figure 32). And of the 20.8 million ● Renters ● Owners renter households with burdens, some 11.0 million pay more than Notes: Cost-burdened households pay more than 30% of income for housing. Households with zero or negative income are assumed to have half their incomes for housing and are severely burdened. Although burdens, while households paying no cash rent are assumed to be without burdens. the share of cost-burdened owners is considerably lower at 23 per- Source: JCHS tabulations of US Census Bureau, American Community Survey 1-Year Estimates. cent, their numbers still total 17.3 million and include 7.5 million with severe burdens.

In a mark of progress, the overall number of cost-burdened house- Cost-burdened shares are also much higher among black (45 percent) quartile spent almost $650 less on non-housing expenses each holds fell by 4.6 million between 2010 and 2016. Much of this and Hispanic households (43 percent) than among Asian and other month than bottom-quartile households that are not cost burdened. improvement, however, reflects a 3.8 million decline in the number minority households (36 percent) or white households (27 percent). Severely cost-burdened families with children spent $190 less on of cost-burdened owners with incomes above $45,000. With this Even among households within the same income groups, larger food costs than unburdened households (Figure 34). Severely bur- drop, the share of owners with cost burdens fell from a peak of 30 shares of minorities than whites are cost burdened (Figure 33). The dened older households in the bottom expenditure quartile spent 70 percent in 2010 to 23 percent in 2016—just under the share posted cost-burdened rates for black and Hispanic households have also percent less each month on healthcare costs than otherwise similar in 2001. In contrast, the share of cost-burdened renters has hardly increased more rapidly in recent years than for other groups, rising households without burdens. receded from its 51 percent peak in 2011 and remains well above its 3 percentage points in 2001–2016 compared with 1 percentage point 41 percent share in 2001. for white households and an even smaller uptick for Asian and other minority households. GEOGRAPHIC DISTRIBUTION OF COST BURDENS Whether they own or rent, most low-income households pay out- In 2015–2016, the shares of cost-burdened households fell in 44 sized shares of income for housing. Fully 80 percent of renters states across the country, as well as in 79 of the nation’s 100 most earning less than $30,000 were cost burdened in 2016, including 55 TRADEOFFS BETWEEN HOUSING AND OTHER NECESSITIES populous metros. The declines were modest, with shares in 31 met- percent with severe burdens. Owners earning less than $30,000 also Households in the bottom income quartile saw their housing costs ros decreasing by less than 1 percentage point, and largely driven by have a high cost-burden rate of 63 percent, with 42 percent severely rise and their incomes fall between 2001 and 2016. As a result, moderate increases in incomes. burdened. Among low-income owners with mortgages, a staggering the amount they had left over each month to pay for other basic 93 percent are cost burdened. needs declined from $730 to just $590 in real terms over this period. Despite a small decrease, the cost-burdened share of households in In sharp contrast, households in the highest quartile saw their California was still 42 percent in 2016, with rates in New York and Of all the household types, single-parent families are the most likely incomes climb significantly in 2001–2016 while their monthly hous- New Jersey nearly as high at 39 percent. These states are home to 17 to be cost burdened. Indeed, more than half of these households (53 ing costs increased only $20, leaving $10,600 each month for all of the 25 metros with the highest burden rates in the country. Los percent) pay at least 30 percent of income for housing, reflecting the other expenses. Angeles tops the list (47 percent), followed by Miami, Santa Barbara, absence of multiple earners and the need for larger units. By com- and Atlantic City. Even in the most affordable states, such as Iowa, parison, less than a fifth (18 percent) of married households without Lowest-income households with children are especially hard South Dakota, and West Virginia, more than a fifth of households children are cost burdened. pressed, with just $490 to spend after paying for housing. By the were cost burdened. Economic Policy Institute’s measure, families with children that live Age is also related to cost burdens. At one end of the spectrum, in even the most affordable metros need at least $2,700 per month About a third of the households in metropolitan areas struggle to some 44 percent of households under age 30 are cost burdened. to cover essential non-housing expenses. find affordable housing (Figure 35). The nation’s 10 largest metros Most of these households have low incomes and are single-person have the highest concentrations of cost-burdened households. In or single-parent renters. At the other end, 54 percent of households According to the latest Consumer Expenditure Survey, severely 2016, median housing costs in these areas exceeded $1,300 per age 65 and over that rent and 43 percent of owners still paying off housing cost-burdened households in the bottom expenditure month while median monthly incomes were about $5,600, leaving mortgages are burdened as well.

JOINT CENTER FOR HOUSING STUDIES OF HARVARD UNIVERSITY 31 nearly 40 percent of households cost burdened. By comparison, FIGURE 33 median housing costs in small metros were about $700 per month Cost Burdens Are Prevalent Among Low-Income and median monthly incomes about $3,900, putting the cost-bur- and Minority Households dened rate at 26 percent. Share of Households with Cost Burdens (Percent) Rural communities are generally more affordable than metro 90 areas, with median housing costs of $650 per month. But given 80 relatively low median incomes of $3,700 per month, a quarter of 70 rural residents are also housing cost burdened. Rural communities 60 in California are the least affordable in the country, with a cost- 50 burdened share of 36 percent. 40 30 CURRENT REACH OF FEDERAL RENTAL PROGRAMS 20 Federal housing assistance is a vital but limited resource that serves 10 just one out of every four very low-income renter households. Of 0 Under $15,000 $15,000–29,999 $30,000–44,999 $45,000–74,999 $75,000 and Over the 4.6 million households that currently receive rental support, the vast majority are older adults, families with children, and households that include a member with disabilities.

● hite ● Black ● Hispanic ● Asian/Other In 2017, about half of assisted households (2.2 million) received

Notes: Cost-burdened households pay more than 30% of income for housing. Households with zero or negative income are assumed to have housing vouchers to use in the private rental market, a decline of burdens, while households paying no cash rent are assumed to be without burdens. Hispanic households may be of any race. White, black, and 86,000 from 2016. The number of occupied public housing units Asian/other households are non-Hispanic. Asian/other includes all other households and those reporting more than one race. Source: JCHS tabulations of US Census Bureau, 2016 American Community Survey 1-Year Estimates. also fell by nearly 32,000 in 2016–2017, leaving the occupied public housing stock under 1.0 million units for the first time since 1972. However, part of this decline is due to the Rental Assistance Demonstration program, which allows public housing authorities to convert public housing to Section 8 contracts. As a result, FIGURE 3 project-based rental assistance edged up 39,000 occupied units in When Burdened with High Housing Costs, 2014–2017, to 1.2 million. Low-Income Households with Children Spend The Low-Income Housing Tax Credit (LIHTC) program is now the Little on Other Basic Necessities largest source of assisted rental housing (Figure 36). Since its incep- Average Monthly Expenditures of ow-Income Families with Children (Dollars) tion in 1986, the program has supported the construction, rehabili- 600 tation, or acquisition of nearly 2.5 million affordable rentals.

500

400 LIMITATIONS OF ASSISTANCE Allocations for rental assistance have fallen well behind need. 300 HUD’s latest Worst Case Housing Needs report indicates that the number of very low-income households with severe cost burdens or 200 living in inadequate or overcrowded conditions rose from 6.0 million 100 in 2005 to 8.3 million in 2015. Over this same period, a $12 billion total increase in HUD’s major rental programs lifted the number of 0 assisted households by just 150,000, to 4.7 million. HUD spending Food Transportation Healthcare was essentially flat in 2013–2015, even as the number of households with worst-case needs continued to rise. Although the 2018 ● Households without Burdens ● Households with Severe Burdens omnibus spending bill increased HUD funding, renewals of rental Notes: Low-income households are in the bottom quartile of households ranked by total spending. Households without burdens (with severe burdens) assistance contracts consume an increasing portion of its budget, devote 30% or less (more than 50%) of expenditures to housing, including utilities. reducing the funds available for other key programs. Source: JCHS tabulations of US Bureau of Labor Statistics, 2016 Consumer Expenditure Survey.

For households that qualify for assistance, several obstacles stand in the way of finding affordable housing. First of all, wait times for HUD subsidies averaged 27 months in 2017, ranging from about 18

32 THE STATE OF THE NATION’S HOUSING 2018 months for public housing to 32 months for vouchers. Many cities HUD typically sets FMRs for an entire metropolitan area, in effect have closed their waiting lists for both of these types of assistance. reducing the number of units in high-rent neighborhoods available to voucher holders. The Small Area Fair Market Rent rule addresses For voucher recipients, the challenge is then to find eligible housing this issue by assigning FMRs at the ZIP-code level in 24 metropoli- in the private market within 60–120 days or surrender their vouch- tan areas. A recent Furman Center study concluded that the rule ers. Even when given extensions, though, voucher holders may have increases the number of affordable units for voucher holders in difficulty renting appropriate housing because landlords in many higher-rent neighborhoods but decreases the number in lower-rent cities can refuse to accept vouchers. This has contributed ot keep- areas. The study also found that the rule raises the total number ing voucher-use success rates generally low. However, the Poverty & of units affordable to voucher holders in all but four of the metros. Race Research Action Council reports that 14 states and 63 local governments have now passed ordinances prohibiting source-of-income Increasing the number of affordable units in high-rent areas is one discrimination, which may help more voucher holders find units. way to help voucher holders move to neighborhoods of opportunity. The 2015 Affirmatively Furthering Fair Housing rule also sought to Finally, if assisted households do find housing, the units may reduce segregation and increase housing choice for households by still cost more than 30 percent of income (Figure 37). In the case requiring HUD grantees to develop fair housing goals. Although the of LIHTC developments, rents are set to be affordable at certain current administration has suspended the rule, some communities income levels. As a result, a large share (39 percent) of LIHTC resi- have nevertheless proceeded with their planning while others, like dents are cost burdened. To make their units affordable, 53 percent Kansas City and Philadelphia, have already completed setting their of LIHTC residents receive an additional form of rental assistance, goals and strategies. such as a voucher.

In total, 17 percent of HUD-assisted households are currently cost THREATS TO THE AFFORDABLE SUPPLY burdened, but the share among voucher holders is much higher at The National Low Income Housing Coalition reports that the gap 31 percent. In part, this is because of low fair market rents (FMRs). between supply and demand for rental units affordable and avail- Under the voucher program, the subsidy covers the difference able to very low-income households is 7.7 million. This shortfall between 30 percent of adjusted income and HUD-defined FMRs. If could become much worse given the threats to the affordable sup- voucher holders live in units that rent for more than the FMR, they ply. Unsubsidized low-rent units are continually lost to upgrading or must pay more than 30 percent of their incomes. removal, while subsidized units with expiring contracts are at risk of

FIGURE 35

About a Third of All Households in Most Metros Are Cost Burdened Metro Area Households with Cost Burdens (Percent)

Share of Households with Cost Burdens (Percent) ● Under 20 ● 20–29 ● 30–39 ● 40 and Over (up to 47)

Notes: Cost-burdened households pay more than 30% of income for housing. Households with zero or negative income are assumed to have burdens, while households paying no cash rent are assumed to be without burdens. Source: JCHS tabulations of US Census Bureau, 2016 American Community Survey 1-Year Estimates using the Missouri Census Data Center MABLE/Geocorr14.

JOINT CENTER FOR HOUSING STUDIES OF HARVARD UNIVERSITY 33 FIGURE 36 shifting to market rate. Indeed, affordability restrictions on 533,000 LIHTC units, 425,000 project-based Section 8 units, and 142,000 other The Low-Income Housing Tax Credit Program Has subsidized units are set to expire within the next 10 years. Become the Largest Source of Subsidized Housing Number of Occupied Units (Millions) In addition, the new tax reform package reduced the corporate tax rate, lowering the value of low-income housing tax credits for 2.5 investors who use them to reduce their tax liability. As a result, the amount an investor pays for one dollar of tax credits has dropped 2.0 from over a dollar to about ninety cents. With less investment per dollar of subsidy, affordable housing developers are struggling to 1.5 make up the difference. Novogradac & Company estimates that the reduced value of credits resulting from tax reform will lead 1.0 to construction of 232,000 fewer affordable units over the next decade. The 12.5 percent increase in LIHTC allocations for the next 0.5 four years under the 2018 omnibus spending bill should, however, reduce this loss by about 28,000 units. 0.0 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017

UPTURN IN HOMELESSNESS ● IHTC ● Section 8 Vouchers ● Project-Based Section 8 ● Public Housing After declining by 14 percent between 2010 and 2016, the number of people experiencing homelessness increased by 3,800 last year. Note: LIHTC occupied units are estimated using the 96% average occupancy rate reported in HUD, Understanding Whom the LIHTC Program Serves, 2017. HUD’s Annual Homeless Assessment Report shows that nearly Source: JCHS tabulations of HUD, Picture of Subsidized Housing Reports and Low-Income Housing Tax Credit Database; Robert 554,000 people were living in shelters or on the street on a given Collinson, Ingrid Gould Ellen, and Jens Ludwig, Low-Income Housing Policy, NBER Working Paper, 2015. night in January 2017, while 1.4 million people—including 147,000 families with children—used a shelter at some point over the course of 2016. In addition, the US Department of Education estimates that nearly 1.0 million school children were living with people outside FIGUREFIGURE RM-2 37 their families in 2015–2016 because of housing loss or economic Federal Rental Assistance Reduces hardship, and 42,000 were living primarily on the street during the But Does Not Eliminate Cost Burdens school year. Share of Renter Households with Cost Burdens (Percent) More than half (56 percent) of the homeless population live in the 90 nation’s highest-cost metros. Indeed, the average homelessness 80 rate in metros with median rents in the top quintile is more than 70 double that in all other metros. Moreover, the metros with the larg- 60 est homeless populations—New York, Los Angeles, San Francisco, 50 and Seattle—are the same high-cost markets where homelessness is increasing (Figure 38). 40 30 The reductions in homelessness over the past seven years largely 20 result from targeting two populations in need of intensive support 10 services—veterans and the chronically homeless. These initiatives 0 emphasized additions to the supply of permanent supportive hous- Very ow-Income ow-Income Housing Choice Public Project-Based Renters with Housing Tax Credit Vouchers Housing Section 8 ing and the use of the “housing first” model, which houses people No Assistance as quickly as possible with as few preconditions as possible. So far, this narrow focus has helped 62 communities across the country end veteran homelessness. ● Severely Burdened ● Moderately Burdened These limited successes do not, however, address the underlying Notes: Moderately (severely) cost-burdened households pay 30–50% (more than 50%) of income for housing. Households with zero or negative income are assumed to have severe burdens, while households paying no cash rent are assumed to be without burdens. Very issue of housing affordability. For low-income households, espe- low-income renters earn less than 50% of area median income. Voucher holders may live in LIHTC units. cially those spending a large share of their incomes on housing, Source: JCHS tabulations of HUD, 2017 Public Use Microdata Sample, Worst Case Housing Needs Report to Congress, and 2018 Understanding Whom the LIHTC Program Serves. an unexpected expense or job loss can lead to eviction. In fact, the vast majority (83 percent) of people experiencing homelessness are not chronically homeless, and many who enter shelters—especially families—come directly from more stable housing situations.

34 THE STATE OF THE NATION’S HOUSING 2018 Further progress in reducing homelessness may require new Regulatory changes are another way that states and localities approaches. Some programs use the pay-for-success model to support affordable and fair housing goals. Inclusionary housing finance interventions, such as rapid rehousing and permanent policies, implemented by 886 jurisdictions, require or provide incen- supportive housing where funding comes from investors. If tives for developers to set aside a percentage or number of units as the program is successful, investors receive a return and local affordable. Inclusionary zoning has gained traction in recent years govern-ments save money on services. Another program that may in metro areas where rents are rising. For instance, Atlanta recently help to prevent homelessness is the City of Stockton's plan to passed an ordinance requiring that 10–15 percent of units in new provide a basic income to low-income residents as an offset to housing in certain neighborhoods be affordable to residents making rising hous-ing costs. up to 60–80 percent of area median income.

Although some states encourage or require localities to increase STATE AND LOCAL GOVERNMENT INITIATIVES the supply of affordable housing, others have preempted local State and local governments are making their own efforts to efforts. In Tennessee, a recent state law effectively undermined the provide more affordable housing for low- and moderate-income Nashville Metropolitan Council’s inclusionary ordinance by requir- households. According to the National Low Income Housing ing that the city provide financial incentives to developers that Coalition database, about 100 state and local programs provide voluntarily include affordable units. Similarly, a Texas law prevents either tenant-based assistance or capital support for affordable municipalities and counties from enforcing ordinances that ban rental housing development. For example, Denver has launched source-of-income discrimination. a voucher program with public and private funding so that lower- income households can afford to live in vacant high-rent units. Alternatively, many cities and states provide downpayment assis- INCREASING LOSSES TO NATURAL DISASTERS tance to low- and moderate-income homebuyers, often through The 16 major disaster events in 2017 caused a record-setting $306 housing finance agencies. billion in damages. These events caused destruction of hundreds of thousands of homes and widespread displacement of households To leverage funding sources, state and local governments rely on across California, Florida, Puerto Rico, and Texas. In Puerto Rico bond issues, tax levies, and housing trust funds to support more alone, storms destroyed or severely damaged an estimated 472,000 below-market-rate housing. Indeed, Seattle has used a combination housing units. of bonds and levies to meet its affordable housing goals since 1981. Seattle’s 2016 property tax levy will raise $290 million over seven In the immediate aftermath of disasters, displaced households need years, subsidizing 3,000 affordable apartments and providing short- short-term housing. In 2017, the Federal Emergency Management term assistance for at-risk households. Agency’s (FEMA’s) Transitional Shelter Assistance program covered

FIGURE 38

Although Improving in Much of the Country, Homelessness Is Increasing in Several Large, High-Cost Metros Homeless Population (Thousands)

140

120

100

0 New ork os Angeles San Francisco Seattle All Other Top 25 Metros

● 2013 ● 2014 ● 2015 ● 2016 ● 2017

Notes: Homeless population estimates are point-in-time counts conducted one night per year in January. Data include the top 25 largest metro areas by population. Source: JCHS tabulations of HUD, Annual Homeless Assessment Reports to Congress.

JOINT CENTER FOR HOUSING STUDIES OF HARVARD UNIVERSITY 35 hotel costs for tens of thousands of displaced households, including disclosure requirements, would also help both communities and 27,000 in Florida after Hurricane Irma and 54,000 in Texas following buyers better assess disaster risks. Hurricane Harvey. In Puerto Rico, the difficulties of rebuilding and finding adequate housing have meant that 9,600 households were still living in transitional shelters three months after Hurricane THE OUTLOOK Maria hit in September 2017. Good-quality, safe, and affordable housing is fundamental to personal well-being and security. But for millions of US families and To support rebuilding, homeowners filed over 140,000 claims in 2017 individuals, paying today’s high housing costs means sacrificing with the National Flood Insurance Program (NFIP), the primary flood on food, healthcare, savings, and other essential expenses. Worse insurance provider. But much of the lost or damaged housing stock still, these cost-burdened households are increasingly concentrated was uninsured. Less than 4 percent of the homes in Puerto Rico and in high-poverty neighborhoods, which further undermines their only one out of five homes in Texas had flood insurance. FEMA direct health, safety, and access to economic opportunity. assistance filled some of the gaps for households without flood insurance, providing financial help for 1.6 million households. In the three decades since the first State of the Nation’s Housing report appeared, the number of very low-income families has soared by 6 The rebuilding process has its own challenges. The three states million, to more than 19 million. At the same time, federally sub- with significant disaster damage last year—California, Florida, sidized rental housing has increased by only 950,000 units while and Texas—have large populations of undocumented immigrants, the low-cost stock (with rents under $800 in real terms) has shrunk households that are unlikely to apply for assistance in fear of depor- by some 2.5 million units. As a result, the share of lowest-income tation. In Puerto Rico, relief is complicated by the fact that much of households with assistance has fallen from already low levels, and the housing stock was built without permits or without regard to even moderate-income families find it difficult to secure rentals building codes. they can afford in the private market. Meanwhile, the severe housing boom and bust has left the shares of young adults who own Recovery will no doubt be long. Congress appropriated $7.4 bil- homes even lower than in 1988 while black households have essen- lion through the Community Development Block Grant Disaster tially made no progress. Recovery program to help communities in Florida, Texas, Puerto Rico, and the US Virgin Islands. Critics, however, claim that the Without greater federal leadership, reversing or even halting these program disproportionately benefits homeowners. long-term trends is unlikely. The best place to start is therefore to enhance and expand the housing choice voucher and LIHTC The increased frequency and intensity of natural disasters is the programs—the essential pillars of the federal subsidy system. new reality, making mitigation a crucial priority. FEMA allocated The HOME and CDBG programs also need additional funding to a total of $38.9 million for 156 mitigation projects started in 2017. adequately support the stepped-up efforts of state and local govern- The National Institute for Building Sciences found that every feder- ments to increase the supply of affordable housing. ally funded dollar spent on mitigation saves six dollars in repair and recovery, while NFIP estimated that its building and floodplain For their part, state and local jurisdictions also have opportuni- regulations save $1.9 billion annually. However, the future of NFIP ties to reduce housing costs through regulatory reform. Allowing is uncertain, given it has a $1.4 billion shortfall and is set to expire higher-density development and simpler housing designs, as well in July 2018 without another extension from Congress. as streamlining approval processes, would enable and incentivize builders to supply homes affordable to a broader range of incomes. State and local building codes also have a role to play by setting While current regulations are intended to protect the public inter- resilience standards for new housing in disaster-prone areas. For est, concerns for health, safety, and efficiency must be weighed example, Florida has codes in place requiring that windows, roofs, against the need to reduce the costs of housing production. Striking and other elements be able to withstand hurricane-force winds. this balance is essential if the nation is to meet its stated goal of a Updated flood mapping at the local level, as well as uniform flood decent home and suitable living environment for all.

36 THE STATE OF THE NATION’S HOUSING 2018 7 ADDITIONAL RESOURCES

Table A-1...... Housing Market Indicators: 1980–2017

Table A-2...... Housing Cost-Burdened Households by Tenure and Income: 2001, 2015, and 2016

The following interactive exhibits, along with an extensive list of Excel tables, are available for download at www.jchs.harvard.edu.

MAPS

Price-to-Income Ratios by Metro Area: 1980–2017

Share of Recently Sold Homes that Are Affordable by Metro Area: 2016

Share of Cost-Burdened Households by Tenure and Metro Area: 2016

Domestic Migration by Age Group and State: 2012–2016

CHARTS

For-Sale Inventory, Home Sales, and Months of Supply by Metro Area: 2010–2017

Cost Burdens by Income and Metro Area: 2016

Supply of Rental Units Affordable to Extremely Low-Income Renters by Metro Area: 2016

Home Price Changes in Metro and Non-Metro Areas: 2000–2017

Rental Housing Units by Real Gross Rent and State: 1990–2016

JOINT CENTER FOR HOUSING STUDIES OF HARVARD UNIVERSITY 37 TAE A1

Housing Market Indicators: 1980–2017

Median Sales Price of Permits 1 Starts Size 4 Single-Family Homes Vacancy Rates 7 Value Put in Place 8 Home Sales (Thousands) (Thousands) (Median sq. ft.) (2017 dollars) (Percent) (Millions of 2017 dollars) (Thousands)

Year Single-Family Multifamily Single-Family 2 Multifamily 2 Manufactured 3 Single-Family Multifamily New 5 Existing 6 For Sale For Rent Single-Family Multifamily Owner Improvements New 9 Existing 10 1980 710 480 852 440 222 1,595 915 192,169 184,584 1.4 5.4 157,427 49,702 n/a 545 2,973 1981 564 421 705 379 241 1,550 930 185,795 178,311 1.4 5.0 140,128 47,082 n/a 436 2,419 1982 546 454 663 400 240 1,520 925 176,029 171,965 1.5 5.3 105,318 39,468 n/a 412 1,990 1983 901 704 1,068 635 296 1,565 893 185,317 171,843 1.5 5.7 178,460 55,243 n/a 623 2,697 1984 922 759 1,084 665 295 1,605 871 188,499 170,570 1.7 5.9 203,822 66,579 n/a 639 2,829 1985 957 777 1,072 669 284 1,605 882 192,041 171,671 1.7 6.5 198,989 65,014 n/a 688 3,134 1986 1,078 692 1,179 626 244 1,660 876 205,758 179,498 1.6 7.3 232,889 69,416 n/a 750 3,474 1987 1,024 510 1,146 474 233 1,755 920 225,485 184,649 1.7 7.7 252,922 54,919 n/a 671 3,436 1988 994 462 1,081 407 218 1,810 940 233,102 184,824 1.6 7.7 248,835 46,202 n/a 676 3,513 1989 932 407 1,003 373 198 1,850 940 237,213 186,427 1.8 7.4 239,049 44,090 n/a 650 3,010 1990 794 317 895 298 188 1,905 955 230,492 181,605 1.7 7.2 211,711 36,102 n/a 534 2,917 1991 754 195 840 174 171 1,890 980 215,965 183,615 1.7 7.4 178,939 27,262 n/a 509 2,886 1992 911 184 1,030 170 211 1,920 985 212,274 183,534 1.5 7.4 213,106 22,877 n/a 610 3,155 1993 987 213 1,126 162 254 1,945 1,005 214,586 183,628 1.4 7.3 237,695 18,300 97,147 666 3,429 1994 1,068 303 1,198 259 304 1,940 1,015 215,018 186,445 1.5 7.4 268,456 23,290 106,918 670 3,542 1995 997 335 1,076 278 340 1,920 1,040 215,365 186,306 1.5 7.6 246,913 28,773 91,224 667 3,523 1996 1,069 356 1,161 316 363 1,950 1,030 218,718 190,415 1.6 7.8 266,820 31,752 103,705 757 3,795 1997 1,062 379 1,134 340 354 1,975 1,050 222,975 195,548 1.6 7.7 267,538 34,948 101,765 804 3,963 1998 1,188 425 1,271 346 373 2,000 1,020 229,330 202,963 1.7 7.9 299,872 36,954 108,815 886 4,496 1998 1,188 425 1,271 346 373 2,000 1,020 229,330 202,963 1.7 7.9 299,872 36,954 108,815 886 4,496 1999 1,247 417 1,302 339 348 2,028 1,041 236,881 206,351 1.7 8.1 329,333 40,364 110,394 880 4,650 2000 1,198 394 1,231 338 250 2,057 1,039 240,565 207,838 1.6 8.0 337,059 40,226 115,430 877 4,602 2001 1,236 401 1,273 329 193 2,103 1,104 242,490 213,851 1.8 8.4 344,754 41,944 117,678 908 4,732 2002 1,333 415 1,359 346 169 2,114 1,070 255,612 226,442 1.7 8.9 362,283 44,898 133,331 973 4,974 2003 1,461 428 1,499 349 131 2,137 1,092 259,774 237,549 1.8 9.8 413,740 46,781 133,676 1,086 5,444 2004 1,613 457 1,611 345 131 2,140 1,105 286,774 253,295 1.7 10.2 489,925 51,832 149,744 1,203 5,958 2005 1,682 473 1,716 353 147 2,227 1,143 302,352 274,866 1.9 9.8 544,096 59,362 180,441 1,283 6,180 2006 1,378 461 1,465 336 117 2,248 1,172 299,713 269,802 2.4 9.7 505,800 64,202 168,995 1,051 5,677 2007 980 419 1,046 309 96 2,277 1,197 293,068 257,654 2.7 9.7 360,789 57,879 159,246 776 4,398 2008 576 330 622 284 82 2,215 1,122 264,243 223,827 2.8 10.0 211,504 50,478 146,931 485 3,665 2009 441 142 445 109 50 2,135 1,113 247,591 196,633 2.6 10.6 120,352 32,606 129,853 375 3,870 2010 447 157 471 116 50 2,169 1,110 249,329 194,584 2.6 10.2 126,540 16,509 129,026 323 3,708 2011 418 206 431 178 52 2,233 1,124 247,584 181,111 2.5 9.5 117,883 16,386 131,754 306 3,786 2012 519 311 535 245 55 2,306 1,098 261,781 189,183 2.0 8.7 140,942 24,032 123,054 368 4,128 2013 621 370 618 307 60 2,384 1,059 282,940 207,707 2.0 8.3 179,684 33,145 127,436 429 4,484 2014 640 412 648 355 64 2,453 1,073 298,717 216,298 1.9 7.6 200,456 43,025 139,407 437 4,344 2015 1,183 487 715 397 71 2,467 1,074 304,258 231,555 1.8 7.1 228,688 54,327 153,560 501 4,646 2016 1,207 456 782 392 81 2,422 1,101 314,357 240,517 1.7 6.9 247,642 61,806 167,085 561 4,838 2017 1,282 462 849 354 93 2,426 1,094 323,100 248,800 1.6 7.2 264,522 62,703 190,346 613 4,892

Notes: All value series are adjusted to 2017 dollars by the CPI-U for All Items. All links are as of May 2018. n/a indicates data not available. Sources 1. US Census Bureau, New Privately Owned Housing Units Authorized by Building Permits in Permit-Issuing Places, http://www.census.gov/construction/nrc/xls/permits_cust.xls. 2. US Census Bureau, New Privately Owned Housing Units Started, https://www.census.gov/construction/nrc/xls/starts_cust.xls. 3. US Census Bureau, Shipments of New Manufactured Homes, https://www.census.gov/data/tables/time-series/econ/mhs/shipments.html and JCHS historical tables. 4. US Census Bureau, New Privately Owned Housing Units Completed in the United States by Intent and Design, http://www.census.gov/construction/nrc/xls/quar_co_purpose_cust.xls. 5. US Census Bureau, Median and Average Sales Price of New One-Family Houses Sold, www.census.gov/construction/nrs/xls/usprice_cust.xls. 6. National Association of Realtors® (NAR), Median National Sales Price of Existing Single-Family Homes, obtained from NAR and Economy.com. 7. US Census Bureau, Housing Vacancy Survey, https://www.census.gov/housing/hvs/data/ann17ind.html. 8. US Census Bureau, Annual Value of Private Construction Put in Place, http://www.census.gov/construction/c30/historical_data.html and JCHS historical tables. Single-family and multifamily are new construction. Owner improvements do not include expenditures on rental, seasonal, and vacant properties. 9. US Census Bureau, Houses Sold by Region, http://www.census.gov/construction/nrs/xls/sold_cust.xls. 10. National Association of Realtors®, Existing Single-Family Home Sales obtained from and annualized by Economy.com, and JCHS historical tables.

38 THE STATE OF THE NATION’S HOUSING 2018 TAE A1

Housing Market Indicators: 1980–2017

JOINT CENTER FOR HOUSING STUDIES OF HARVARD UNIVERSITY 39 TABLE A-2

Housing Cost-Burdened Households by Tenure and Income: 2001, 2015 and 2016 Households (Thousands)

2001 2015 2016

Not Moderately Severely Not Moderately Severely Not Moderately Severely Tenure and Income Burdened Burdened Burdened Total Burdened Burdened Burdened Total Burdened Burdened Burdened Total

Owners Under $15,000 973 831 2,655 4,459 771 802 3,254 4,827 794 799 3,323 4,916 $15,000–29,999 4,234 1,797 1,827 7,858 3,948 2,084 2,217 8,249 3,957 1,989 2,092 8,038 $30,000–44,999 5,664 2,016 991 8,671 5,750 2,307 1,118 9,175 5,770 2,186 1,067 9,023 $45,000–74,999 12,837 3,262 730 16,830 13,107 2,915 738 16,759 12,976 2,795 730 16,502 $75,000 and Over 29,523 2,365 281 32,168 33,226 2,114 288 35,628 34,311 2,032 280 36,623 Total 53,231 10,270 6,485 69,986 56,801 10,222 7,615 74,638 57,809 9,802 7,492 75,103

Renters Under $15,000 1,431 915 4,874 7,220 1,511 1,022 6,507 9,041 1,487 1,003 6,340 8,830 $15,000–29,999 2,343 3,194 2,138 7,675 2,128 3,703 3,543 9,374 2,049 3,474 3,505 9,028 $30,000–44,999 4,103 2,112 329 6,544 3,749 2,919 825 7,493 3,732 2,918 867 7,517 $45,000–74,999 7,303 917 103 8,323 7,057 1,799 244 9,101 7,117 1,869 279 9,265 $75,000 and Over 6,478 197 13 6,688 8,097 445 21 8,562 8,599 497 21 9,117 Total 21,658 7,335 7,457 36,450 22,542 9,889 11,139 43,570 22,984 9,761 11,013 43,758

All Households Under $15,000 2,404 1,745 7,529 11,679 2,282 1,825 9,761 13,868 2,281 1,802 9,663 13,746 $15,000–29,999 6,577 4,991 3,965 15,533 6,076 5,787 5,760 17,623 6,006 5,463 5,597 17,066 $30,000–44,999 9,767 4,128 1,320 15,215 9,499 5,226 1,943 16,668 9,502 5,104 1,934 16,540 $45,000–74,999 20,141 4,179 833 25,152 20,164 4,714 982 25,860 20,093 4,665 1,009 25,767 $75,000 and Over 36,000 2,562 294 38,856 41,323 2,558 309 44,190 42,911 2,529 302 45,741 Total 74,889 17,605 13,942 106,436 79,344 20,111 18,754 118,208 80,793 19,563 18,505 118,860

Notes: Moderate (severe) burdens are defined as housing costs of more than 30% and up to 50% (more than 50%) of household income. Households with zero or negative income are assumed to be severely burdened, while renters paying no cash rent are assumed to be unburdened. Income cutoffs are adjusted to 2016 dollars by the CPI-U for all Items. Source: JCHS tabulations of US Census Bureau, American Community Survey 1-Year Estimates.

40 THE STATE OF THE NATION’S HOUSING 2018 CONTENTS

twitter: @Harvard_JCHS JOINT CENTER FOR HOUSING STUDIES OF HARVARD UNIVERSITY

THE STATE OF THE NATION’S HOUSING 2018

STATE OF THE NATION’S HOUSING REPORTS

1988–2018 Living In America: Challenges Facing New Immigrants and Refugees

Prepared for the Robert Wood Johnson Foundation by Lake Snell Perry Mermin/Decision Research

August 2006 Edited by: Katherine E. Garrett Table of Contents

Executive Summary ...... 3

Introduction and Background to the Study ...... 4

Social Issues Affecting Health Outcomes in New Immigrants and Refugees . .5

The Education System ...... 5

Job Opportunities and Housing ...... 9

Isolation of Immigrant and Refugee Communities ...... 11

Prejudice, Discrimination and Lack of Cultural Understanding . . . . . 17

Recommendations ...... 22

Program-Related Actions ...... 22

Communications Methods ...... 25

Appendix A: Study Methodology ...... 29

Appendix B: Issues Ranked by Frequency and Prevalence ...... 32

© 2006 Robert Wood Johnson Foundation. Executive Summary In 2004, the Robert Wood Johnson Foundation’s Vulnerable Populations Portfolio asked the research firm of Lake Snell Perry Mermin/Decision Research (LSPM/ DR) to conduct a focus group study of immigrant and refugee communities in the United States. LSPM/DR conducted 32 focus groups between May 2004 and March 2005 in ten cities across the United States, speaking both with immigrants and refugees and with people who work with these populations.

The participants in these focus groups described a way of life for new immigrants and refugees full of hurdles. These result from a number of social factors:

■ The type and quality of education available to these new residents—desperate to learn English—and to their children. ■ Economic issues: the lack of secure jobs that pay an often undocumented population, and their resulting poor or crowded housing. ■ Isolation in immigrant and refugee communities: isolation from services that could help them, as well as the emotional isolation caused by the stress. ■ Prejudice and discrimination that new immigrants and refugees report they face, as well as the cultural differences that may deter them from seeking and receiving services.

From their stories and experiences, LSPM/DR identified actions that could help immigrants and refugees overcome these challenges and lead healthy, happy and productive lives in their new country. These actions fall into four categories:

■ Restructuring existing services and coordinating them better so immigrants and refugees find them easier to use. ■ Targeting immigrant and refugee needs more directly, especially as they relate to public schools, and health care and mental health services. ■ Building new services: interpreter programs, for example, and programs directed toward young people. ■ Providing more and better information to immigrants and refugees, in particular about life in the United States, their legal rights, becoming a citizen and small business ownership.

The research also revealed that people and organizations wishing to help immigrant and refugee populations need to be aware of the best vehicles for sharing information within and among these populations:

■ Family and friends ■ In-language media ■ Word of mouth, stories and personal connections ■ Religious leaders

Living In America: Challenges Facing New Immigrants and Refugees Introduction and In 2004, the Robert Wood Johnson Foundation’s Vulnerable Populations Background to Portfolio asked the research firm of Lake Snell Perry Mermin/Decision the Study Research (LSPM/DR) to conduct a focus group study of immigrant and refugee communities in the United States. The goal of the Foundation’s Vulnerable Populations Portfolio is to support promising new ideas that address health and health care problems that intersect with social factors—poverty, for example, or education or housing—and affect society’s most vulnerable people. The purpose of this study, Living in America: Challenges Facing New Immigrants and Refugees, was, therefore, to gather information on the social factors affecting the health of recent immigrant and refugee families and on the effectiveness of the range of community services which target this specific vulnerable population.

Immigrant and refugee families live difficult lives as they adjust to new communities and new cultures. Some of these challenges affect health status; certainly, access to health care services is difficult, but the education system, jobs, housing, emotional isolation, prejudice and basic cultural differences also shape the ability of these new residents to be healthy in America. In this study, LSPM/DR sought to probe into attitudes and perceptions about these social issues, to better understand exactly what immigrants and refugees experience as they seek supportive services, and to identify opportunities for improving these services in immigrant and refugee communities.

LSPM/DR conducted 32 focus groups between May 2004 and March 2005 in ten cities. Most (22/32) of the focus groups were held with immigrants from South and Central America, Mexico, China, and Arabic-speaking nations, and refugees from Sierra Leone and Somalia. All research participants had lived in the United States for no more than ten years, many of them for less than five years. The rest of the focus groups (10/32) were conducted with “community connectors,” local service providers who work with immigrants and refugees. A full description of the study methodology is contained in Appendix A. Photo: © Getty Images LSPM/DR and the Robert Wood Johnson Foundation would like to thank all the focus group participants and others who helped us with this research for their contributions to this project, especially for their time, ideas and candor. The resonance of their observations comes through in this report, and we are grateful for their willingness to share them with us.

The recommendations in this report are based on snapshots into complex communities. Reports from focus groups provide a sense of the richness of cultures and the diversity of experiences of the research participants. The tradeoff is that the insights in this report come from stories and anecdotes from specific individuals and communities, rather than from more empirical social science research. That type of study remains to be done.

Living In America: Challenges Facing New Immigrants and Refugees Social Issues Affecting There are many similarities in the stories that immigrants and refugees tell about Health Outcomes in their lives in America. It is striking that such diverse groups of individuals—coming New Immigrants from different countries and cultures and for different reasons—identify so many and Refugees of the same needs and challenges. What is clear from this study is that life for immigrants and refugees can be extremely difficult. Most participants in this study said all they do in America is work and sleep, with little else in between. Commonplace tasks like grocery shopping, taking a bus, or finding a doctor can be overwhelming. Their family life suffers from numerous daily strains and parents feel they are growing apart from their children. And yet most remain optimistic and believe life will get better with time. They are most hopeful when talking about their children’s lives and the opportunities for success they now have. In the end, few regret their decision to come to America.

This section of the report categorizes the challenges faced by immigrants and refugees by the underlying social issues that cause them:

■ The type of education services available to these new residents—desperate to learn English—and to their children. ■ Economic issues: the lack of secure jobs that pay an often undocumented population, and their resulting poor or crowded housing they can obtain. ■ Isolation in immigrant and refugee communities: isolation from services that could help them, as well as the emotional isolation caused by stress. ■ Prejudice and discrimination that new immigrants and refugees report they face, as well as the cultural differences that may deter them from seeking and receiving services.

Using the experience of new immigrants and refugees as well as their own words, this section of the report is intended to give a broad picture of how these social issues affect the lives, and especially the health status, of these vulnerable populations.

The Education System Learning English

Immigrants and refugees said that their lack of English proficiency is a barrier to a better life.

Language barriers are a fundamental hurdle for immigrants and refugees in this study and appear to stop them from making vital connections in their communities. Even “Just because I don’t daily tasks like taking a bus or grocery shopping can be overwhelming. One Arab know English, I can’t immigrant from New Jersey described being unable to ask a simple question of an handle even the employee in a local grocery store and ended his story with: “So I cried, not for the simplest errands .” food, but because I was unable to express myself in English.” Chinese Immigrant, Participants told many stories about the problems they have encountered in Orange County, Calif. America due to language barriers. One Chinese immigrant in Chicago was in a car accident and could not describe his role in the accident to the investigating police officer. An Arab immigrant in New Jersey went to the hospital emergency room after she fainted and came home without treatment or medication because she could not communicate with providers about her health condition. Immigrants and refugees reported facing language barriers when they went to the public library, saw a doctor, at their child’s school, and when lost and seeking directions.

Living In America: Challenges Facing New Immigrants and Refugees Research participants seemed motivated to overcome language barriers and to learn English. Most believe they cannot improve their lives and get a better job until they do so.

Immigrants and refugees value English as a Second Language (ESL) programs.

Because learning English is a priority, ESL classes may be the most valued service for new immigrants and refugees. Most seemed to know about ESL programs in “I would walk everyday their community and many have actually attended these classes. “First of all I to school in the winter want to learn English so that I can choose a career. Get a better job. Language is [in order to attend ESL the main thing,” said a Central American immigrant in Prince Georges County, class] .“ Md. Even though some immigrants and refugees said that learning English is very difficult, they seemed determined to succeed. “A lot of times I am not able Somali Refugee, to follow the lesson, so I self-study. I bought a dictionary and study myself,” Minneapolis, Minn. explained a Chinese immigrant from Orange County, Calif.

Some connectors in this study said that ESL classes often go beyond teaching English to include “how to” information. For example, one connector in Schuyler, Neb. who has taught ESL classes explained that he brought in guest speakers such as representatives of law enforcement to inform immigrants about other aspects of life in America. He also said that he was often asked to help fill out forms, accompany immigrants to appointments to interpret, and to explain issues like becoming a citizen and applying for government programs. He was not alone—other ESL instructors in this study say that their students ask them for advice on just about everything. A connector in Minneapolis who works with Somali refugees explained that her clients want more than just English classes: they want other topics taught in ESL and to receive a diploma that would be of value to an employer.

Accessing ESL programs can be difficult, however.

Long work hours and busy lives can keep new immigrants and refugees from participating in ESL programs. “It takes time to learn English. There are very few schools that offer English classes and many times the schedules are not [compatible]. The number one priority is work and to support our families,” explained a connector who works with Central and South Americans in Prince Georges County, Md. One connector in Schuyler, Neb. said, “The opportunities are there but it’s not always convenient. I constantly have requests for classes at a different time.” A few participants praised the convenience of ESL classes offered at their work site. One connector in Minneapolis pointed out that in some locations ESL programs are being cut back due to tight local and state budgets. “You have so many classes and there are so many students. Really, there is a problem now because of the budget this year. There will be a reduction on the certification programs. About 66 percent of Minnesota will not get that money. So, there might be a very big problem over there.”

Lack of identification can also stand in the way of education. One research participant told how she came to America with a teaching degree, learned English, and then was unable to take her GED without a Social Security number.

Living In America: Challenges Facing New Immigrants and Refugees Educating their Children Many immigrant and refugee parents described a variety of problems with schools.

Parents in this study expressed their most intense frustration on the issue of schooling in the United States. They value education highly and believe a good education is the key to success for their children. Education is so important to Chinese immigrants in Orange County, for example, that some live three families to a house in order to live in a better school district. For this reason, many immigrant and refugee parents said they are frustrated that their children fall behind in U.S. schools, that schools lack bilingual teachers and aids, and that they are unable to help their children succeed. Some immigrant and refugee parents in this study said that it is in schools that their children face discrimination and biases due to their different ethnic and cultural background. In addition, schools often are the site where the culture and traditions of immigrants and refugees are most challenged, and where children begin to adapt American values and customs, usually against their parents’ wishes.

Immigrant and refugee children are not prepared for success in U.S. schools.

One of the first problems mentioned is that immigrant and refugee children often fall behind in U.S. schools. “[I am] thankful to the government that our children are sent to school but the problem is we have arrived recently and the kids don’t know the language, the teachers are Americans and they might not even understand what the lesson is all about. They go to the same classes as the kids born here and they might end up sitting in the class without understanding anything,” said a Somali refugee from Minneapolis. The language barriers that children face—and the inconsistent schooling that some received prior to coming to America (particularly true of refugees)—means that immigrant and refugee children fall behind quickly at school.

Refugee children in particular seem in danger of failing at school. A Photo: © 2004 Alex Harris connector who works with families from Sierra Leone explained that these children have not only been out of school for a considerable time, but they have also been exposed to the horrors of war which has traumatized them. She pointed out the need for school systems to work closely with parents of refugee children to find ways to help them succeed in school.

Another problem cited by parents and connectors alike is the lack of bilingual teachers and aids, interpreters, and counselors who can work with struggling or traumatized immigrant and refugee children. As a connector who works with Chinese immigrants in Orange County said,

“[The schools] come to ask for translation, or they ask the kids to translate to counsel the kids. That is a problem, because we don’t have these counseling services that can work with the schools. That is how I ran across some of the kids that were troubled…The school counselors come to us, because they don’t have the facility to translate. They can’t translate the problem to the kids. Sometimes you see the parents will say [to the child], ‘Oh, you are stupid, why do you do that?’ There is not a proactive plan for moving them from like getting an F in chemistry to a B.”

Connectors who work with migrant farm workers from Mexico said the children of these families face many barriers to success in schools. They explained that these children move from state to state, rarely remaining in a school for the entire year. They said high school is particularly hard for these children. Because of feelings of

Living In America: Challenges Facing New Immigrants and Refugees displacement, high school students are more likely to join gangs and, according to this connector, about half drop out of school by the age of 16. A connector from North Carolina who works with migrant farm workers said, “The students are just waiting to turn 16, most of the students, to drop school. They say I do not want this and they join gangs and there is a problem with gangs now.”

What’s Working in Benson, North Carolina

The Migrant Education Program aims to help the children of migrant farm workers succeed in schools by increasing their self-esteem through peer support clubs and other activities that help forge a connection to their peers . The programs are free of charge, located in the public schools with transportation provided . Other programs are slowly emerging to help keep children of migrant farm workers in school and encourage them to attend college . One connector explained the rationale for these programs: “Not having enough extracurricular activities, what else are they going to do? Okay, they are going to be on the street…parents are working, they are alone at home, drugs, gangs, sex, so it is very hard…”

Parents find it difficult to help their children with homework and advocate for “[Parents] are not their children with the school. receiving the kind of support that they would Parents in this study reported their regret that they are unable to help their like to receive in terms children with schoolwork. Part of the reason is because their children tend to of how to discipline, be more proficient in English than they are. “The homework…they go home, in terms of how to the parents don’t speak the language, so they’re behind the next year,” said a communicate with the connector in Dallas. Arab mothers in New Jersey seemed particularly upset about school system, how their inability to assist their children with school-related matters. Many said they to follow up, know felt “helpless” when it comes to helping children with schoolwork. While some where the child is, said they have tried both print and electronic dictionaries as well as other aides, what opportunities after a while these grow tiresome and the child is on their own. are available to the children .” In some cases, it is not so much the language barrier but also the lack of education of the parent. “Kids in the communities that I work with in low-income homes, Connector, they are not faring well. A lot of it is because the immigrant family did not have Minneapolis, Minn. that education themselves. It is not that they are not capable or don’t care, they just don’t have the resources to help tutor them when they fall down through the cracks,” said a connector to Chinese immigrants in Orange County.

Parents also said they find it hard to get involved with schools or communicate their concerns to their child’s teacher, and many feel intimidated interacting with school officials. “Typically the schools will encourage parents to volunteer in the classroom. Well, Somali moms…are not going to volunteer if they don’t know the language,” said a connector who works with Somali refugees in Portland, Maine.

A number of parents say their children face discrimination in schools.

Immigrant and refugee parents said their children face discrimination at school from classmates and teachers alike. Their children feel like they do not belong, and language barriers and academic struggles only add to the problem. “I think the education is good, but there is some discrimination,” said a Mexican immigrant in Schuyler, Neb. Another participant in that focus group added her own perceptions: “I think the same thing. There is a big difference between Americans and Hispanics. They pay more attention to Americans than Hispanics.”

Living In America: Challenges Facing New Immigrants and Refugees Arab immigrants said their children frequently deal with harassment and taunting. “Some children sometimes say that when they say their names and it appears as Arab names, there is some tension,” said an Arab immigrant parent from New Jersey. Another reported, “I wear the hijab in school and some people try and tell me to take it off…They keep on telling me to take it off, and then I say I can’t take it off…so then they say, ‘so is your father Osama Bin Laden?’” Some connectors in this study reported that the problem is so acute for some immigrant and refugee children that they drop out as soon as possible.

Somali and Arab immigrants worry about schools “Americanizing” their children.

Both Somali and Arab parents in this study described a culture clash with American schools. As one Somali refugee parent from Minneapolis said,

“We have also faced difficulties in adapting with the new environment and the culture of this country; also it’s a major problem to come to new life with millions of people of different cultures, language and religion. The children go to schools with all these and they have to struggle adjusting and their mindset changes. When they come home they watch TVs and play video games and they get confused.”

Arab parents in particular blamed schools for undermining their traditions and religion. Said one Arab parent in New Jersey, “They raise the children in a way that teaches them that a person is … selfish, they teach them selfishness and everyone is independent with a private life that we have nothing to do with. They consider our Islamic ideas old-fashioned.”

Discipline, in particular, is a big issue for Arab parents in regard to schools. A few parents in this study said they have had problems with school officials who have accused them of child abuse. “Schools do not understand Muslim discipline,” explained an Arab immigrant parent in New Jersey. A connector for the Arab community said that he plans to hold classes for Arab parents to explain American laws regarding discipline and school policies to avoid these kinds of misunderstandings.

Job Opportunities Many immigrants and refugees feel stuck in low-level jobs and describe and Housing numerous barriers to advancing.

The most important priority of many of the immigrants and refugees in this study is securing the next, better job. While appreciative of that first job when they arrive in the country—they say they are willing to take anything in order to start earning an income—the real problem is moving into a better paying job with more responsibility after they have been in the country a while.

A number of barriers exist to getting a better job, first and foremost being lack of sufficient language skills and education. In answer to what employers are looking for, one connector to Somali refugees in Minneapolis said, “The people I deal with it’s language, language language.” Even low-paying jobs that historically required little or no English are now demanding some language skills. This is especially true in cities where the job market is tight, like Minneapolis. One connector to Somali refugees explained, “There used to be a lot of [entry-level] industry jobs like packaging and jobs like that. That job isn’t available now. Whenever you call them, they will tell you that the person has to speak or at least be able to follow the instructions of the supervisors. They have to read and write the English language.”

Living In America: Challenges Facing New Immigrants and Refugees Others believe that their lack of education—or lack of an American education— hurts them as well. Said one Chinese immigrant in Chicago, “[Employers are] very concerned about your work experience in the United States and also your education background in the United States. They emphasize your U.S. experience. Say for instance you’re an accountant [in China], they will choose somebody with a U.S. diploma.” Many immigrants and refugees who came to the United States equipped with advanced degrees and professional backgrounds are no more immune. Engineers spend years driving cabs; cabinet ministers work as security guards, “jobs that Americans don’t want,” said one connector to refugees from Sierra Leone in Washington, D.C.

Lack of identification and Social Security numbers can also make finding a job difficult. “If we were legal, we’d have better jobs,” explained a Mexican immigrant in Dallas. A Mexican immigrant from Schuyler, Neb. told how she borrowed someone else’s papers in order to obtain her job.

Many said they wanted to own businesses of their own one day, but few if any of the immigrants and refugees in this study knew of job training programs in their community or other ways to enhance their skill level to get a better job. The main way they seek advancement is by attending ESL classes and learning English as quickly as possible. A few pursue their GED. Many work within their own network of friends to learn of new job openings. Many also work a second job to offset the low pay of their primary job. Of note, few people outside their own network of friends seem to be helping these immigrants and refugees advance in the workplace.

Many immigrants and refugees lack safe, affordable housing in their communities.

Finding appropriate housing can be challenging. Cost is the biggest barrier, since immigrant and refugee families say they usually obtain only low-paying jobs in their first years in America. Upon their arrival most spend anywhere from a few days to months sharing cramped quarters with family and friends. Eager to move from this often stressful environment, they have nowhere to turn. One connector to immigrants from South and Central America in Prince Georges County, Md., explained, “They can’t leave because they don’t have anywhere to go to. How do we solve this with the very little housing programs that exist?”

There is also the problem of zoning laws. Minneapolis, Photo: © 2005 Tyrone Turner for example, places a ceiling on the number of individuals who can reside in one dwelling. One Somali refugee there recalled having to hide his child from the authorities. “I was paying 60 percent of my income towards rent and I was hiding my youngest child. If I didn’t do that, they would have required me to rent a three bedroom apartment which I cannot afford. I was hiding my youngest for two years,” he said. Landlords are also asking for job and rent histories, which many are unable to provide. Many families do not qualify for public housing assistance, with incomes slightly above the income limits because both parents work at least one job. If they do qualify, they report being put on waiting lists up to one-year long.

10 Living In America: Challenges Facing New Immigrants and Refugees Immigrants and refugees said the housing they can afford is often in unsafe neighborhoods. The women in these focus groups expressed the most concerns about safety, since many must walk through these neighborhoods due to transportation problems. A number of research participants said they have experienced vandalism and robberies. Many fear the gang activity in their neighborhoods and the easy access to drugs and alcoholism that appears to be increasing among the youth in their neighborhoods. Parents worry the most about raising their children in these environments.

In Benson, N.C., the dwelling structures themselves are unsafe. Connectors to migrant farm workers there say current codes are inadequate and do not require mattresses for sleeping, a telephone or more than one toilet for 12 people. For various reasons, they say inspectors allow uninhabitable dwellings to pass inspection. “A nail here, a nail there…16 people live there,” explained one connector. “You can’t ever think a person could live there.” Health care providers say much of the health care concerns of migrant farm workers are due in large part to their unsanitary living conditions, which spread disease and poor health.

Becoming citizens is the shared goal.

In just about every focus group participants said they wanted to become legal American citizens as soon as possible. Some believed that lack of documentation is the main impediment keeping them from realizing their goals. They want to own their own homes and businesses, scale back their work hours and spend more time with family, and yet they feel they cannot do any of these things until they are legal. For this reason, many said they wanted help in becoming a citizen. They are confused about the required steps and some explained that fulfilling basic needs like paying rent and getting a better job tend to take priority. This is one area where they would welcome assistance. “If I could get legal papers, I could get a real good job like working as an electrician, I could get my own help, or get a job working for the government or something working as an electrician. I could really, you know, get paid well, and I wouldn’t have to kill myself,” said a Mexican immigrant from Dallas.

Isolation of Immigrant and Isolation from government services Refugee Communities Undocumented immigrants and refugees awaiting asylum find it hard to get access to social services.

Lacking legal status blocks immigrant and refugee families from seeking assistance. The participants in this study, many of whom are undocumented, said it prevents them from taking even the first step to reach out for help or information. Instead, they hide and try to become “invisible” so that they do not run into trouble with the immigration authorities. This, in turn, makes them vulnerable to exploitation and extreme poverty.

11 Living In America: Challenges Facing New Immigrants and Refugees Fear of being deported creates reluctance to seek assistance.

Immigrants and refugees often fear taking steps to find assistance that might be available, for example, government programs that could help them with housing or health care. Some said they would not go to local health providers because they too have begun to ask for identification. One connector in Dallas explained that some local health clinics ask for Social Security cards before providing services. “There’s a few of them right now especially [that say], ‘Let me see your Social Security.’ They walk out of the clinic…They are supposed to ask for it now. They cannot deny services, but you ask the question and you’re instilling fear.” A connector in New Jersey who works with Arab immigrants described a conversation with a client:

“She said, ‘But Susie, I don’t have a green card, I’m not legal, but my husband’s legal. My mom, she has breast and cervical cancer, and I’m scared to have it. I’m scared to have the doctor do a mammogram and pap smear.’ I said, ‘Listen to me. You come tomorrow to my center, and I’m going to go in with you and the doctor, and I’m going to ask if your doctor is female, because it’s not allowed for you to see a man…’ She called me on the second day, and said, ‘I’m not going because my husband says immigration will deport me.’”

Others believe that if they accept services now while they are undocumented they will have to pay back services—or be denied citizenship—later on. “Because in the future they want to have their residency or citizenship…Their children are eligible for programs such as TANF but they are afraid this will affect them later on,” said a connector who works with Central and South Americans in Prince Georges County.

What’s Working in the Twin Cities

For the past several years, the Minneapolis–St . Paul Confederation of Somali Community Minnesota (CSCM) has hosted a “Monthly Police-Somali Community Dialogue ”. Early this year, for example, a representative of the Minneapolis Police Department met with Somali community elders, organizers and concerned residents of Minneapolis to discuss the role of community members in stemming the tide of crime within the Somali community . Other guests have included the City Attorney, the City Medical Examiner, a police investigator, a beat cop and an officer responsible for domestic abuse . At these meetings, a guest speaker gives a 5–10 minute presentation; then community members ask questions or make suggestions and comments . The intent is that these meetings will result in informed residents, information for the City and cooperation between the police and the community to reduce crime .

Immigrants and refugees want information about their rights. “Our community does Immigrants’ and refugees’ experiences with harassment, discrimination, and poor not know its rights, treatment in the workplace prompted a number of research participants to ask for so we try to avoid more information about their rights. Because many are here illegally, they believe problems .” they have no rights at all. Even if they have legal status, many fear they will not be treated fairly due to widespread prejudice and discrimination. This keeps them Arab Immigrant, from lodging legitimate grievances against employers, landlords, or even law Union City, N.J. enforcement. Many say they feel powerless. The answer, some believe, is more knowledge about laws in the United States and about their rights. As a Mexican immigrant from Schuyler, Neb. explained, “You think that you can do the same things here and that is where problems start. The culture is different and laws are stricter and they have to be respected. Over there you just have to know how to drive, but here you need a license; this is one of the problems one will find. Many obstacles. You get scared when the police stop you because you don’t understand.”

12 Living In America: Challenges Facing New Immigrants and Refugees For many, the Immigration and Naturalization Service (INS) also remains a mystery; interviewees knew very little about the laws governing their status, including the processes around work and travel. Some Mexican immigrants in Schuyler, said they find it difficult to keep up with the constant changes in immigration law. Other research participants complained about frequent delays in standard paperwork like work visas or residency. One connector to Arab immigrants in Union City, N.J., noted that many immigrants are “stuck—they cannot stay nor can they go back.” Arab immigrants in particular talk at length about how the INS just tells them to “wait, wait” and many feel they are given “a hard time.”

Isolation from Health Services There are many barriers to obtaining health services.

All of the issues mentioned in this report have an effect on access to and use of health care services. Lack of legal status discourages many immigrants and refugees from seeking medical care because they fear they will be turned in. Language barriers are a problem for many immigrants and refugees since they cannot effectively communicate with medical professionals when they do seek care nor can they learn about available health programs in their community. It is unclear whether immigrant and refugee children are accessing any of the health services available at schools. Experiences with discrimination also affect the willingness of immigrants and refugees to see providers outside of their culture or to generally reach out beyond their community when it comes to meeting health needs. Other barriers—such as transportation problems, stigma around discussing certain medical conditions, long work hours and holding on to precious jobs—also inhibit the ability and willingness of immigrants and refugees to seek out and use health services. Yet it is clear that all of these research participants value health care, are concerned about their health and that of their children, and want health insurance coverage if they currently lack it. Photo: © 2005 Janet Jarman Most immigrant and refugees in this study lack health insurance and are not getting preventive care.

Most immigrants and refugees in this study are uninsured. The exceptions include Mexican immigrants in Schuyler who receive coverage offered by the meat packing plant where they work, and the majority of Somali refugees in the Minneapolis focus groups who are enrolled in Medicaid. Most others, however, work for employers who do not offer health insurance, or cannot afford it even if the employer offers it, or do not work enough hours to qualify.

For most immigrants and refugees in this study, preventive care is an unfamiliar concept. One connector spoke to the vastly different medical culture from which Somali refugees hail: “The infrastructure that was in Somalia at that time was heavily focused on curative. If you had a fever or a headache or something, you could go wait in line and see a physician. They would give you something, tell you to take this medicine, or get an injection, then you go home and that’s how it is.” Most immigrants and refugees also cite a practical reason for not getting

Immigrants and refugees still refer to the “INS”— as opposed to the recently reorganized Department of Homeland Security–as the agency with jurisdiction over immigration matters.

13 Living In America: Challenges Facing New Immigrants and Refugees check-ups: they cannot afford to take the time off work. One connector in North Carolina pointed out that the migrant farm workers there “do not have sick days.” Another added, “That is the key. Any day out of work is less money in their pocket so they do try and work even with a sore back or busted ankle, whatever, they are out there working.”

Many immigrants and refugees said they turned to home remedies (herbs and teas, for example) and Tai Chi (in the case of some Chinese immigrants) to cure their ills, but rarely a doctor. “Even if I’m sick, I still stay at home, frankly, and you’ll find me drinking tea and I don’t know what…I don’t go to the doctor, except as a last resort. I don’t know why… I hate to go to doctors basically,” said one Arab immigrant in New Jersey. This is also the case in Minneapolis, where the majority of Somali refugees have Medicaid. As one connector to the Chinese immigrants in Orange County, Calif., herself Chinese, notes, “We use the emergency room for health care rather than taking prevention.” As connectors reported that immigrants and refugees suffer disproportionately from chronic illnesses such as diabetes, asthma, heart disease, and obesity, the reliance on episodic emergency room care is especially troubling.

Physical isolation Transportation is a major problem. “After I found a job I In almost every location, immigrants and refugees reported concerns about their felt that I didn’t know limited transportation options. Getting themselves to and from work and their enough English . I don’t children to and from school are their biggest concerns. Many immigrants and know the roads . I was refugees in this study tell of walking long distances, sometimes late at night and afraid I would get lost through unsafe neighborhoods, because they have no other way to get home. when traveling on trains and then because I Even after years in America, many immigrants and refugees in the focus groups don’t know English say they continue to rely on family and friends for transportation. One Mexican I think it was very immigrant in Dallas, whose aunt had always driven her to their workplace, said, difficult for me .” “And then she stopped working there. I didn’t have a way to get there…many times I would walk.” This demonstrates that carpooling only works if people share Chinese immigrant, the same, regular hours and schedules. Many said they are often stuck at the end Chicago, Ill. of the day and must find their own way home even when they do carpool. Women seem to suffer most from transportation problems, since the men normally drive the one car in the family.

Few own their own cars; those families that are able to afford a car have to share one among many family members. “They have to take a turn. They have to arrange the time,” explained one connector to Chinese immigrants in Orange County. In these cases, say connectors, wives are entirely dependent on husbands (who often use the car to get to work), isolated during the day and at a loss if an emergency should arise.

There are barriers to driving legally.

Immigrants and refugees reported it is difficult to obtain a driver’s license. Navigating the Department of Motor Vehicles (DMV) is hard, particularly for those with limited English proficiency. According to one connector to refugees from Sierra Leone in Washington, D.C.: “It is a matter of educating the refugee, teaching the refugee to take the DMV classes, pass, and go for a learner’s permit, pass and then learn how to drive. Sometimes it takes over six months or a year.” Some said the written test is too formal and confusing, even when provided in their own language and that even if they pass the written test, there are rarely

14 Living In America: Challenges Facing New Immigrants and Refugees bilingual instructors available for the road test. Still others applying for driver’s licenses pointed out that their states are now demanding identification, like Social Security cards. As a result, many said they have no choice but to drive without a license. Others reported they cannot obtain auto insurance because they have no documentation.

Public transit does not provide an answer.

Surprisingly few of these research participants use public transportation, either because it is unavailable in their communities or because schedules are limited. They said that traditional bus schedules often do not accommodate their erratic or late night work hours. Options are even more limited for those who have to travel to and from the suburbs. Most restricted, however, are the migrant farm workers in North Carolina who are usually camped in unpopulated and remote locations. As one connector said, they are “physically tied to their farms.” For others the transportation system is simply too confusing, especially for those whose English is more limited. Newer immigrants and refugees are often unfamiliar with their surroundings, making public transportation even less appealing.

Transportation difficulties have a broad impact.

Limited transportation options have implications that reach beyond just work and school. Although immigrants and refugees fear loss of employment, other important aspects of their lives are affected as well. One connector to Somali refugees in Minneapolis said, “It’s an issue for accessing legal services or just any basic service, such as getting to a medical facility.” Immigrants and refugees agree, pointing out that their children are often unable to participate in after- school activities. Another connector to migrant farm workers in North Carolina explained, “If they cannot stay after school to take those tutoring classes and all that, then they go back home. There are no computers to practice or anything like that so that is where the dropout rate [comes from].” Lack of transportation makes it harder to attend ESL classes, or meetings with Immigration officials, or appointments with health care providers.

Isolation of Families Immigrant and refugee families are under stress.

While this is not something that immigrants and refugees complain of directly in the focus groups, their comments—and the insights from connectors—show that these families are under enormous pressure. Long work hours, both parents working, children left alone after school, cramped living quarters often in unsafe neighborhoods, financial worries (including helping families back home), long commutes to and from work, daily language barriers, and other challenges are taking their toll. Research participants appear exhausted. Many are discouraged. They say they have no time to relax, socialize with other immigrants or neighbors, or to help each other. These pressures lead to fractured relationships within families, increased stress, and serious health issues.

15 Living In America: Challenges Facing New Immigrants and Refugees Children embrace American culture while parents hold onto traditions.

Perhaps the biggest strain on families is the growing gap between immigrant and refugee parents and their children who acculturate much more quickly. As one connector for Somali refugees in Minneapolis said:

“The young are running away from the culture, running away from the parents, because that represents ignorance and it represents embarrassment. So, you see more and more of kids with the tennis shoes, with the hip-hop, and the gangs. We have drug use and teen pregnancy which I’m sure is an aberration in the Islamic culture. So, there is an age point where the languages are no longer viable between parent and young. We have an adult very often who is speaking Somali or mostly Somali–maybe a little bit of basic English. Then, we have a young person who is speaking English and a little bit of Somali. Now, how’s the parenting dynamic in that situation? It’s very problematic.”

Another connector in that same focus group added, “Mostly, the younger generation and the elders are what we would call a culture clash, the difference, “When the immigrants the gap between the old and the young. The young want to become American and come into this country the old want to keep the tradition.” kids are more adaptive to a new life than Arab immigrants in New Jersey and Chinese parents in Orange County raised the elderly people . similar concerns as the Somali parents. They claimed their children have become Eventually the parents less respectful since coming to America and have grown increasingly uninterested and kids become far in their own culture. They voiced serious worries about their children joining apart . Every time the gangs and using drugs. They do not know their children’s friends and do not know parent tries to say what is happening at their child’s school. This saddens them but also frustrates something they say, ‘Oh them since they do not know how to reconnect with their children. mom and dad you don’t know anything, so stuff Finally, connectors said that some cultural norms discourage openness as a way to it .’ They feel isolated, deal with family problems. Parents in many cultures are unused to talking with their they feel useless . The children about problems. A connector who works with Chinese immigrants noted: family relationship becomes cracked right “I guess you kind of have a population where both parents are working their butt in the middle .” off and they are not getting paid. The kids are left on their own and they hope the kids will have a better opportunity and will strive academically. At the same time Connector, Orange there is a gap and I think generally there is not enough communication. Let’s talk County, Calif. about sex, let’s talk about drugs, and let’s talk about your mental issues. I think that is kind of a foreign concept in the immigrant community, talking about those issues and thinking about mental issues. In the Western community it may be a mental whatever but in the Asian community they might not see it as a mental issue. There are these cultural factors we need to consider and I think there is definitely a gap between the children and the parents in terms of certain issues, because it is not part of their lifestyle to talk about that.”

16 Living In America: Challenges Facing New Immigrants and Refugees Prejudice, Discrimination Exploitation and Discrimination and Lack of Cultural Understanding The workplace is the primary site for exploitation and discrimination.

Mexican and Central and South American immigrants in this study told many stories of harassment, poor treatment, inconsistent wages, and health and safety violations at work. Yet they said they do not complain. “They always think that they don’t have any rights because they are here illegally. They don’t know how to complain or whom to complain to,” said a connector in Prince Georges County. The problem, said many immigrants and refugees, is that they do not know their rights and fear that if they were to press legal charges, they would lose their job and probably be sent back home.

Some also felt that immigrants are given the hardest, most dangerous jobs. A Mexican immigrant from Schuyler who works at a meat packing factory said, “A lot of people don’t “There are undocumented workers at [the factory]. They can make them do the speak up for fear of hardest jobs. Sometimes I think they are injured, but they don’t say anything retaliation, that you are because they are afraid of being fired or getting more difficult jobs.” going to get fired from your job because you’re While some migrant farm workers may be familiar with the local Legal Aid’s Farm just trying to speak up ”. Workers Unit, they are too afraid to use it. A connector who provides legal assistance to migrant farm workers in North Carolina said although he can help a client get Connector, back-pay owed to him, the worker will definitely be fired and probably be sent Dallas, Texas back to Mexico. Therefore, he gets few requests to pursue legal means to obtain back-pay. Ultimately, this connector said that it is easier for the farmer to replace a troublesome employee with another Mexican immigrant who will appreciate the job.

Immigrants and refugees report negative interactions with law enforcement.

Many in this study said that they feel profiled by law enforcement officers and unfairly harassed. In Schuyler, Mexican immigrants feel police provide “harassment and not security,” while Arab immigrants in New Jersey describe police as “the enemy.” “That is the only problem. The police. Even if the person is driving well. There is racism here in Schuyler,” asserted a Mexican immigrant. Another said, “They always stop Hispanics. They are on the lookout for us.”

Some told stories of being victims of crime and how the police were not helpful. “Our car stereos have been stolen twice. I have never seen them show any follow- up. They just make the report and file it and they never tell you anything again,” said a Mexican immigrant in Schuyler. Another participant in the same focus group added:

“Last summer we were coming home from the football field, we were still wearing our uniforms. An unmarked car got next to us and followed us home. He said, ‘Who is driving?’ I said, ‘I am.’ He asked for my ID and called another policeman. They arrested us and took our fingerprints and pictures. Why did they arrest us? They said they got us confused with someone they were looking for.”

17 Living In America: Challenges Facing New Immigrants and Refugees Arab immigrants in New Jersey also told stories of police harassment. A woman in the focus groups reported:

“I was in a car accident…The person who had the accident with me…He made me turn left and then he hit me. I had a witness, the guy behind me hit me between the two cars. My car was totaled. I told the police what happened. I heard the guy behind me tell the police what happened. Nothing of this was mentioned in the police report. And they blamed the accident on me. I am sure that all of this is because of my veil… they didn’t pay any attention to me. Even in the ambulance they didn’t take care of me. They put me in the ambulance and I sat on a seat like this one, and the ambulance was turning towards Palisades Hospital I fell off the seat. They didn’t…I mean the treatment was unbelievable. This is what I felt because I know that if someone has an accident that person may be injured and thus be placed in the ambulance in a certain way so as not move any bones in my body. They let me in and sat me on a seat without a seat belt even, they were very rude.”

Troubles with police are also common for Chinese and Vietnamese immigrants in Orange County. A connector who works with this community said, “I see police harassment of our youth because…they dress like the other kids with baggy clothes. If you are Huntington Beach and you are white it would be no problem. But if you are a Vietnamese kid sitting at the mall waiting for your mother to pick you up, even though you are an “A” student, you get picked up by the police and typecast as a gang member.”

Arab immigrants feel discrimination has increased since the events of September 11th. “You don’t have a facility…where Arab immigrants in this study said that there has been a sharp increase in bias people can…find legal against them since 9/11. They must cope with open insults—one even reported representation…after being spat upon—when walking along the street. “I was standing at a red light and 9/11, people are in fear . slowed down so someone could pass, he immediately yelled out ‘terrorist’ and They hear stories of did this to me [indicating a profane finger gesture],” recalled one Arab immigrant one Somali arrested in New Jersey. Others said they felt a more subtle prejudice when dealing with somewhere and they government services. One connector explained, “I even noticed a lot of Social all say, ‘Am I going to Service benefits are judgmental. The judgments are becoming stricter in terms of be next?’ We heard Muslims, in terms of accessing them. There is a rule book and in people’s mind horrible stories of the book is tighter now.” The focus group participants say that this has been people just being hurtful and that they feel less comfortable and safe in America than they used to. picked out and beaten and thrown in jail just on false accusations .”

Connector, Minneapolis, Minn.

18 Living In America: Challenges Facing New Immigrants and Refugees Lack of Cultural Understanding Immigrants and refugees experience language barriers and lack of cultural sensitivity from health care providers.

Language issues cause frustration around access to health care services. Immigrant and refugee patients can have a hard time understanding medical correspondence, whether it be over the phone, on paper (e.g., children’s vaccination records for schools), or verbal directions given in the doctor’s office. Public hospital emergency rooms, where the uninsured in this study say they usually go for medical care, can have lengthy waits for an interpreter if there is even one available. Said one Chinese immigrant in Chicago, “If you’re lucky [there’s an] interpreter. Otherwise you’re getting nowhere.”

What’s Working in Portland, Maine

In Portland, Maine, one local hospital uses picture flashcards to educate diabetic patients who do not understand English about what foods to eat . There was one case of a daughter who met with great success overseeing her elderly diabetic mother’s care . The nutritionist at this hospital, unable to communicate in Somali, had designed flashcards with various foods and other items important to a diabetic diet to teach the mother and daughter about appropriate diet . As a result of this informal yet highly innovative tool, the daughter left the hospital with a better understanding of what she could and could not cook for her mother .

In addition, some pointed to a lack of cultural sensitivity from providers as an obstacle to seeking care. According to a conversation with one connector in Minneapolis, “most providers are still unprepared to deal effectively (with any cultural sensitivity) with the community.” When doctors cannot connect effectively with their patients, she continued, “this increases mistrust and suspicion among the Somali community vis-à-vis medical professionals.”

Some immigrants and refugees also have expectations about health care providers that are at odds with the American system. Many immigrants and refugees tell us that they prefer a provider who shares their background, while women from some cultures —particularly the Somali and Arab women in the focus groups—prefer to visit only another female provider, and yet this rarely happens. Many also expect to be cared for by a doctor and dislike the widespread use of nurses in the U.S. health system. A Somali refugee in Portland, Maine, for example, recalled a visit to a local emergency room where she felt insulted when treated by the nurse instead of a doctor.

19 Living In America: Challenges Facing New Immigrants and Refugees The health care system needs to address cultural stigmas around receiving mental health services. “I came from a war- torn country and I was Mental health concerns were discussed primarily in the focus groups with having anxiety attacks connectors rather than in those with immigrants and refugees themselves; many on a daily basis going immigrants and refugees have difficulty discussing mental health needs. Connectors to graduate school explained that the immigrants and refugees they serve face significant stigma in and working . I literally discussing issues like trauma and depression. Connectors, and even a handful collapsed . I had no idea of immigrants and refugees, spoke of cultures that are averse to Western ideas of that I was suffering counseling and psychotherapy. Said a connector to Chinese immigrants in Orange from Post Traumatic County, Calif., “Even to go to a psychologist, people think you are crazy if you go Stress Syndrome ”. to see a psychologist.” One Arab immigrant in New Jersey suffering from post- traumatic stress disorder, recounted a confrontation with her parents: “I had to go Arab Immigrant, to counseling and my parents could not accept that idea. It is something shameful.” Union City, N.J. The discussions in the focus groups suggest that many refugees—and some immigrants—arrive in the United States with special mental health needs: trauma and depression due to ravages of war, rape, and loss of loved ones. Added to these are the culture shock and disorientation that come when one is suddenly put in a foreign environment. Connectors added that many of the refugees they see are unaware that they suffer from trauma. “A lot of them are coming here traumatized. They get here, they become re-traumatized. And the reason for that is because of [culture] shock…a lot of people are traumatized, a lot of people are depressed and they don’t even know it,” explained one connector who works with refugees from Sierra Leone in the Washington, D.C., area. Another connector said, “The woman finds herself in a peaceful environment, but believe me, she’s still fighting the war that she left back home…there are no mechanisms upon which she can rely [for help].”

There is a great need in almost every community for mental health services that are both affordable and culturally relevant. “I don’t know the complexities in the One connector to Arab immigrants in New Jersey explained, “No one is there to community of providing take care of their psychological needs. There is a mental health issue as well and it mental health care, but is not being addressed. We clearly see this is affecting not only the first generation it’s always different immigrants but their children as well.” In Benson, N.C., representatives from Tri- in each refugee and County Community Clinic described their lack of enough specialists to meet the immigrant community, mental health demands of their growing community: currently they only have two the acceptance of mental health providers on staff and they serve over 12,000 migrant farm workers mental health care .” each year. Although the clinic provides mental health screening for migrant farm workers on-site (in the camps), there are no nearby agencies to which to refer Connector, people. Almost every community lacks enough mental health providers, according Minneapolis, Minn. to these providers.

Connectors said that the American understanding of the refugee experience and of refugee attitudes toward mental health services is limited and can sometimes offend rather than heal. One connector to refugees from Sierra Leone offered some advice: “An African would hardly answer you in the first person singular when it really involves things that are personal… When you ask in the third person you say, ‘how do they treat people back home during the war?’ ‘Oh

According to one connector to Somali refugees in Minneapolis, “The Center for Victims of Torture along with the University of Minnesota conducted a …multiyear study of the Somali population in terms of assessing levels of torture and war violence in the population. They found extremely high levels of exposure to trauma, violence, or torture either directly or vicariously in the community both amongst men and women.”

20 Living In America: Challenges Facing New Immigrants and Refugees they…,’ they will start [talking]…Understand where this person is coming from. There you start building a relationship as trust.” Connectors to Somali refugees in Portland agreed. One suggested that, “It is really important to have that bridge. In other words, to have somebody from that culture who understands the U.S. culture, and also understands the culture of the person.”

Connectors said that most of the immigrant and refugees they see prefer to keep emotional problems hidden and rely only on family members for help. One connector to Arab immigrants in New Jersey—herself an immigrant of Arab descent, said, “There is a cultural issue we have that you are not supposed to talk about your problems. There is not an easy emotional release of your stress…We are trained by our culture to keep it to yourself and you cry in your bedroom and everyone is happy.”

Others turn to spiritual counseling. As one connector to refugees from Sierra Leone explained, “If I come to a family and say, ‘OK, family X, you need psychotherapy,’ they’re going to look at me as if I am crazy, but if I tell them, ‘you need to pray,’ or ‘you need to go see the Pastor,’ they would be more receptive.” In Benson, N.C., a connector explained that one of her high school students was sent home to Mexico to see a witch doctor rather than see the school psychologist for emotional problems.

21 Living In America: Challenges Facing New Immigrants and Refugees Recommendations Using the information gained through these focus groups, LSPM/DR has identified two main ways to improve the services provided to immigrants and refugees:

■ Work on the programs that serve this population: restructure or expand them, or develop new programs in key areas. ■ Learn about and use the communications methods that are most valued by this population.

Program-Related Actions The issues facing immigrants and refugees are interconnected in ways that make solutions challenging. For example, legal status, lack of English proficiency, fear of discrimination, and poor transportation can all play a role in an immigrant’s or refugee’s ability to receive health care services. Programs that serve immigrant and refugee populations will be most successful if they can address this web of interconnected needs.

We have identified four categories of actions that could be taken to improve such programs:

■ Restructuring existing services; ■ Targeting immigrant and refugee needs more directly in current public services; ■ Building new services; and ■ Providing more and better information.

22 Living In America: Challenges Facing New Immigrants and Refugees The following table presents the recommended actions for each of these categories and ideas on how to implement these recommendations.

Table 1. Actions and Implementation Ideas

Recommended Actions Ideas for Implementation Restructure existing services Integrate Services to Make them Easier for Effective approaches to service integration include housing a range of services (e.g., legal services, ESL Immigrants and Refugees to Find and Use classes, services for school-age children, mental health counseling, help with housing) in the same building. The International Institute of New Jersey, for example, provides all of these services and more in one location. Mary Center in Washington, D.C., similarly combines health services with legal services, housing, and other assistance. Use ESL as a Window to Other Services and ESL classes provide an important opportunity to reach immigrants and refugees who might not use any other Information community service; ESL classes are perhaps the best known and best used service or program in many of the communities we visited.

This study also found that the ESL instructor is one of a few highly trusted individuals that immigrants and refugees turn to for help. “It’s the ESL instructors they feel comfortable with, not the regular teachers,” said one connector to migrant workers in Benson, N.C.

Many instructors do much more than just teach English in their ESL classes: they teach about banking, how to interact with police, and how to obtain health care as well as dealing with immigration issues. Others like to incorporate “softer” topics about American culture and customs, and may bring in guest lecturers and outreach workers to enlighten their students. Target immigrant and refugee needs more directly in current public services Create More Supports for Immigrants and Ideas from focus group participants on improving services in the schools include: Refugees in Schools ■ More bilingual school staff and more use of interpreters. ■ Written notices sent home in more languages. ■ More outreach to immigrant and refugee parents who may be too intimidated to participate in school activities. ■ Tutoring for their children to prevent them from falling behind. ■ Greater sensitivity among school staff for different cultures and traditions. ■ More vigilance against discrimination at schools by students and staff. ■ Seminars for immigrant and refugees explaining school rules and procedures. ■ School-based programs to bring refugee and immigrant parents into the life of the school. ■ More counselors and mental health professionals trained to work with immigrant children and, in particular, traumatized refugee children, to help them settle into school life. Offer More Affordable and Culturally Sensitive Most immigrants and refugees in this study appear to be receiving only infrequent health care, and almost no Health Care Options preventive care. Barriers to health care services include: ■ Lack of insurance. ■ Limited availability of free or low-cost care and concern that such programs are not available to undocumented people. ■ The desire to see a health provider from the same ethnic background who speaks the same language. ■ Limited knowledge of public programs such as Medicaid, SCHIP and WIC. Use “Cultural Bridges” to Break Down Stigma Connectors in many focus groups, especially those dealing with refugees, suggested that more attention Surrounding Mental Health be paid to understanding the cultural barriers to mental health services. Some recommended what they call “cultural bridges” or “cross cultural providers”—using community members to enlighten providers about cultural attitudes toward mental health. A similar model is the International Institute of New Jersey’s “Pathways” program which encourages community leaders to engage and educate their own community members on mental health and other services. Build new services Make Interpreter Services More Widely Immigrants and refugees in our focus groups ask for more interpreters in sites such as hospitals, doctors’ Available offices, schools, local courts, banks, and the DMV. One Arab immigrant in Union City, N.J., said that having an interpreter in the courts is the “second best defense” they have after knowing their rights and laws. A fellow Arab immigrant said he knows of only one courthouse in their area that has a steady, reliable interpreter on staff. Chinese immigrants in Orange County, Calif., report that Spanish and Vietnamese interpreters tend to be available, but that they struggle to find Chinese-speaking help.

23 Living In America: Challenges Facing New Immigrants and Refugees Recommended Actions Ideas for Implementation Create More Activities for Immigrant and The focus groups revealed a need for places where their children can congregate when school is out. Some Refugee Youth parents say their child’s public school does not offer any after-school programs; children may also be unable to attend such programs because they lack transportation. This is especially true in smaller cities. In Schuyler, Neb., for example, parents wish their children had a YMCA, “like the one in [nearby] Columbus.”

Parents and connectors worry about children, with so much time on their hands and little adult supervision, turning to drugs, alcohol and gangs. A connector to Chinese immigrants in Orange County said, “I think our kids get drawn into it, because we are not providing any alternative. We lack the youth centers. If the parents, or you, or the kids are not involved in church—some of the Vietnamese, our Buddhist churches they have something similar to a Boys and Girls kind of program, which is very good. In the Chinese communities in Irvine they have Chinese School so you can engage in those kinds of activities or…have music lessons. For some of the lower economic group what else do you do? You go to a park and get beat up by other ethnic groups.” Provide more and better information Make Refugee Orientation Programs Ongoing Some refugees and connectors suggest that more comprehensive, on-going orientation programs would be and Address Longer-Term Needs beneficial. They say that current, one-time programs only address the basic needs refugees have when they first arrive. Follow-up programs could help refugees with issues such as transportation, becoming citizens, obtaining health care services, dealing with discrimination, that emerge once refugees have been settled in America for some time.

Refugees also say they retain little of what they learn in their orientation program due to the stress of arriving in the United States. As one connector to Somali refugees in Portland, Maine, noted, “People need constant orientation. People are not going to retain all this information.”

Others say the content of some refugee orientation programs could be changed to incorporate more “survivor skills.” Orientation sessions focus on the immigration process and contain little information on acculturation skills such as shopping for groceries or using the telephone or public transportation. “There is a lot of education still to do with the kinds of things that we take for granted,” explained one connector to refugees from Sierra Leone in the Washington, D.C., area. “We have instances where they use bleach to clean vegetables, because they don’t know the safe use of some of the products…We still think that they know, but they don’t know.” Provide More Information about Legal Rights Immigrants and refugees would benefit from information about several specific areas of the law: ■ Labor law. With scant understanding of labor laws, many are working 16 hours or more each day; others say they are afraid to quit a job for fear of being sent back to their country of origin. ■ Traffic codes. Immigrants and refugees reported being in accidents and not knowing how to resolve them. This is an area where participants feel their limited English proficiency makes them especially vulnerable, and so information about the specific steps they should take if they are in a traffic accident would be valuable. ■ Discrimination. Many are unaware that they have any legal recourse when they face anti-immigrant discrimination in the work place, from law enforcement, in schools, and in their neighborhoods.

Some communities we visited report holding informal seminars to bring law enforcement together with immigrants and refugees; such meetings enable participants to ask questions about rights and laws and for law enforcement to hear the concerns of these populations. Offer Citizenship Instruction and Guidance on A shared goal of most of the immigrants and refugees in this study is to obtain U.S. citizenship. Most, however, Immigration Problems are not familiar with the process of becoming a citizen and do not know how to get information on this topic. Others are not clear about immigration requirements. Without a source of reliable information about citizenship and residency, immigrants and refugees tend to rely on word of mouth and hearsay, and research participants therefore say they would like more information on these issues that they know is trustworthy. In one community we visited, information about citizenship was provided in ESL classes through a guest lecturer who provided legal advice to immigrants and refugees. Supply Opportunities to Learn about Starting Many immigrants and refugees in this study express an interest in opening their own business, but few know their Own Business and Obtain Job Skills how to do this. Others simply want to learn practical business skills that can help them obtain a better paying job. A resource that can help immigrants and refugees learn about these topics seems to be missing in the communities we visited and would be valued by research participants.

24 Living In America: Challenges Facing New Immigrants and Refugees Communications Methods Immigrants and refugees can be invisible in communities. Research participants explain why they are often reluctant to reach out for help, but this reluctance is frustrating for service providers and others who want to help them. Immigrants and refugees need information about a range of topics on life in the United States. Their knowledge of the services and programs available in their communities is minimal.

In the focus groups, immigrants and refugees explain how they want to receive information. All service providers have an opportunity to improve their outreach by making better use of the communication networks that are used and trusted by immigrants and refugees.

First, the information must be in the appropriate language for each population. In every focus group, participants complain about the limited information they can find in their own language (although Spanish-speaking participants have more access to information than others in the study). Participants then describe the sources they use most often to get information:

■ Family and friends ■ In-language media ■ Word of mouth, stories and personal connections ■ Religious leaders

Family and Friends The primary source of information for almost all of the immigrants and refugees in the study is family and friends, usually those who have been in America longest. These close-knit communities look to each other first and foremost to learn about life in the United States and about programs and services in the community. For example, Mexican immigrant mothers in Dallas knew from friends that their children could qualify for Medicaid and that they could qualify for WIC; word spreads quickly when there is a program or service that could benefit immigrant families. Other important information—about immigration, jobs, rides to and from work—is relayed from one to another, informally. Even those who have been in America for more than a few years say they turn to family first for information.

What’s Working in Dallas, Texas

In Dallas, young Mexican immigrant boys and men play soccer on weekends and, for many adult men, it is also their only form of social interaction . According to connectors, Mexican immigrants have formed their own pirate league with over 600 teams . “They are playing under their own rules…90 percent of them they’re illegal and that’s all they got…But it’s wonderful to see them get together,” said one connector to Mexican immigrants there . This pirate league provides an excellent opportunity for outreach, since it is a place where the entire community comes together at once .

It is key to tap these informal family and community networks and to use them to disseminate important information about services and resources. Using local, trusted community members as messengers could be an effective way to get into these networks.

25 Living In America: Challenges Facing New Immigrants and Refugees In-Language Media Immigrants and refugees also rely heavily on in-language television and radio, and to a lesser extent newspapers, for information and entertainment. For most, television is the main source of news, especially updates on the political situation back home. Connectors agree. Said one in Orange County, Calif., “The radio and the TV are the best, because most of the people don’t have transportation services to go to a seminar or a presentation.” Another connector said, “You go right into the home with that.” For many, especially seniors, television relieves boredom. Explained one connector to refugees from Sierra Leone (who watch mainly for war news), “I think that’s the main thing they do ‘cause they don’t have any place to go.” In Benson, N.C., radio is said to be the more popular medium, since many migrant farm workers are without television sets. The area boasts a radio station that serves the Hispanic community in North Carolina and two neighboring states. It provides public service announcements and many education programs in Spanish. Connectors in this community describe radio as an extremely powerful medium.

What’s Working in Minneapolis, Minnesota

In Minneapolis, Somali TV plays a pivotal role when it comes to educating the Somali refugee community . We first heard about the availability and popularity of Somali TV programming while visiting the Minnesota International Health Initiative (MIHV) . The non-profit organization uses TV to raise awareness about health concerns (often very private concerns) among the community and offers many programs to combat these concerns (for example, they regularly broadcast a Somali Family Planning and Child Spacing video) . Programs that are aired on Saturday mornings are often rerun several times during the week, due to their popularity . Connectors and refugees alike said, “everyone [all Somalis] knows” when to tune in . Somali TV is also said to reach even the most isolated of the community, elderly and female refugees, both of whom tend to spend most of their time in the home . Notably, women indicate that they know about many important services—“the way the community can help us”—from Somali TV .

Connectors in every city suggest that lower literacy levels among the majority of their immigrant and refugee clients make television and radio more effective media and outreach tools than newspapers. The one exception is Chicago, where many of the Chinese immigrants we met with rely on Chinese language newspapers for important information, such as job listings.

The International Institute of New Jersey is one service agency that sponsors a regular radio program that addresses topics of concern to the immigrants and refugees they serve. They believe this is an effective way to broaden their reach into the community while raising awareness and providing useful information at the same time.

26 Living In America: Challenges Facing New Immigrants and Refugees Word of Mouth, Stories and Personal Connections Connectors urge greater use of active word-of-mouth networks, and to a lesser extent television and radio, because most of these immigrants and refugees hail from oral cultures. Connectors say talking and telling stories face-to-face are the most effective methods of communication. Connectors take this into consideration when attempting to educate the Somali community in Minneapolis. “Stories work,” said one connector there, much more so than brochures or fliers. Refugees agree that they prefer to talk to one another, face-to-face, than to read or write.

Personal connections or at least some familiarity between the immigrant/refugee and the person providing them with help is essential for effective outreach. One connector to South and Central American immigrants in Prince Georges County, Md., said about her clients, “I think they open up when they see Latin faces.” A connector to migrant farm workers in Benson, N.C., shared similar thoughts: “They trust me… [They come to my office on Monday] and on Tuesday they see me in Wal-Mart.” Connectors agree that immigrants and refugees tend to not only listen, but also talk more openly, if they are approached by someone they know. As a result, connectors often end up discussing issues that go far beyond their professional scope. A connector explained, “[Housing] is not the only thing you end up doing…you end up talking about taxes, health, immigration, everything…you become a counselor on everything.”

Bilingual teachers, aides, counselors within the public school system provide Photo: © Getty Images valuable information and assistance to many immigrants and refugees, especially Hispanic immigrants. Said one connector to Mexican immigrants in Dallas, “The school is respected because that’s [our] culture…the teacher walks on water.”

In some communities, the agencies that sponsor refugees’ arrivals, such as Catholic Charities in Portland, Maine, and Lutheran Social Services in Minneapolis and St. Paul, continue to be a trusted source of information for refugees even years after their initial arrival to the United States. Although these agencies are not always set up to provide services over the long term, refugees know and trust their staffs and may be willing to seek information from them, making these agencies a possible communication vehicle for other service providers as well.

Religious Leaders Often coming from a highly religious background where religious leaders are greatly respected, many new immigrants and refugees turn to churches and mosques for spiritual support upon arrival. Religious organizations also provide practical help. Many offer ESL classes and other educational programs: a mosque we visited in Union City, N.J., for example, brings in speakers to discuss issues such as American parenting styles. Some serve as informal job banks, while others address needs such as food, clothing and shelter. Their church tends to be the main, and often first, meeting place for refugees from Sierra Leone living in the Washington, D.C., area. Its pastor said, “It is the church where they meet

27 Living In America: Challenges Facing New Immigrants and Refugees with their friends and then they go back home—and from that place we begin to show them the system. Most times we are the first people that will show them [a] McDonald’s.” It is clear that religious organizations are able to provide a source of comfort. Some Arab immigrants in Union City, N.J., describe their mosque as their second home.

For these reasons, organized religion in America can provide an effective opportunity for community outreach. Buddhist monks in Orange County, are already active in outreach with various social services, as are many Episcopalian and Evangelical ministries in and around Benson, N.C. In fact, in Benson, the majority of migrant farm workers are Roman Catholic and yet they are attracted to evangelical ministries because they fill a void: they provide much-needed services such as food, shelter, clothing and transport, as well as some sports and recreation opportunities for their children while the Catholic church does relatively little.

Other Examples of Communications Networks

In Schuyler, Neb ., some Mexican immigrants have found a good source of information and assistance in their employer . The “Pack” in Schuyler [the meat packing factory] offers its employees many opportunities for self- improvement, including classes in ESL, GED, computer training, and parenting (Head Start) . These are offered in the plant’s in-house “Family Learning Center .”

The Asian American Senior Citizens Service Center in Orange County, Calif ., and the Chinese American Service League in Chicago, are examples of organizations set up to provide assistance to a single immigrant group, in this case Chinese immigrants . Both organizations offer job training and placement services, ESL classes, as well as numerous forms of entertainment and social interaction . Chinese immigrants look to these organizations first, and rarely know of anywhere else to turn when they need help . Because of the important role these organizations play in the lives of their clients–especially the elderly—both are logical points of service for any outreach activity . Notably, similarly effective enterprises were not mentioned elsewhere .

The “welfare office” (Minnesota Department of Social Services or MDSS) is a source of information for many refugees, especially women . It is clear from their comments in the focus groups that most women know where to go and how to apply for Medicaid and food stamps, as well as ESL classes (part of the refugee package) . MDSS, they say, assigned them to a particular school for ESL and gave them bus passes to get to class .

28 Living In America: Challenges Facing New Immigrants and Refugees Appendix A: Immigrant and refugee communities have historically proven to be difficult Study Methodology to reach, making LSPM/DR’s study methodology potentially useful to other researchers. The study had two parts:

■ A pilot phase, involving five communities, primarily in large cities. ■ Phase One, which incorporated refinements based on the pilot phase and involved five more diverse communities.

Pilot Phase Pilot phase cities were chosen because:

■ Census data showed they had a significant population of recent immigrants and/or refugees. ■ RWJF grantees who work with immigrant and refugee populations recommended them. ■ They provided representation from across the United States.

Table 2 contains a detailed breakdown of the locations and research participants in the pilot phase.

The process in each city had two parts:

1. Initially, before meeting any immigrants or refugees, LSPM/DR conducted one focus group with community “connectors” in order to learn about the needs immigrants and refugees in that community as well as the kind of assistance available. Connector groups consisted of social workers, health care workers, housing managers, professional interpreters, mental health counselors, Medicaid enrollment workers, ESL teachers and other service providers. Connectors were recommended initially by local RWJF grantees; from these first contacts LSPM/DR staff were referred to other service providers who were asked also to participate in the focus group. 2. This focus group was followed by a series of group interviews with immigrant or refugee families. Local providers, sometimes RWJF grantees, helped identify and recruit research participants. Multi-generational families were selected in order to gain insight to the breadth of needs facing immigrant and refugee families. In most cases one family was interviewed at a time, although occasionally two families participated together. Roughly two to three group interviews were conducted in each city.

LSPM/DR staff made it a point to partner with trusted local providers who helped sponsor the focus groups and find comfortable settings and even local caterers. The focus groups took place in locations like a church hall, a local public library, a mosque, and a high school. Holding the focus groups in places where the participants felt comfortable helped ensure a good turnout for the focus groups. Equally important was using a moderator from the community, if possible, or of the same ethnic background. LSPM/DR staff identified and trained local community members to play this role, or contracted with a trained focus group moderator of the appropriate ethnic background.

29 Living In America: Challenges Facing New Immigrants and Refugees All group interviews and focus groups were designed to be open-ended and informal to allow immigrant and refugee families as well as their providers to drive the conversation and raise issues of importance. The discussions (with both connectors and families) covered these topics:

■ General experience settling in America; ■ Goals, aspirations, daily routines; ■ Specific or immediate needs as well as longer term needs, including employment, education, physical and mental health, transportation, housing, legal services, child care and language issues; ■ Awareness of and access to programs and services; experiences seeking and enrolling in programs; and ■ Sources of information and support.

In both the pilot phase and Phase One, connectors and the immigrants/refugees themselves at times provided a very different picture of services in their community. Connectors, for example, would describe the many services they provide and how many families they assist, yet immigrants and refugees would report being unaware of such services and unfamiliar with these very same service providers.

Table 2: Pilot Phase Cities and Participants

Site Population Focus Group Type Rationale Prince Georges County, Md. South and Central American 1 Group w/ Connectors Emerging community; overextended local resources. Immigrants 2-3 Groups with Families Washington, D.C. Refugees from Sierra Leone 1 Group w/ Connectors Large refugee community; fairly strong infrastructure for 2-3 Groups with Families dealing with refugee issues. Chicago, Ill. Chinese Immigrants 1 Group w/ Connectors Strong local service providers; established immigrant 2-3 Groups with Families community. Dallas, Texas Mexican Immigrants 1 Group w/ Connectors Large immigrant population; experience dealing with 2-3 Groups with Families immigrant concerns; resources possibly overwhelmed by demand. Portland, Maine Refugees from Somalia 1 Group w/ Connectors Emerging population; smaller city experience; fewer 2 Groups with Families resources available.

Phase One The experience in the pilot phase led to important changes in four areas for Phase One: the cities targeted (Table 3 lists the cities involved in Phase One), the background research conducted, the methodology used to interview the immigrants and refugees themselves, and the use of follow-up interviews.

Targeted Cities Although our research populations largely remained the same (with the addition of migrant farm workers from Mexico), we expanded our criteria for site selection beyond density, RWJF recommendation and location. Our aim was to have diversity in:

■ Size of city—smaller, less resources vs. larger, urban centers; ■ Social services infrastructure—struggling vs. more resources; ■ Dominant ethnic group vs. one of many newly arriving groups; ■ First wave vs. second wave; and ■ Immigration due to employment vs. community or family connections.

30 Living In America: Challenges Facing New Immigrants and Refugees Background Research In Phase One, the research team immersed itself in the community prior to any focus groups by gathering background information through interviews and then by spending about 6–8 hours touring the community and meeting with local leaders. Before arriving in the city we conducted 8–12 lengthy contextual interviews by telephone and reviewed recent articles and news stories about these communities. From this work we developed background memos on each city. We also added tours of ethnic enclaves, favored “hang-outs,” and local clinics, which helped the research team to pick up on subtle undercurrents in the community and to know some of the locations, institutions, and people to which the focus group participants referred. The research team also conducted on-site informal interviews with various providers immediately before the focus groups. All these activities gave the research team a broader understanding of the community as well as a clearer picture of the social services infrastructure that was (or was not) in place.

Focus Group Methodology We continued to start with one connector focus group although we broadened the definition of connector to include individuals in less formal positions, such as spiritual leaders, community advocates and members of the community who themselves became informal leaders. We also moved from the “family interviews” used in the pilot phase to more traditional focus groups. In Phase One, we conducted these focus groups with 8–12 immigrant/refugee adults. We chose adults who were not related, so researchers could probe more deeply into sensitive issues and experiences which participants might have been reluctant to discuss with family members.

Follow-up Interviews In Phase One, the research team conducted phone interviews with individuals who were important to the study but who were unable to meet with us on-site. In a few cases, we also followed up with certain focus group participants who were quiet during the focus groups, to ensure that we did not lose their voice. This was also done to be sensitive to cultural and other barriers that may have made it difficult for participants to participate during the larger group meetings.

Table 3: Phase One Cities and Participants

Site Population Group Type Rationale Schuyler, Neb. Mexican Immigrants 1 Group w/Connectors Immigrants recruited by local meat packing industry to 2 Groups w/Adults historically white rural community. Orange County, Calif. Chinese Immigrants 1 Group w/Connectors “Invisible minority” living among many other immigrant 2 Groups w/Adults groups in crowded urban area. Many demands on local resources. Union City, N.J. Arabic Immigrants 1 Group w/Connectors Understudied population; second largest Arabic 2 Groups w/Adults population in the U.S.; unique post 9/11 experience. Minneapolis/St. Paul, Minn. Refugees from Somalia 1 Group w/Connectors Largest Somali community in the U.S.; seen as 2 Groups w/Adults successful transition; strong local providers. Benson, N.C. Migrant Farm Workers 1 Group w/Connectors Agricultural; fluid population hard to serve; from Mexico unique needs.

31 Living In America: Challenges Facing New Immigrants and Refugees Appendix B: In the body of this report, the issues shown by our research to be facing immigrants Issues Ranked and refugees are organized by the social factors to which they pertain. In this by Frequency Appendix, we instead present these issues in order of significance, based on the and Prevalence frequency with which these problems were raised in the focus groups, the degree to which they were widespread and affected all of the immigrant and refugee groups in this study, and the level of intensity with which they were discussed. Section 3 contains full descriptions of the nature and impact of each of these issues.

1. Legal status (lack of legal documentation) 2. Language—lack of proficiency with English 3. Exploitation and Discrimination 4. Stress 5. Undiagnosed and untreated mental health conditions 6. Problems with the schools 7. Lack of job mobility and low-paying jobs 8. Lack of transportation and physical isolation (especially for women) 9. Safety

32 Living In America: Challenges Facing New Immigrants and Refugees 12/10/2018 Peter Temin: Economic Mobility Requires the Nearly Impossible - The Atlantic

BUSINESS Escaping Poverty Requires Almost Years With Nearly Nothing Going Wrong The MIT economist Peter Temin argues that economic inequality results in two distinct classes. And only one of them has any power.

GILLIAN B. WHITE APR 27, 2017

KEITH BEDFORD / REUTERS

A lot of factors have contributed to American inequality: slavery, economic policy, technological change, the power of lobbying, globalization, and so on. In their wake, what’s left?

That’s the question at the heart of a new book, The Vanishing Middle Class: Prejudice and Power in a Dual Economy, by Peter Temin, an economist from MIT. Temin argues that, following decades of growing inequality, America is now left with what is more or less a two-class system: One small, predominantly white upper class that wields a disproportionate share of money, power, and political inﬂuence and a much larger, minority-heavy (but still mostly white) lower class that is all too frequently subject to the first group’s whims.

https://www.theatlantic.com/business/archive/2017/04/economic-inequality/524610/?utm_source=fark&utm_medium=website&utm_content=link&ICID… 1/6 12/10/2018 Peter Temin: Economic Mobility Requires the Nearly Impossible - The Atlantic Temin identifies two types of workers in what he calls “the dual economy.” The first are skilled, tech-savvy workers and managers with college degrees and high salaries who are concentrated heavily in fields such as finance, technology, and electronics—hence his labeling it the “FTE sector.” They make up about 20 percent of the roughly 320 million people who live in America. The other group is the low- skilled workers, which he simply calls the “low-wage sector.”

Temin then divides workers into groups that can trace their family line in the U.S. back to before 1970 (when productivity growth began to outpace wage growth) and groups that immigrated later, and notes that race plays a pretty big role in how both groups fare in the American economy. “In the group that has been here longer, white Americans dominate both the FTE sector and the low-wage sector, while African Americans are located almost entirely in the low-wage sector,” he writes. “In the group of recent immigrants, Asians predominantly entered the FTE sector, while Latino immigrants joined African Americans in the low-wage sector.”

After divvying up workers like this (and perhaps he does so with too broad of strokes), Temin explains why there are such stark divisions between them. He focuses on how the construction of class and race, and racial prejudice, have created a system that keeps members of the lower classes precisely where they are. He writes that the upper class of FTE workers, who make up just one-fifth of the population, has strategically pushed for policies—such as relatively low minimum wages and business-friendly deregulation—to bolster the economic success of some groups and not others, largely along racial lines. “The choices made in the United States include keeping the low-wage sector quiet by mass incarceration, housing segregation and disenfranchisement,” Temin writes.

And how is one to move up from the lower group to the higher one? Education is key, Temin writes, but notes that this means plotting, starting in early childhood, a successful path to, and through, college. That’s a 16-year (or longer) plan that, as Temin compellingly observes, can be easily upended. For minorities especially, this means contending with the racially fraught trends Temin identifies earlier in his book, such as mass incarceration and institutional disinvestment in students, for example. Many cities, which house a disproportionate portion of the black (and increasingly, Latino) population, lack adequate funding for schools. And decrepit infrastructure and lackluster public transit can make it diﬀicult for residents to get

https://www.theatlantic.com/business/archive/2017/04/economic-inequality/524610/?utm_source=fark&utm_medium=website&utm_content=link&ICID… 2/6 12/10/2018 Peter Temin: Economic Mobility Requires the Nearly Impossible - The Atlantic out of their communities to places with better educational or work opportunities. Temin argues that these impediments exist by design.

Despite the bleak portrait that he paints, he doesn’t believe that the U.S. necessarily has to be like this. He oﬀers five proposals that he says might help the country return to more equal footing. Some are fairly clear levers that many before him have recommending pulling: expanding access to and improving public education (particularly early education), repairing infrastructure, investing less in programs like prisons that oppress poor minorities, and increasing funding for those that can help build social capital and increase economic mobility. But other suggestions of his are more ambitious and involve fundamentally changing the cultural beliefs that have been reinforced over generations. Temin advocates doing away with the belief that private agencies can act in the interest of all citizens in the way that public entities can, and should. His final recommendation is to address systemic racism by reviving the spirit of the Second Reconstruction of the 1960s and 1970s, when civil-rights legislation helped to desegregate schools and give black Americans more political and economic power.

Temin notes that not all of these things need to be accomplished in order for America to reverse the increasingly divided path it’s on. But at the moment, implementing even one of these recommendations would prove a tall order.

We want to hear what you think about this article. Submit a letter to the editor or write to [email protected].

https://www.theatlantic.com/business/archive/2017/04/economic-inequality/524610/?utm_source=fark&utm_medium=website&utm_content=link&ICID… 3/6 12/10/2018 Peter Temin: Economic Mobility Requires the Nearly Impossible - The Atlantic

https://www.theatlantic.com/business/archive/2017/04/economic-inequality/524610/?utm_source=fark&utm_medium=website&utm_content=link&ICID… 4/6 12/10/2018 Peter Temin: Economic Mobility Requires the Nearly Impossible - The Atlantic

https://www.theatlantic.com/business/archive/2017/04/economic-inequality/524610/?utm_source=fark&utm_medium=website&utm_content=link&ICID… 5/6 12/10/2018 Peter Temin: Economic Mobility Requires the Nearly Impossible - The Atlantic

https://www.theatlantic.com/business/archive/2017/04/economic-inequality/524610/?utm_source=fark&utm_medium=website&utm_content=link&ICID… 6/6

Fall 08

Confronting the Housing Squeeze: Challenges Facing Immigrant Tenants, and What New York Can Do

Pratt Center for Community Development, with the New York Immigrant Housing Collaborative1

• NEW YORK IMMIGRATION COALITION • ASIAN AMERICANS FOR EQUALITY • CHHAYA COMMUNITY DEVELOPMENT CORPORATION • MAKE THE ROAD NEW YORK • MIRABAL SISTERS CULTURAL COMMUNITYCENTER • YKASEC-EMPOWERING THE KOREAN AMERICAN COMMUNITY • NEIGHBORS HELPING NEIGHBORS*

EXECUTIVE SUMMARY

Immigrant renters in New York City confront severe challenges finding safe, decent, and affordable housing. This report identifies those challenges, and finds that by almost every measure, immigrant tenants face housing problems to a degree much greater than native-born New Yorkers. It also proposes measures New York City and State officials can take to improve housing conditions that disproportionately affect the city’s recent immigrants. More than 1.5 million immigrants moved to NYC between 1990 and 2007, seeking a better life. As a result, New York is once again an immigrant city: as of 2006, 37 percent of New Yorkers were foreign-born. But even as they have brought new energy and investment to neighborhoods, many of these newcomers have ended up in overcrowded, illegal, expensive, or unhealthy living conditions. Like all renters, immigrants have faced an economic squeeze over the past decade, as rents have risen while incomes have remained flat. The median income for households headed by foreign-born New Yorkers is $35,500, significantly less than the median income of native born– headed households. Even as the city has seen high levels of new construction, the number of units that are affordable for low- to middle-income families has decreased precipitously. From 2002 to 2005, the city lost more than 205,000 units affordable to the typical household. The median monthly rent for unsubsidized apartments in the city increased by 8 percent, while the citywide median income fell by 6.3 percent. For unsubsidized low-income renters – a group that includes a disproportionate share of immigrants – the typical share of earnings spent on rent rose from 43 percent to more than half of income, in just three years. The foreclosure crisis is exacerbating the problem, and even drop in real estate prices is providing little relief. Rent declines are concentrated in Manhattan luxury housing, the only part of the market with a high vacancy rate. In the outer boroughs, where most New Yorkers and most immigrants live, widespread foreclosures are leading to the eviction of tenants and homeowners alike. To better understand these challenges and move toward policy solutions, the Pratt Center – as part of a collaborative effort convened by the New York Immigration Coalition, including Asian Americans for Equality, Chhaya Community Development Corporation, Make the Road New York, Mirabal Sisters Cultural and Community Center, and Neighbors Helping Neighbors – conducted a study to examine the housing conditions of immigrant tenants in New York City. We surveyed 541 foreign-born residents of the New York City neighborhoods with the greatest concentration of immigrants, asking questions about housing conditions, affordability, access to subsidized housing, and other essential indicators. EXECUTIVE SUMMARY Confronting the Housing Squeeze presents our findings and recommendations. FINDINGS

1. Immigrants face severe affordability problems, compounded by “predatory equity,” gentrification, and rapid rent increases: Foreign-born New Yorkers are more likely to pay high portions of their income for rent. More than half of all immigrant renters pay over 30 percent of their income for rent (56.5 percent, compared with 47 percent for native-born tenants). The problem is especially severe for low-income tenants. For households with ⏐ 2

income of less than half of the area median income (about $37,000 for a family of 4), nearly 82 percent of immigrant tenants pay more than 30 percent of their income for rent, and more than 50 percent pay over half their income for rent. On average, families pay a significantly higher portion of their income for rent than they did just a few years ago. These affordability problems are compounded in neighborhoods where gentrification has increased rents sharply. In addition, an emerging phenomenon of “predatory equity” – in which new building owners and investors seek rapid tenant turnover and dramatic rent increases – is especially prevalent in some immigrant neighborhoods.

2. Immigrants are more likely to live in overcrowded and illegal conditions: Immigrants are three times more likely to live in overcrowded conditions than native-born New Yorkers. In addition, many immigrant families live in illegally converted basements or other spaces; about half of survey respondents knew of families living in illegal units. One estimate puts the number of such units at more than 100,000 citywide, concentrated in neighborhoods with high proportions of immigrants.

3. An overwhelming percentage of respondents to our survey reported that they knew people living in poor conditions. However, the likelihood that a New Yorker lives in substandard housing conditions appears to be correlated with race more than with immigrant status: More than 70 percent of immigrant renters surveyed for this report indicated that “most” or “a lot” of immigrants they knew live in poor or dangerous conditions. More than half have seen mice or rats in their buildings in the last 90 days, and nearly half have cracks of holes in their apartments. The likelihood that a New Yorker lives in substandard housing conditions appears to be correlated with race more than with immigrant status. As a group, immigrants are more likely than native-born white and Asian tenants but less likely than native-born Black and Latino tenants to live in substandard housing.

4. Immigrants have less access than native-born New Yorkers to publicly subsidized affordable housing programs: Immigrants are much less likely than comparable native- born New Yorkers to live in affordable housing created through public programs. A survey by the Community Service Society found that just 32 percent of immigrant black and Hispanic New Yorkers live in subsidized housing, compared with half of native-born black and Hispanic New Yorkers. In Queens, the borough with the highest proportion of immigrants, little affordable housing has been produced by recent city, state, or federal initiatives. RECOMMENDATIONS

Around the country, cities are working to improve housing options for immigrants. Even in the EXECUTIVE SUMMARY face of national policies that have been hostile, these cities are recognizing the importance of immigrants and taking policy steps to create more safe, decent, affordable, and welcoming places for them to call home. The City of New York, after years of advocacy by the New York Immigration Coalition, Make the Road New York, and other groups, recently took a pioneering step in recognizing its responsibility to provide support and access to immigrants. In July 2008, Mayor Michael Bloomberg and City Council Speaker Christine Quinn signed an executive order guaranteeing ⏐ 3

that important forms and information in government offices will be available in the six most widely spoken languages in the city. Both the city and state of New York should build upon this step by devoting increased attention to addressing the housing problems confronting the millions of immigrant families who are helping to make the city a vital place, but face challenges finding a decent place of their own. These steps include:

1. To preserve affordable housing in immigrant neighborhoods:

a. Strengthen rent regulations by repealing vacancy decontrol and restoring fairness, transparency, and quality administration of the system. Immigrants are more likely than native-born New Yorkers to live in rent-stabilized housing, and live in many neighborhoods where rents have increased dramatically. Rent regulations provide a stable stock of rental housing units and should be strengthened in the face of accelerating deregulation.

b. Establish a “Good Landlord, Good Neighbor” program for small buildings, rewarding owners who agree to rent units to tenants at below-market rents with fair tenant protections. Many immigrant tenants live in unregulated small buildings. A new program could offer financial incentives to help homeowners provide affordable housing in a cost- effective way for both owners and the city.

c. Confront “predatory equity” and tenant harassment by rolling back landlords’ ability to easily obtain unnecessary rent increases, cracking down on harassment, and establishing a new program to rescue buildings where predatory investments by speculators who were hoping for quick profits are now leading to tenant harassment, reductions in services, and other harmful consequences.

d. Strengthen protections for subsidized affordable housing. The city, state, and federal government should cooperate to establish a package of regulations and incentives that seek to preserve every existing unit of subsidized affordable housing, in conjunction with new measures serving to increase immigrant access to subsidized housing opportunities (see recommendation #4).

2. To address issues of overcrowding and “underground” housing:

a. Create an “accessory dwelling unit” program allowing existing units that are safe but forbidden under current zoning or building regulations to be permitted and regulated under the city’s housing and building codes. The city could begin with a targeted pilot program to strengthen affected communities.

b. Expand priority for publicly subsidized housing to include severely overcrowded, EXECUTIVE SUMMARY doubled- and tripled-up families, as well as those living in dangerous conditions. A designated priority for such families would help keep them out of the shelters, while not consigning them to wait in deplorable circumstances with little hope. ⏐ 4

3. To improve housing conditions.

a. Expand the Safe Housing Act, which provides for inspection and repair of some of the city’s worst-maintained buildings, to cover more buildings in immigrant areas, through further expansion of the city’s code enforcement program, more bilingual inspectors, and follow-up reinspections where problems are identified.

b. Consider moving to cyclical inspections of all at-risk buildings in neighborhoods with significant evidence of poor conditions.

c. Adopt the Asthma-Free Housing Act to reduce and regulate indoor asthma allergens in New York City apartments, specifically mold hazards and pest infestations, in order to combat the disproportionate incidence of asthma and lung disease in immigrant and low- income neighborhoods.

4. To provide better access to public affordable housing programs.

a. Build more affordable housing that is accessible to immigrant families, especially in heavily immigrant neighborhoods and Queens, where very little has been built under the mayor’s New Housing Marketplace initiative. Start by dramatically increasing the number of low-income units at Hunters Point South, Willets Point, and Stapleton. Provide affordable units at a wider range of incomes, including some targeted for very- low-income renters.

b. Move to a citywide, transparent waiting list for city-subsidized housing programs. Currently, applicants must apply separately, to each developer or their marketing agent, for every single affordable housing development in which they seek residence. This is an extraordinary burden on all low-income households, and an extra obstacle to families with limited English proficiency. The City Department of Housing Preservation and Development (HPD) should establish a unified application system for units created through government programs and subsidies.

c. Targeted strategies to strengthen immigrant neighborhoods. The network of community organizations and programs that address housing and related issues was developed when the city was facing a geographically different set of problems. HPD, the Department of Buildings (DOB), and other agencies should develop and implement new strategies to address the specific challenges of those neighborhoods where low-income immigrant families face worst-case housing needs.

With these steps, New York City can remain America’s gateway, a place that immigrants from around the world, bringing economic and social vitality to our neighborhoods, can safely and

affordably call home. EXECUTIVE SUMMARY

⏐ 5

INTRODUCTION

As a result of their dual status as tenants in New York City, at a time with rents are rising and incomes are flat, and as immigrants – facing a range of language, employment, and discrimination barriers – immigrant renters in New York City confront severe challenges finding safe, decent, and affordable housing. More than 1.5 million immigrants moved to NYC between 1990 and 2007, seeking a better life. Immigrants now make up 37 percent of the population and contribute broadly to New York City, including hundreds of billions of dollars in annual economic output. While immigrants make up two-thirds of the low-wage workers in New York City, they are also one-quarter of CEOs, half of accountants, a third of office clerks and receptionists, and half of building service workers. In many cases, immigrants played a critical role in bringing back neighborhoods that were hit by severe disinvestment in the 1970s and 1980s.2 IMMIGRANT SHARE OF POPULATION

INTRODUCTION

Source: NYC Housing and Vacancy Survey, 2005 ⏐ 6

IMMIGRANT-RICH NEIGHBORHOODS

But even as they have brought new energy and investment to neighborhoods, many of these newcomers have ended up in overcrowded, illegal, expensive, and sometimes unsafe conditions. Many have limited English proficiency and/or are undocumented, potentially putting them at the mercy of landlords3. They are less likely than other New Yorkers to live in publicly subsidized affordable housing and more likely to face problems affording housing. 4 The median income of households headed by immigrants in New York City is $35,500, significantly less than those whose heads are native- born. Low and moderate-income Census sub-borough areas in which more than 38 percent of tenants in New York City, households (the median for all of NYC) are headed by a foreign- wherever their national origin, born person(s). Source: NYC Housing and Vacancy Survey, 2005. continue to confront severe challenges finding safe, decent, and affordable housing. In recent years, even as the city has seen high levels of new construction, the number of units that are affordable for low- to middle-income families has decreased precipitously. At the same time, most workers’ hourly wages fell5. For unsubsidized low-income renters the typical share of earnings spent on rent rose from to more than half of income.

The foreclosure crisis is exacerbating the problem, and even the recent dip in real estate prices is providing little relief. Rent declines are concentrated in Manhattan luxury housing, the only part of the market with a high vacancy rate. In the outer boroughs, where most New Yorkers and most immigrants live, foreclosures are leading to the widespread eviction of both tenants and owners.

Member organizations of the New York Immigrant Housing Collaborative have watched these trends unfold and seen their members and clients experience displacement, harassment, severe rent burdens, and other consequences. Even before sharp rent increases of the 2000s, immigrants have faced harsher housing conditions than other New Yorkers. Writing based on INTRODUCTION the 1996 NYC Housing and Vacancy Survey, Michael Schill, Samantha Friedman, and Emily Rosenbaum found that immigrant households were more likely than native-born New Yorkers to encounter problems affording housing and to live in overcrowded or unsound residences. With the increased pressure on tenants over the past decade, New York Immigrant Housing Collaborative members suspected that these problems had only intensified. ⏐ 7

To better understand these challenges and move toward policy solutions, a coalition of immigrant community organizations convened by the New York Immigration Coalition – including Asian Americans for Equality, Chhaya Community Development Corporation, Make the Road New York/Latin American Integration Center, Mirabal Sisters, and Neighbors Helping Neighbors – formed the New York Immigrant Housing Collaborative (NYIHC). The collaborative asked the Pratt Center for Community Development to conduct a study examining the housing conditions of immigrant tenants in New York City, with the goal of informing our policy advocacy agenda. This report builds upon past research and adds to it insights collected by our member organizations. We surveyed existing literature on immigrants and housing in New York City. We analyzed the 2005 NYC Housing and Vacancy Survey as well as a telephone survey of low- income New Yorkers conducted by the Community Service Society. We built upon analyses of “underground housing” —units, generally in basements of one-, two-, or 3-family homes, that do not comply with building, housing, or zoning codes — by the Citizens Housing and Planning Council and by the Pratt Center for Community Development and Chhaya CDC. Finally, members of the New York Immigrant Housing Collaborative conducted a survey of foreign-born residents of the New York City neighborhoods with the greatest concentration of immigrants, asking questions about housing conditions, affordability, access to subsidized housing, and other essential indicators. This report proceeds to outline a set of public policy proposals that address the findings. These proposals form the basis of the Immigrant Housing Collaborative’s advocacy agenda for individual issue campaigns, for the 2009 New York City elections, and beyond. INTRODUCTION ⏐ 8

BACKGROUND

BACKGROUND: NYC’S AFFORDABLE HOUSING CRISIS

The outlines of the housing crisis facing low-, moderate-, and middle-income tenants in New York City are well known. As the population has grown over the past 20 years, housing production has not kept pace – leading to high prices, overcrowding, and homelessness. Tenant incomes have lagged behind rapid increases in rents, leading to ever-higher rent burdens. Gentrification and the expiration of affordable housing requirements on subsidized developments have compounded the problem. The population of New York City grew from 7 million in 1980 to over 8 million by 2000 and is projected to exceed 9 million before 2030. This growth can be attributed to immigrants; the native-born population of New York City (including that of African-Americans and Puerto Ricans) has actually declined. The City Planning Commission reports that “New York City has averted catastrophic population losses that have occurred in other cities.” In other words, growth through immigration has literally saved New York City from abandonment. Today immigrants and children of immigrants account for more than 60 percent of the population in New York City.6 However, New York City’s housing supply has not kept up with its surging population. Even with a high rate of residential construction in the City for the past decade, the number of new units has not come close to meeting the needs of the growing population. In addition, few of the new units are affordable to low- or moderate-income households. A glut of new luxury units has not increased availability of housing affordable to low- and moderate-income tenants. Between 1999 and 2005, the median income of renters declined nearly 6 percent, while the median rent increased by almost 9 percent.7 A record-high share of New York's tenants, 42 percent, are now paying more than one-third of their income for rent; more than one-quarter of renters pay more than half of their income for housing.8 Lower-cost apartments have become significantly harder to find, as the number renting for under $1,000 dropped by more than 536,000.9 In response to advocacy from community organizations and citywide policy groups, the Bloomberg administration has sought to help create and preserve affordable housing. Incentives in the zoning code and expanded property tax breaks encourage developers to include below- market-rate units in new development. The city has also committed billions in subsidy and other resources that developers can use to create or preserve low-cost units.

Yet the city is still losing affordable housing much more rapidly than it is being created. The administration’s New Housing Marketplace plan promised to create or preserve 95,000 affordable units by 2012. So far, it has produced about half that number. However, in just the three years from 2002 to 2005, the number of rental units in the city affordable to a family

earning $56,000 – an income that qualifies a family of four for most city-subsidized housing BACKGROUND programs – fell by 205,000.10 These included significant numbers of apartments originally built with government subsidies under the Mitchell-Lama and Section 8 programs, as well as formerly middle-income housing like Stuyvesant Town. The 2005 New York City Housing and Vacancy Survey, the most recent available, shows the resulting pressures on low-income households. The share of earnings these households spend ⏐ 9

on rent, which had already been rising steadily for years, jumped sharply between 2002 and 2005 — the typical low-income household went from spending 43 percent of income on rent in 2002 to more than 50 percent in 2005. According to the Community Service Society’s annual survey of low-income New Yorkers, the share of low-income households facing one or more housing hardships — falling behind in rent or mortgage payments, utility cut-offs, doubling up, or seeking emergency shelter — grew from 36 percent to more than half between 2002 to 2006.11 The widening mismatch between incomes and housing costs has afflicted homeowners as well. Since immigrant New Yorkers are disproportionately renters (71.6 percent of households, versus 64.2 percent for native-born New Yorkers), and the individuals served by the member groups of the New York Immigrant Housing Collaborative are overwhelmingly tenants, we have opted to focus in this report of issues facing tenants and do not consider in detail the issues facing immigrant homeowners.12 But there are substantial reasons to be concerned about immigrant homeowners as well. Long prior to the recent foreclosure crisis, immigrant New York homeowners paid far more of their incomes for housing, on average, than native-born New Yorkers, and this gap is even wider among homeowners than it is for renters. During the early years of this decade, stagnant wages coupled with sharply rising real estate values led many owners of one- and two-family homes to cash in on rising home equity, whether to pay for life expenses or to maintain aging structures. Excessive fees and high interest rates made those loans precarious to begin with. The collapse of the subprime lending market rendered refinancing impossible for borrowers with weak credit scores, and has left these homeowners with nowhere to turn. New York homeowners behind on their mortgage payments had nearly 15,000 foreclosure notices filed against them in 2007, double the number in 2005.13 Personal bankruptcy filings in the city shot up nearly 70 percent over the past year, to more than 10,500.14 While an in-depth look at subprime lending, foreclosures, and immigration is beyond the scope of this report, it is worth noting that the subprime lending and foreclosure crisis has hit especially hard in New York City neighborhoods with large immigrant populations – Jamaica/Hollis and Queens Village in Queens, and Flatlands, East Flatbush, and Bushwick in Brooklyn. Foreclosures in New York City have afflicted renters as well. A recent study by the Furman Center for Real Estate and Urban Policy at New York University found that of the 30,035 households in buildings facing foreclosure, just under half, were renters. 15 Tenants in neighborhoods where foreclosures are concentrated may face even greater challenges securing safe and affordable housing, as both homeowners and tenants evicted from foreclosed buildings look to find other rental options in their neighborhoods. BACKGROUND: IMMIGRANTS IN NEW YORK CITY

While New York City has historically been an immigrant city and the principal point of entry into the United States, the last generation has seen a dramatic increase in the number of foreign- born individuals residing in the city. Following passage of the Immigration and Nationality Act of 1965, millions of immigrants flowed into the city during the 1980s and 1990s, even as a low- paying, service-oriented economy grew in place of relatively high-paying manufacturing jobs. BACKGROUND Between 1990 and 2000 the city admitted 1,224,524 immigrants. In the three decades since 1970, the share of foreign-born New Yorkers doubled, from 18.2 percent to more than one- third.16 This increase reversed a precipitous population decline of the 1970s, and helped save New York City from abandonment. ⏐ 10

While the rate of increase has slowed in recent years, as more new immigrants settle immediately in the city’s suburbs and elsewhere in the United States, New York City’s overall immigrant population has continued to grow. In 2006, it stood at over 3 million (37 percent), one- fifth of whom had arrived in New York City since 2000.17 Newer immigrants come from Latin America, the Caribbean, Asia, Eastern Europe, and Africa. While the immigrant communities in other U.S. cities, such as Los Angeles and Miami, tend to be dominated by a few nationalities, in New York no single country or region predominates. The ten most frequent countries of origin in 2005 were the Dominican Republic, China, Jamaica, Guyana, Mexico, Ecuador, Haiti, Trinidad and Tobago, Colombia, and Russia.18 New York City has a larger Chinese population than any city outside of Asia, a larger West Indian population than any city outside the Caribbean, and a larger Dominican population than any city outside Santo Domingo. Compared to native-born households, immigrants tend to be disproportionately of working ages – with 79 percent between the ages of 18 and 64, compared to 56 percent of native born.19 On average, immigrants continue to earn lower wages than native-born New Yorkers. While immigrants make up to 43 percent of the city’s workforce, they are two-thirds of the city’s low- wage workers. While many immigrants live in large families, many immigrants reside here individually, often working in New York City while families remain overseas. As a result, immigrants make up an even greater share of New York City’s households (43 percent) than they do of the population overall (37 percent).

[FIGURE 1] FOREIGN-BORN SHARE OF BOROUGH POPULATION, 1970 - 2006 60%

50%

40%

30%

20%

10%

0% Brooklyn Queens Manhattan Bronx Staten Island New York City

1970 1990 2006 BACKGROUND

Source: U.S. Census Bureau Recent immigrants are also, by definition, more likely to be seeking housing than other families. Nearly half – 48 percent – of the housing units newly occupied between 1990 and 2002 were headed by an immigrant. In some neighborhoods – Elmhurst, Jackson Heights, Woodside, East

20 ⏐

Flatbush, Bensonhurst – immigrants rented 70 percent or more of units occupied since 1990. 11

Many immigrant households, especially newer immigrants, face barriers as a result of limited English proficiency. Residents of New York City speak nearly 200 different languages, and nearly half of all households speak a language other than English at home. More than two in five of Asian and Hispanic households both speak a language other than English at home and have a head of household who is not English proficient, including more than 60 percent of Mexican and Ecuadorian households, and more than half of Chinese, Dominican, Korean, and Colombian households.21 Limited English proficiency makes it more difficult for tenants to know their rights or to negotiate with landlords, and possibly less likely to pursue legal action if they believe their rights have been violated. BACKGROUND ⏐ 12

HOUSING CONDITIONS FOR IMMIGRANT RENTERS IN NEW YORK CITY

To develop an on-the-ground understanding of the housing-related problems faced by immigrants in their neighborhoods, the New York Immigrant Housing Collaborative conducted a survey in 2007 of immigrants living in the neighborhoods in Brooklyn, Manhattan, Queens, and Staten Island that they represent. The team collected 541 surveys from immigrant tenants across a wide range of ages, gender, and country of origin.22 More information on the survey and resulting data is available in our Methodological Appendix, available at www.prattcenter.net. In addition to the surveys, each community organization in the NYIHC conducted a focus group of tenants to discuss the challenges facing immigrants and their ideas for solutions to those problems.

HOUSING CONDITIONS ⏐ 13

FINDING #1

Immigrants face severe affordability problems, compounded by “predatory equity,” gentrification, and rapid rent increases. RENT BURDEN

Foreign-born tenants face significantly greater rent burdens than native-born New Yorkers. According to the 2005 NYC Housing and Vacancy Survey (HVS), more than half of all immigrant renters pay more than 30 percent of their income for rent (57 percent, compared with 47 percent for native-born tenants). The problem is especially severe for low-income tenants. For households with incomes of less than half of the area median income, or about $37,000 for a family of 4, nearly 82 percent of immigrant tenants pay more than 30 percent of their income for rent (compared with 76 percent of native-born tenants), and more than 50 percent pay over half their income for rent (compared with 47 percent of native-born tenants). SHARE OF INCOME SPENT ON RENT

Foreign Native Born Born All Households (%)

Renter pays more than 30% of income for rent 56.5 47.1 Renter pays more than 50% of income for rent 31.5 24.9 Households with income less than 80% of Area Median Income (AMI) (%)

Renter pays more than 30% of income for rent 69.2 63 Renter pays more than 50% of income for rent 39.1 35.1 Households with income less than 50% of AMI (%)

Renter pays more than 30% of income for rent 81.8 75.7 Renter pays more than 50% of income for rent 50.3 47.2

Median Household Income $35,000 $46,980 Median Gross Rent $875 $894

Source: New York City Housing and Vacancy Survey, 2005 FINDING #1 Immigrant households typically pay slightly less in rent ($875 a month) than native-born households ($894 a month). But because immigrants’ median household income is substantially lower — $35,500 annually, nearly one-fourth lower than median income for native-born households — immigrant tenants face a much higher rent burden. ⏐ 14

But low incomes don’t tell the whole story. Native-born Black households have an even lower median income than those headed by immigrants – just $32,000 a year – but spend a median of $703 a month on rent, resulting in a rent burden lower than that of immigrant households. This difference is most pronounced among the poorest: Immigrant families earning less than half of the area median income were 25 percent more likely than Black families with comparable incomes to pay more than half their income for rent. The difference presumably reflects Black households’ greater likelihood of living in government-subsidized housing (see Finding #4). The NYIHC survey findings likewise reveal extremely high rent burdens. More than two-thirds of respondents (71.4 percent) reported that housing in general is not affordable, and fewer half (44.5 percent) reported that they agree or strongly agree that their own housing is affordable. Rent burdens – the percent of household incomes spent on rent — vary both by neighborhood and household type:

Community Group Average Rent Burden Neighborhoods

Chinatown, various Asian Americans for Equality 48% neighborhoods in Queens Jackson Heights and Elmhurst, Chhaya 51% Queens Upper Manhattan, esp. West Mirabal Sisters 58% and Central Harlem Sunset Park and surrounding Neighbors Helping Neighbors 62% Brooklyn neighborhoods Make the Road NY 63% Bushwick, Brooklyn (Make the Road by Walking)

Make the Road NY Sunnyside, Woodside, and other (Latin American Integration 80% Queens neighborhoods Center)23

Households with seniors but no children had an average rent burden of 47 percent Households with no children and no seniors had a rent burden of 51 percent Households with both children and seniors had a rent burden of 68 percent, and Households with children and no seniors had a rent burden of 70 percent

Immigrants who arrived in the U.S. in the 1980s or earlier reported the lowest rent burdens – an average of half of monthly income going toward rent. Those who arrived after 1989 reported spending two-thirds of monthly income on rent. This may be largely due to the fact that 73 percent of immigrants who arrived before 1988 indicated they lived in rent stabilized apartments, compared to 55 percent of immigrants who arrived between 1989 and 1998, and just 44 percent of those who arrived after 1999.24

Immigrants from different parts of the world face different rent burdens. According to the NYIHC FINDING #1 survey, respondents from Central America and China face the lowest rent burdens (roughly 48 percent), while those from South America and Mexico face the highest (71.7 percent and 79.8 percent, respectively).25 ⏐ 15

PREDATORY EQUITY

Housing advocates have identified the relatively new phenomenon of “predatory equity” as jeopardizing rent stabilized housing units and placing tenants at risk of harassment.26 In this situation, which erupted onto the NYC scene during the real estate bubble of recent years, a real estate company – backed by a pool of investors seeking outsized returns – purchases a rent-regulated building. In order to deliver on their promise to rapidly produce high returns, the new owner then moves quickly to raise rents to levels that the current tenants cannot afford. In many buildings, nearly every tenant in the building received an eviction notice, even those who were not behind in their rent. In some cases, tenants simply vacate their apartments out of fear. In nearly all cases, the rates of turnover in buildings purchased with predatory equity investors are far higher than in other rent stabilized buildings. And the new rents are much higher. There is now a substantial risk, with the downturn in the real estate market, that many of these investments will fail. Even with aggressive tactics, landlords are unlikely in some neighborhoods to achieve the high rents that their deals were premised on. Buildings are at risk of bankruptcy or foreclosure, which could place the health and safety of tenants and neighbors in jeopardy. Whether the outcome is tenant harassment and evictions or abandonment and blight, affordable housing will be lost at a dramatic rate. This phenomenon appears to be prevalent in neighborhoods with high proportions of immigrants. The Association for Neighborhood and Housing Development has identified approximately 90,000 units in multifamily buildings purchased with predatory equity. With the exception of Stuyvesant Town/Peter Cooper Village, a majority of the neighborhoods with high concentrations of these buildings have more than the citywide average of immigrant households. This may be because landlords have sought immigrant buildings, where immigrants may be relatively likely to vacate after receiving an eviction notice, even if they are not behind in their rent, or are especially vulnerable to other harassment techniques.

FINDING #1 ⏐ 16

NEIGHBORHOODS WITH LARGEST NUMBER OF UNITS AT RISK OF “PREDATORY EQUITY”

Source: Association for Neighborhood and Housing Development. Staten Island not included in data. RAPID RENT INCREASES

While rents have increased in all neighborhoods in recent years, some neighborhoods have seen especially precipitous increases, making it significantly more difficult for working families to stay in these communities. In some parts of the city, the rent increases are driven by gentrification – the arrival of relatively wealthy and typically native-born new residents in large numbers. But rapid rent increases are by no means limited to such areas as Williamsburg and Washington Heights – they’re also apparent in outer-borough neighborhoods like Ridgewood, Bayside, and Gravesend, and many of the comparatively prosperous new arrivals are

immigrants themselves. FINDING #1 Because buildings with fewer than six apartments are not covered by rent regulations, neighborhoods where small buildings predominate are especially vulnerable to rapid rent increases, not only making it difficult for low- and moderate-income families to find affordable ⏐ 17

housing there but also putting excessive pressure on existing tenants who live in below-market apartments. As with predatory equity, many of the neighborhoods experiencing rapid rent increases – Bayside/Little Neck, Williamsburg, Middle Village/Ridgewood, Bushwick, and Sheepshead Bay/Gravesend – have a percentage of immigrants greater than the citywide average. RISING RENTS IN IMMIGRANT NEIGHBORHOODS, 1999–2005

Median Median Immigrant Percent Neighborhood Contract Contract Households, Increase Rent, 1999 Rent, 2005 Percent, 2005

Bayside/Little Neck $906 $1,200 32 40

Greenwich Village/Financial District $1,256 $ 1,600 27 12

Park Slope/Carroll Gardens $ 797 $ 1,000 25 19

Williamsburg/Greenpoint $640 $800 25 40

Middle Village/Ridgewood $724 $900 24 42

Bushwick $ 604 $743 23 40

Lower East Side/Chinatown $ 543 $657 21 24

East Harlem $500 $600 20 21

Sheepshead Bay/Gravesend $755 $900 19 53

Kingsbridge Heights/Mosholu $676 $800 18 35

Riverdale/Kingsbridge $724 $852 18 34

Throgs Neck/Co-op City $724 $850 17 19

Highbridge/South Concourse $635 $743 17 44

Elmhurst/Corona $833 $950 14 81

Crown Heights/Prospect Heights $664 $757 14 35

FINDING #1 ⏐ 18

RISING RENTS

Source: NYC Housing and Vacancy Survey, 1999 and 2005 Several of these neighborhoods are anticipated to be areas of significant population growth over the next 20 years, according to projections by the New York City Department of City Planning. Flushing, Seagate/Coney Island, East New York, Jamaica, Washington Heights, and Mott Haven are all projected to see significant population growth, which is likely to increase housing pressure and prices. FINDING #1 ⏐ 19

FINDING #2

Immigrants are more likely than native-born New Yorkers to live in overcrowded and illegal conditions.

According to the 2005 Housing and Vacancy Survey, the share of [Figure 2] Overcrowded & Severely immigrant households that were Overcrowded Households, Within Groups overcrowded, with more than 1 person per room, was nearly double 30% that of native born households – 25% more than one-quarter of immigrant households, versus 15 percent for 20% native-born. The percentage of 15% immigrant households facing severe crowding (more than 1.5 persons 10% per room) was, at 6 percent, more 5% than triple that of native born households. This problem has 0% grown more severe in recent years: Foreign Native White Black Hispanic Asian the percentage of foreign-born New Born Born Native Native Native Native Yorkers living in crowded conditions grew from 15 percent in 1996 to 26 Overcrowded Households percent in 2005. Severely Overcrowded Households

In the NYIHC survey, respondents from Latin America were most likely Source: NYC Housing and Vacancy Survey, 2005 to self-report that “many” or “most” immigrants they knew live in crowded conditions, and that those from East Asia (China, Hong Kong, Tibet or Taiwan) were the least likely to report knowing immigrants living in crowded conditions.

FINDING #2 ⏐ 20

DO YOU KNOW IMMIGRANTS WHO LIVE IN OVERCROWDED CONDITIONS?

Latin South Asia East Asia Other Total America

No one 2% 2% 8% 7% 3% A few people 4% 5% 20% 7% 7% Some people 14% 26% 20% 15% 17% Many people 46% 30% 22% 37% 28% Most people 34% 37% 30% 33% 34%

Overcrowding can in some instance serve as a strategy to address high rents by pooling incomes. This does not mean, however, that it is a choice freely made. In every focus group conducted by NYIHC organizations, individuals consistently expressed feeling claustrophobic and being forced to live in overcrowded conditions. Moreover, while some immigrant groups live in large extended families, average household size for immigrant households in actually smaller than for native born New Yorkers, due to the large number of singles among immigrants – so crowding is not simply a matter of living with large numbers of people. Finally, despite the much higher rates of crowding, immigrant households still face higher rent burdens than native-born New Yorkers. Crowding must be addressed as a public policy challenge, not as an individual choice. UNDERGROUND HOUSING

Between 1990 and 2000, New York City gained approximately 114,000 apartments that are not reflected in the official number of certificates of occupancy the city granted for new construction or renovation. Many more have almost certainly been created since. These phantom apartments are the city’s housing underground: units that have been created in spaces that are not approved for living. They include private homes that have been cut into rooming houses, two-family homes with unauthorized basement apartments that house an illegal third family, unapproved residential conversions of commercial lofts, and other types of unlawful construction. Research by the Pratt Center for Community Development and Chhaya Community Development Corporation shows that these units predominate in neighborhoods on the outskirts of the city, in Queens, Brooklyn, and the Bronx. In these communities, populated by large numbers of recent immigrants, the existence of unauthorized apartments is controversial. Many neighbors view these units as drains on neighborhood services, indications of an uncounted population using schools, hospitals, streets, and services. The people who live in these units, understandably, see things differently. For them, these units are necessary, a crucial resource in a city sorely lacking in affordable alternatives. While these units provide an important refuge for families who cannot find other housing options, they are a tenuous option. One call to the Department of Buildings can lead to eviction, and tenants in these units are not protected by FINDING #2 rent laws or the housing maintenance code. ⏐ 21

“UNACCOUNTED FOR” HOUSING UNITS

By Community District. Source: U.S. Census Bureau; New York City Department of City Planning. For methodology see “New York’s Housing Underground,” Pratt Center for Community Development, 2008. Respondents in the NYIHC survey were asked whether they knew immigrant families living in units that had been illegally converted into apartments. Approximately half knew of immigrant families living in partitioned rooms (49 percent) or basements (52 percent) and a similar proportion (48 percent) of respondents knew of immigrants living in apartments of one sort or another – such as those in attics, garages, or basements — that they understood to be illegal.

Interestingly, knowledge of immigrants living in illegal units was not concentrated at the lowest incomes. While 43 percent of the lowest-income respondents reported an awareness of immigrants in illegal apartments, 55 percent of the middle income tier and 58 percent of those in the highest income tier reported such awareness. FINDING #2 ⏐ 22

FINDING #3

An overwhelming percentage of respondents to our survey reported that they knew people living in poor conditions. However, the likelihood that a New Yorker lives in substandard housing conditions appears to be correlated with race more than with immigrant status.

Unlike overcrowding, which correlates strongly with immigrant status, substandard housing conditions appear to correlate more strongly with race that immigrant status. As a group, immigrants are more likely than native-born white and Asian tenants but less likely than native-born Black and Latino tenants to live in substandard housing.

Foreign Native White Black Hispanic Asian Born Born Native Native Native Native Housing Quality Deficiencies (%) 2 or more 25.8 25.3 15.8 28 28 18.9 3 or more 14 14.1 11.4 20.6 17.9 12.9 4 or more 7.5 7.6 9.1 13.4 13.2 11.1 5 or more 3.6 3.2 8.2 10.9 9.1 10.1 Specific Deficiencies (%) Peeling Paint on Inside Walls 14.7 16.7 13.5 20.7 21.2 17 Presence of Mice or Rats 25.6 18 10.5 29.1 27.3 11.1 Heating Equipment Breakdowns 13.7 15 11.3 21.1 17.6 15.5 Water Leakage Inside Apartment 17.7 18.5 15.4 22.8 22.8 14.6 Boarded up Structures in 8 11.6 8.7 16.9 11.6 9.7 Nihbh d Resident rating of residential structures in neighborhood (%) Excellent 17.6 28.6 39.5 12.2 17 30.1 Good 57 51.4 51.3 51.0 53.1 52.1 Fair 21.4 17.1 8.3 30.9 25.1 16.8 Poor 3.9 2.9 0.9 5.9 4.8 1

Source: New York City Housing and Vacancy Survey, 2005

FINDING #3 ⏐ 23

Immigrant households stand out from native-born households in two areas: Immigrants were more likely to report the presence of mice or rats in their apartments Immigrants were less likely to live in neighborhoods with boarded-up structures. In a departure from the HVS data, the NYIHC survey findings suggested a much greater prevalence of dangerous housing conditions. More than 70 percent of respondent said that “most” or “a lot” of immigrants they knew live in poor or dangerous conditions. More than half have seen mice or rats in their buildings in the last 90 days, and nearly half have cracks or holes in their apartments. DO YOU KNOW IMMIGRANTS THAT LIVE IN POOR OR DANGEROUS CONDITIONS?

No one 5% A few people 5% Some people 15% Many people 36% Most people 39%

Of those who responded to the question: 57 percent had seen mice or rats in their building in the last 90 days 45 percent had cracks or holes in their apartment or house 70 percent reported that housing is not of good quality, and Only 51 percent reported that their home is well maintained by the super or landlord. Across all groups, only 30 percent reported that housing was of good quality. The vast majority, 78 percent, of the respondents from Latin America reported that housing was not of good quality; about 70 percent of the respondents from China, Hong Kong, Tibet, or Taiwan felt this way, followed by 52 percent of the respondents from South Asia.

FINDING #3 ⏐ 24

FINDING #4

Immigrants have less access than native-born New Yorkers to publicly subsidized affordable housing programs.

Immigrants are much less likely than comparable native-born New Yorkers to live in affordable housing created through public programs. A survey of low-income New Yorkers by the Community Service Society found that just under one-third of immigrant black and Hispanic low- income New Yorkers live in subsidized housing, compared with half of native-born black and Hispanic low-income New Yorkers. Similarly, the 2005 Housing and Vacancy Survey found that 10.9 percent of native-born New Yorkers live in public housing, compared with 6.6 percent of foreign-born New Yorkers.

Respondents to the Immigrant Housing Collaborative survey were not likely to participate in affordable housing programs: 63 percent of the respondents reported that they don’t participate in any affordable housing programs; only 9 percent reported access to a Section 8 voucher, while only 7 percent lived in public housing. It appears that immigrant New Yorkers do not apply for affordable housing programs that they may be eligible for. A majority in our survey, 61 percent, reported that they had never applied for affordable housing programs (these include Section 8, Public Housing, SCRIE, Jiggets, FEPS, Mitchell-Lama, and programs administered by nonprofit developers). When asked why, roughly equal numbers of people said that they did not know about the programs, did not need the programs, or believed that they did not qualify for the programs.27 LITTLE AFFORDABLE HOUSING BUILT IN THE BOROUGH OF IMMIGRANTS

A recent analysis by the New York City Independent Budget Office reveals that the Bloomberg Administration’s affordable housing development initiative, the New Housing Marketplace, consistently shortchanges low-income families and communities in Queens, the borough with by far the highest percentage of immigrant New Yorkers. According to the 2005 HVS, 51.5 percent of Queens households are headed by immigrants, compared with 44.1 percent in Brooklyn, 32 percent in the Bronx, 23.8 percent in Manhattan, and 20.2 percent in Staten Island.

Yet, while Queens is home to 23.7 percent of the city’s households that earn less than $50,000 per year and are thus eligible for a range of affordable programs targeting low-income families, the borough has received only 3.7 percent of the units affordable to these families under the Bloomberg administration’s programs.

This vast gap effectively locks Queens residents – and therefore many immigrant families – out of affordable housing opportunities. Most New Housing Marketplace programs set aside half of units for residents of surrounding neighborhoods. By locating so little affordable housing in Queens, city policies are forgoing precious opportunities to create affordable housing as New

York City's geographically largest borough goes through a major growth spurt. FINDING #4 ⏐ 25

[Figure 4] Citywide share of [Figure 5] Citywide share of households < $50,000 NHMP low-income units

Manhattan Bronx Manhattan Bronx Brooklyn Queens Brooklyn Queens Staten Island Staten Island

Source: New York City Independent Budget Office NEW HOUSING MARKETPLACE LOW-INCOME UNITS

Share of Share of NHMP citywide Households Percent of citywide Low- NHMP < $50,000, immigrant households Income low- 2006 households < $50k Units income units Manhattan 321,232 20% 16,073 35% 24% Bronx 324,924 20% 17,037 37% 32% Brooklyn 506,834 32% 11,096 24% 44% Queens 377,645 24% 1,709 4% 51% Staten Island 61,586 4% 679 2% 20% NYC 1,592,221 100% 46,594 100%

Population data from 2006 American Community Survey; immigrant percentage from 2005 NYC Housing and Vacancy Survey; affordable housing data from New York City Independent Budget Office and Department of Housing Preservation and Development. Numbers may not add up because of rounding. FINDING #4 ⏐ 26

NEW HOUSING MARKETPLACE UNITS

FINDING #4 ⏐ 27

IMMIGRANTS’ EXPERIENCES OF DISCRIMINATION AND SERVICE AVAILABILITY

Members groups of the Immigrant Housing Collaborative have found that a range of factors, including actual and perceived discrimination, limited English proficiency, and lack of linguistically appropriate housing-related services prevent immigrants from obtaining safe, decent, and affordable housing. The NYIHC survey therefore explored a range of issues related to immigrants’ access to services and their experiences of discrimination and fear. Because this data is not tracked in the NYC Housing and Vacancy Survey, comparison with native-born New Yorkers is not possible. DISCRIMINATION AND FEAR

More than one-third of respondents (34 percent) indicated that they, or people they knew, had been afraid to make a housing complaint. This is particular of concern in cases of tenant harassment and predatory equity. Immigrants living in poor housing conditions were the most likely to report having been afraid to make a housing complaint: 84 percent of those reporting fear related to making a housing complaint also report that “a lot” or “most” immigrants they know live in poor conditions. Slightly fewer respondents indicated that they, or others they knew, had been discriminated against in their “housing experience” because of race/ethnicity (31 percent) or immigrant status (28 percent). HAVE YOU OR OTHERS YOU KNOW….

Yes No Don’t Know

Been discriminated against because of 31% 55% 14% race/ethnicity Been discriminated against because of 28% 54% 19% immigrant status Been afraid to make a housing complaint 34% 49% 16%

This finding supports the concern of many in the immigrant advocacy community that immigrants do not receive their fair share of city housing services because of the fear that engaging city officials or agencies will have negative consequences. SERVICE AVAILABILITY AND LANGUAGE ACCESS IMMIGRANT EXPERIENCES Two-thirds or more of survey respondents indicated that they were not aware of available housing information and legal services in their language and community.

⏐ 28

ARE SERVICES AVAILABLE IN YOUR NEIGHBORHOOD & IN YOUR LANGUAGE?

Legal Services Information on Information to Tenants' Rights Help Homeless People

23% 37% 36% 64% 63% 77%

Yes No Yes No Yes No

Information on Information on Information on Fair Housing Laws Safe Banking and Unsafe Housing Mortgage Options Conditions

29% 30% 31%

71% 70% 69%

Yes No Yes No Yes No

SOURCE: New York City Immigrant Housing Collaborative Survey Limited English proficiency and lack of access to linguistically appropriate services limit access to information and legal services, and therefore pose significant obstacles for many immigrants in finding and maintaining safe and affordable housing. While most immigrants learn English quickly, and a majority of foreign-born New Yorkers are fluent in English, many have limited English proficiency. A 2006 report, Hear This: The Need for Multilingual Services in New York City, showed that many tenants with limited English proficiency are living in unhealthy and IMMIGRANT EXPERIENCES unsafe conditions but do not know that there is a city agency dedicated to addressing their housing needs. Moreover, even when they tried to access these city services, survey respondents were often unable to communicate with agency staff members in their own language.28 After a multi-year campaign by the New York Immigration Coalition, Make the Road New York, and other groups, the City of New York recently took a pioneering step in recognizing its responsibility to provide support and access to immigrants. In July 2008, Mayor Michael Bloomberg and City Council Speaker Christine Quinn signed an executive order guaranteeing that important forms and information in government offices will be available in the six most-

spoken languages in the city. This will help immigrants access services, including safe and ⏐ 29

decent affordable housing, but additional outreach will be needed to provide services to tenants with limited English proficiency who are facing harassment, overcrowding, high rent burdens, and discrimination. IMMIGRANT EXPERIENCES ⏐ 30

RECOMMENDATIONS

Around the country, cities are working to improve housing options for immigrants. Even in the face of national politics and policies that have sought to undermine the critical contributions that immigrants are making to the vitality of communities, these cities are recognizing the importance of immigrants and taking policy steps to create more safe, decent, affordable, and welcoming places for them to call home. The state of Minnesota has an annual training requirement for real estate brokers and realtors, one option for which is “courses designed to help licensees to meet the housing needs of immigrant and other underserved populations.”29 Washington, D.C., has identified affordable housing “especially for immigrant families” as a goal for neighborhoods, such as the Columbia Heights area.30 The City of New York, after years of advocacy by the New York Immigration Coalition, Make the Road NY, and other groups, recently took a pioneering step of an executive order guaranteeing that important forms and information in government offices will be available in the six most-spoken languages in the city. The City of New York should build upon this step by devoting increased attention to addressing the housing problems confronting the millions of immigrant families who are helping to make the city a thriving place, but have challenges finding a decent place of their own. Over the past century, the City and State of New York have demonstrated that local housing policy action can make a profound difference in the lives of millions of New Yorkers. From the New York Tenement House Law of 1901, to the first public housing in the United States in 1934, to the Mitchell Lama Program of the 1950s, to the Koch 10-Year Plan of the 1970s, to the Bloomberg “New Housing Marketplace Plan,” New York has been at the forefront of improving housing options through public policy. Just as the tenement house laws responded directly to the conditions the great early 20th century wave of immigrants faced, New York must again step up to provide safe, decent, and affordable housing to immigrant families, through a range of public policy actions. These steps include:

1. To preserve affordable housing in immigrant neighborhoods:

a. Strengthen rent regulations by repealing vacancy decontrol and restoring fairness, transparency, and quality administration of the system. Immigrants are even more likely than native-born New Yorkers to live in rent-stabilized housing, and to live in many neighborhoods where rents have increased dramatically. Rent regulations provide a stable, predictable stock of rental housing units. But deregulation has led to RECOMMENDATIONS sharply increased rents removed tens of thousands of units from the city’s stock of affordable housing.

Public action is needed to stop widespread and growing removal of affordable housing units from the system of rent regulation. The single most important step is to repeal vacancy decontrol, the provision by which a landlord can remove a unit from rent regulation upon vacancy if the nominal rent can be pushed above $2,000. Landlords in many neighborhoods can readily push rents above this level by passing on the cost of

improvements and repeatedly turning over occupied apartments to new tenants. This ⏐ 31

loophole has allowed landlords to deregulate tens of thousands of units, encouraged the harassment of existing tenants, and undermined the entire systems of rent regulations. It should be repealed, either directly by the state legislature, or by repealing the state’s “Urstadt Law,” which grants control over New York State’s rent laws exclusively to the state legislature, and restoring it to the city of New York. In addition, the administration of the rent laws by the New York State Division of Housing and Community Renewal must be made more fair and transparent. During the Pataki administration, it was weakened, and tilted decidedly in favor of landlords, prompting widespread deregulation of apartments and severe rent hikes even among units that remained regulated.31 While new leadership in Albany has made the state’s supervision of rent regulated housing much fairer, owners can still achieve rent increases for improvements that simply bring a building up to the building code, and if they fail to register a unit with the rent regulation program will simply receive notices urging voluntary compliance. DHCR and the state legislature should address these and other issues. In addition, DHCR should move into the 21st century by providing on-line, public information about rent registration status and history, harassment, building conditions, and unusual rent increases. These are not private matters to be hiding in dusty file cabinets, but profound matters of public interest that should be available (like most public data) online. b. Establish a “Good Landlord, Good Neighbor” program that provides cost-effective incentives for small buildings where homeowners agree to rent units to tenants at below- market rents, with fair tenant protections. Many immigrant tenants live in buildings with fewer than six units. These apartments are not protected by rent regulations, and tenants therefore have no protection against rapid rent increases. Many owners of such properties, especially those who live in the buildings, rent their units to tenants below market price. But in areas where rents are rising rapidly and landlords learn that a neighbor is charging twice as much, they may be tempted to do so as well. When a building sells to a new owner, the existing tenants are often displaced, even if they have lived there fore decades and cannot afford another unit in the same neighborhood.

An innovative new “Good Landlord, Good Neighbor” program would provide a financial incentive to homeowners and other small building owners who agree to rent their units out to low-income tenants at below-market rents, with long-term protections in place to provide security and stability. This could come in the form of a property tax deduction or credit, or a utility credit, which would partially offset the money that the owner is foregoing by renting below market. RECOMMENDATIONS c. Confront “predatory equity” and related tenant harassment by rolling back landlords’ ability to easily obtain unnecessary rent increases, cracking down on harassment, and establishing a new program to rescue buildings where predatory investments by speculators who were hoping for quick profits at tenants’ expense are now leading to tenant harassment, reductions in services, and other harmful consequences. ⏐ 32

DHCR can take immediate action by eliminating landlord self-certification of rent increases based on charges for major capital improvements. Allowing landlords to certify their own rent increases give them the ability to raise rents at will, by claiming to provide various improvements regardless of whether they are needed or desired by the tenants, or whether they even actually provide them. Any such increases should require approval by DHCR, either through inspections that affirm the need and the actual improvement or through an affirmation by the tenant. Both the city and state can help tenants to enforce new protections against harassment established by Intro 627-a, passed by the City Council and signed by the mayor earlier this year. They can also provide support to legal services and community-based housing organizations that help tenants to enforce their right to confront harassment under the new law. The City should also consider establishing a new program to rescue buildings that were purchased by predatory investors during the real estate bubble but are now facing abandonment and neglect as those investments fail. The city should look to opportunities, including those arising from the newly expanded federal role in housing finance, to establish a program that could transfer these buildings to reputable purchasers and restructure their financing so they can be preserved as decent and affordable housing. Such a program would need to balance the goal of preserving housing with the need not to reward those actors whose predatory speculation created the problem.

d. Strengthen affordability protections for subsidized affordable housing. While immigrants are generally underrepresented in subsidized affordable housing, several developments, including Starrett City and Co-op City, are home to large number of immigrant families. City, state, and federal government have a range of tools that can be used to prevent current owners from opting out of subsidy programs and selling their developments to the highest bidder. The state should adopt proposals by Mayor Bloomberg that would insure that any subsidized buildings leaving affordability programs enter the rent-regulation system. All three levels of government should cooperate to establish a much stronger package of regulations and incentives that seek to preserve every existing unit of subsidized affordable housing.

2. To address issues of overcrowding and illegal units:

a. Create an “accessory dwelling unit” category within both the building and zoning codes, which would allow safe units that are now illegal to be legal and regulated under the city’s housing code and system. Many basement and other unauthorized units could RECOMMENDATIONS be made into safe and appropriate housing but for the current building and zoning codes. Like other cities around the country, New York should establish a new category of “accessory dwelling units” to allow these units to be regulated, so that safety can be better assured, tenants protected, and neighborhood infrastructure needs such as schools, parking, and public services more appropriately addressed. The city should offer incentives and assistance to landlords who legalize their units and agree to keep

tenants in place or units affordable. ⏐ 33

The city could pilot this program in neighborhoods with significant numbers of immigrants and currently illegal units, with community-based task forces providing language-appropriate outreach and helping address neighborhood issues and needs.

b. Expand priority for publicly subsidized housing to include severely overcrowded, doubled- and tripled-up families. Many immigrant families are more likely to double or triple up, in severely overcrowded conditions, rather than go into the shelter system. As a result, they are not eligible for the priority status that homeless families receive. Even if tenants live in severely overcrowded and dangerous conditions, their only opportunity for affordable housing is to seek to get on every waiting list for every available affordable housing development. The city should establish a system in which the most housing-needy households receive priority for Section 8 vouchers, public housing units, and newly created affordable housing. First priority should be given to homeless families and to families displaced by emergencies. Second priority should go families living in dangerous conditions. Third should go to households that are doubled and tripled up. Many opportunities should remain for broad lotteries that give a wider set of New Yorkers and opportunity to apply for affordable housing, while maintaining the city’s current commitment to giving neighborhood residents preference in the application process. This can be done by setting aside some vouchers and units for the priority lists, and leaving many for lottery.

3. To improve housing conditions:

a. Expand the Safe Housing Act, which provides for inspection and repair of some of the city’s worst-maintained buildings, to cover more buildings in immigrant areas through an expansion of the program, more bilingual inspectors, and follow-up reinspections where problems are identified. In 2007, the city adopted Local Law 29, through which HPD identifies 200 building annually with the most housing code violations, and targets them for aggressive inspection, follow-up, and comprehensive repairs. The legislation gives landlords four months to make repairs that address the core of physical problems in distressed buildings, after which the city will make the repairs at landlord expense.

The program appears to be working and should be expanded, with consistent follow-up to insure that work is actually done, to increase the number of units that are included in the program, provide a stronger focus on general building-wide conditions, and insure that the program includes buildings in immigrant neighborhoods where tenants may be relatively unlikely to bring complaints to HPD. The expansion should be done based on a mix of data, including 311 calls and community organization referrals.

b. Consider moving to cyclical inspections of all at-risk buildings in neighborhoods RECOMMENDATIONS with significant evidence of poor conditions. The Safe Housing Act is a strong approach to reaching some of the worst buildings, especially where strong tenants associations have registered complaints. However, in some neighborhoods with poor housing conditions and many immigrants, tenants are less likely to register complaints. New York City could look to Los Angeles’ Systematic Code Enforcement Program (SCEP). SCEP came about in response to a rental housing crisis, as many landlords

deferred maintenance on their properties and tenants suffered unsafe conditions. The ⏐ 34

municipal administrative system responsible for code enforcement became overwhelmed by complaints, an increasing number of buildings fell into disrepair, and the city began to lose more affordable units than ever. In response, L.A. undertook a major reform effort, which led to the establishment of SCEP at the Los Angeles Housing Department. With the dual goals of achieving code compliance and stemming the tide of affordable units being lost to irreversible disrepair, SCEP was organized as a systematic rather than a complaint-driven system. The program ensures that every rental unit in the city is inspected for violations at least once every five years. SCEP funds itself through its annual inspection fees, currently $27.24 per rental unit. Since SCEP's establishment in 1998, more than 90 percent of the city's multifamily housing stock has been inspected and more than 1.5 million habitability violations have been corrected, resulting in an estimated $1.3 billion reinvestment by owners. New York City ought to establish a narrower target universe of buildings for inspection, but it would do well to expand the reach of its Safe Housing Act beyond a limited number of the city’s very worst buildings. New York must treat the building and maintenance code as law to be enforced, rather than a program to be (sometimes) implemented.

c. Adopt the Asthma-Free Housing Act to reduce and regulate indoor asthma aggravators in New York City apartments, specifically mold hazards and pest infestations. Poor conditions in rental housing in New York City, experienced by many immigrant families, include significant triggers for asthma and put families and especially children at risk. Partially as a result of this, residents of low-income and immigrant neighborhoods experience disproportionate incidence of asthma and lung disease. This is, in many ways, a return to the abhorrent conditions that immigrants faced in substandard housing at the turn of the last century, which led to housing regulations being established in the first place. The Asthma-Free Housing Act, Intro 750, would amend the housing maintenance code to require HPD to establish a minimum standard for the prevention and clean-up of these hazards to reduce asthma attacks. It would also require owners of multifamily buildings where a person with respiratory problems resides to prevent and immediately remove indoor allergen hazards.

4. To provide better access to public affordable housing programs:

a. Build more affordable housing that is accessible to immigrant families, especially in Queens and immigrant neighborhoods elsewhere. The Administration should start by dramatically increasing the number of low-income units at Hunters Point South, Willets Point, and also at Stapleton on Staten Island. It should then move on to aggressively identify sites for low- and moderate-income RECOMMENDATIONS housing in neighborhoods with rising populations.

In developments targeted to offer opportunities to more immigrant families, HPD should include more two- and three-bedroom units, rather than the one-bedrooms and studios that make up half the units in many HPD-sponsored developments. Units should be affordable at a wide range of incomes, in recognition that the median household income for immigrant families in New York City is below even the lowest qualifying income level — 50 percent of area median income — for families seeking housing units built with

HPD’s assistance. ⏐ 35

b. Move to a citywide, transparent waiting list for HPD programs. Currently, applicants must apply separately, to the developer or their marketing agent, for every single new affordable housing development subsidized by HPD or DHCR. This is an extraordinary burden on all low-income households, many of whose members are working multiple jobs and do not have time to watch the HPD and DHCR websites weekly, then apply for every new development. For families with limited literacy, the application process poses an even greater obstacle. In contrast, the waiting list for public housing and Section 8 vouchers is unified and transparent; applicants know how to apply and where they are on the waiting list. The city should establish a similar system for units created through HPD programs and subsidies. Preferences for neighborhood residents would remain, as would other priorities for specialized residences — such as those for grandparents raising grandchildren or people with special needs — but the system would be open to all. This list – like public schools and hospitals — must not require proof of citizenship or green card.

c. More outreach in immigrant neighborhoods. The New York City Department of Housing Preservation and Development has been part of a heroic effort over the past several decades to bring back once-abandoned neighborhoods. Because much of this work was done in response to the abandonment crisis of the 1970s, HPD’s local offices and areas of focus tend to locate in the neighborhoods that experienced need at that time. While many of those neighborhoods continue to merit strong attention, changing demographic patterns mean that many new immigrant communities – identified in this report as facing severe housing conditions – do not receive the same level of attention. HPD, in partnership with DOB, the Department of City Planning, the New York City Commission on Human Rights, and other agencies, should conduct more outreach in those neighborhoods where low-income immigrant families face worst-case housing needs, in order to help residents identify opportunities for affordable housing and to provide assistance to tenants and owners in preserving housing that is safe, decent, and affordable.

With these steps, New York City can renew once more its tradition of leadership on affordable housing policy, and remain America’s gateway – a place that immigrants from around the world, bringing economic and social vitality to our neighborhoods, can safely and affordably call home. RECOMMENDATIONS ⏐ 36

APPENDIX

NEIGHBORHOOD KEY

U.S. Census Bureau, Sub-borough Districts, New York City

Census Census “Sub- Neighborhoods in “Sub- Neighborhoods in Borough Borough borough” Sub-borough borough” Sub-borough number number

101 Bronx Mott Haven/Hunts Point 301 Manhattan Greenwich Village/Financial Dist. 102 Bronx Morrisania/East Tremont 302 Manhattan Lower East Side/Chinatown 103 Bronx Highbridge/S. Concourse 303 Manhattan Chelsea/Clinton/Midtown 104 Bronx University Hts./Fordham 304 Manhattan Stuyvesant Town/Turtle Bay APPENDIX

⏐ 37

Census Census “Sub- Neighborhoods in “Sub- Neighborhoods in Borough Borough borough” Sub-borough borough” Sub-borough number number

105 Bronx Kingsbridge Hts./Mosholu 305 Manhattan Upper West Side 106 Bronx Riverdale/Kingsbridge 306 Manhattan Upper East Side 107 Bronx Soundview/Parkchester 307 Manhattan Morningside Hts./Hamilton Hts. 108 Bronx Throgs Neck/Co-op City 308 Manhattan Central Harlem 109 Bronx Pelham Parkway 309 Manhattan East Harlem 110 Bronx Williamsbridge/Baychester 310 Manhattan Washington Hts./Inwood 201 Brooklyn Williamsburg/Greenpoint 401 Queens Astoria 202 Brooklyn Brooklyn Hts./Fort Greene 402 Queens Sunnyside/Woodside 203 Brooklyn Bedford Stuyvesant 403 Queens Jackson Heights 204 Brooklyn Bushwick 404 Queens Elmhurst/Corona 205 Brooklyn East New York/Starrett City 405 Queens Middle Village/Ridgewood 206 Brooklyn Park Slope/Carroll Gardens 406 Queens Forest Hills/Rego Park 207 Brooklyn Sunset Park 407 Queens Flushing/Whitestone 208 Brooklyn N. Crown Hts./Prospect Hts. 408 Queens Hillcrest/Fresh Meadows 209 Brooklyn S. Crown Heights 409 Queens Kew Gardens/Woodhaven 210 Brooklyn Bay Ridge 410 Queens Howard Beach/S. Ozone Park 211 Brooklyn Bensonhurst 411 Queens Bayside/Little Neck 212 Brooklyn Borough Park 412 Queens Jamaica 213 Brooklyn Coney Island 413 Queens Bellerose/Rosedale 214 Brooklyn Flatbush/Midwood 414 Queens Rockaways 215 Brooklyn Sheepshead Bay/Gravesend 501 Staten Island North Shore 216 Brooklyn Brownsville/Ocean Hill 502 Staten Island Mid-Island 217 Brooklyn East Flatbush 503 Staten Island South Shore 218 Brooklyn Flatlands/Canarsie

1 At the time of this report’s research, the New York Immigrant Housing Collaborative consisted of the New York Immigration Coalition, Asian Americans for Equality, Chhaya Community Development Corporation, Make the Road by Walking, Latin American Integration Center, Mirabal Sisters Cultural and Community Center, and Neighbors Helping Neighbors. Latin American Integration Center and Make the Road by Walking merged in 2007, to form Make the

Road New York. The NYIHC now includes the New York Immigration Coalition, Asian APPENDIX Americans for Equality, Chhaya Community Development Corporation, Make the Road New York, Mirabal Sisters Cultural and Community Center and YKASEC-Empowering the Korean American Community, with additional support from the Urban Justice Center. ⏐ 38

This document was written by Brad Lander and edited by Alyssa Katz. Research was conducted by Andrea Anderson and Justin Kray, with assistance from Jessenia Vazcones. Surveys were conducted by the New York Immigration Coalition, Asian Americans for Equality, Chhaya Community Development Corporation, Make the Road New York, Mirabel Sisters Cultural and Community Center and Neighbors Helping Neighbors. Special thanks to Michelle Tang ([email protected]) for design and layout and to Ericka Stallings and Javier Valdes of NYIC for their consistent efforts throughout to coordinate the collaborative, and to all of the staff, surveyors, and tenant leaders of collaborative groups. Special thanks to our funders, Robert Sterling Clark Foundation, New York Community Trust, Fund for New Citizens, Independence Community Foundation, Deutsche Bank and M&T Bank; without whom this report would not have been possible. 2 Fiscal Policy Institute, “Working for a Better Life: A Profile of Immigrants in the New York State Economy,” November 2007. 3 Communities for Housing Equity, “Hear This! The Need for Multilingual Housing Services in New York City,” prepared by the Community Development Project of the Urban Justice Center, 2006. 4 Michael Schill et al. “The Housing Conditions of Immigrants in New York City,” Journal of Housing Research, Vol. 9 No. 2, Fannie Mae Foundation, 1988. 5 Analysis of the Current Population Survey data 1998-2006 conducted by the Fiscal Policy Institute, to be published in “One City/One Future: A Blueprint for Making Growth Work for All New Yorkers,” forthcoming from Pratt Center for Community Development, National Employment Law Project, and NY Jobs with Justice. Wages are adjusted for increases in the cost of living. 6 New York City Planning Commission, “The Newest New Yorkers,” 2000. 7 Income and rent statistics are from the New York Housing and Vacancy Survey. Rents are calculated from 1999 to 2005, adjusted to 2005 dollars. Median household income of renters in New York City declined 5.6 percent from 1999 to 2004, adjusted to 2004 dollars. Median rent paid in New York City increased 8.9 percent from 1999 to 2005. 8 The share of renters with a high housing cost burden increased from 36 percent to 42 percent; the share of homeowners with a high housing cost burden increased from 27 percent to 35 percent. U.S. Census American Community Survey. 9 From 2000 to 2006, New York City lost 589,000 apartments renting for less than $1,000, a 36 percent decrease. U.S. Census 2000 and the 2006 American Community Survey. 10 Furman Center for Real Estate and Urban Policy, State of New York City’s Housing and Neighborhoods 2005, 2. 11 Victor Bach and Tom Waters, Making the Rent, 2002 to 2005: Changing Rent Burdens & Housing Hardships Among Low-Income New-Yorkers, Community Service Society, 2006. 12 In addition to assisting tenants, Chhaya CDC also assists many South Asian homeowners. 13 Foreclosure Filings, New York City 2007, Furman Center for Real Estate & Urban Policy, New York University. APPENDIX 14 Eliot Brown, “Bankruptcy Filings Jump Signals Trouble,” New York Sun, October 24, 2007; Michelle Chen, The City Responds to the Foreclosure Crisis. Gotham Gazette. March 10, 2008. ⏐ 39

15 Furman Center for Real Estate & Urban Policy, New York University, Press release, April 14, 2008, “New Analysis of NYC Foreclosure Data Reveals 15,000 Renter Households Living in Buildings that Entered Foreclosure in 2007.” 16 U.S. Census data, New York City Department of City Planning. 17 2006 American Community Survey (U.S. Census). Many analysts believe that these figures represent an undercount of the immigrant population, which tends to be undercounted in Census surveys. 18 NYC Department of City Planning, Results from the 2005 American Community Survey, Socioeconomic Characteristics by Race/Hispanic Origin and Ancestry Group. 19 “The Newest New Yorkers.” 20 Ibid, 39. 21 NYC Department of City Planning, Results from the 2005 American Community Survey, Socioeconomic Characteristics by Race/Hispanic Origin and Ancestry Group. 22 Surveys were collected using “convenience sampling,” meaning that each group enlisted a group of volunteers to canvass targeted neighborhoods and administer the survey. Surveys were administered in: English, Spanish, Urdu, Hindi, and Chinese languages (Mandarin and Cantonese). More detailed information about survey methodology is available at www.prattcenter.net. 23 Latin American Integration Center and Make the Road by Walking merged in 2007, to form Make the Road New York. Surveys were conducted prior to the merger. 24 These results exclude respondents who answered “don’t know” to the survey question about rent control/rent stabilized apartments. 25 This analysis excluded respondents who reported “other” on the Region question (a heterogeneous group from parts of Europe, Canada, Israel and other countries). 26 See the Association for Neighborhood and Housing Development, “The Next Sub-Prime Loan Crisis: How Predatory Equity Investment is Undermining New York’s Affordable Multi-Family Rental Housing,” 2008. 27 Only 159 of the 451 renters answered the question “Why did you not apply for affordable housing programs?” 28 Communities for Housing Equity, “Hear This!” 29 Minnesota Statutes Annotated § 82.32 (2008). 30 D.C. Statutes § 6-1073 (2008). 31 Pratt Center for Community Development, “Time for a Gut Rehab: How the Next Governor Can Rebuild New York State's Affordable Housing Legacy,” 2006. APPENDIX ⏐ 40