Leadership Development Module: Housing

Module3: housing

Housing is an essential part of everyday life. Housing plays a role in your ability to access jobs, goods and services, and quality schools. Securing quality housing can be challenging for moderate and low-income households. Harris County Community Services Department cites that roughly 85,500 housing units are overcrowded, 181,500 single-family homes need to be replaced or majorly rehabilitated, and 163,00 households spend more than 30% of their income on housing.

This module will investigate the factors that shape housing affordability, who is responsible, and ways you can advocate for more choices in Houston’s housing market.

What does Affordable Housing Mean?

Affordable housing means housing that is affordable for you, given your monthly or annual income.

A common recommendation (HUD standard) is to spend no more than 30% of your income on housing related expenses. This includes rent or mortgage (principal and interest), property taxes, and insurance. Nationally, housing accounts for 33% of a household’s income - in the Houston area it is 32%. When looking at renters versus homeowners, research from 2015 found that 47% of renters and 21% of homeowners in the greater Houston area were cost burdened.

Household Income Area Median Income (AMI) represents the income of households in the middle of the income range for an area.

This helps to show what the average household is earning and what they can afford. For example the AMI of a four person family in Harris County is $74,900, meaning this family could afford to spend $25,100 a year, or $2,092 a month on housing expenses.

MedianMedian Incomes vary from place: Incomes varyplace fromto place to place:

MEDIAN INCOMES VARY FROM PLACE TO PLACE:

$18,100 $18,100

$25,100 $25,100

30%for AMI forperson 4 for 4 30% AMI 30% AMI a4 person family infamily in person family in College Station

30% AMI for for 4 afor 30% AMI 4 30% AMI 4 person person family infamily person in family in Harris County College Station Bryan - Bryan Harris County College-Station Harris County

Household Expenses

Transportation is a household’s second largest expense and can significantly impact where a household can choose to live. It is not uncommon for a household to balance finding a home they can afford and the cost of getting around. Houston area households spend 21% of their incomes on transportation, higher than the national average of 16.4%. These costs include: public transit, purchasing a vehicle, gas, maintenance, insurance, and yearly registration and inspections. Because of the interconnectedness of housing and transportation, LIVING manyLIVING recommend that your combined housing and HOUSING HOUSING GROCERIES GROCERIES transportation costs be no more than 45% of your 30% 55% RENT 30% 55% RENT EDUCATION EDUCATION household’s income.

MORTGAGE MORTGAGE ENTERTAINMENT ENTERTAINMENT SHOPPING SHOPPING HEALTH CARE HEALTH CARE ETC. ETC.

15%15%HOUSING

RENT MORTGAGE INSURANCE PROPERTY TAXES

TRANSPORTATION TRANSPORTATION

LIVING GROCERIES EDUCATION ENTERTAINMENT SHOPPING HEALTH CARE ETC.

INSURANCE INSURANCE PROPERTY TAXES TA PROPERTY

55%

PUBLIC TRANSIT PUBLIC TRANSIT 30% TRANSPORTATION

15%

CAR INSURANCE CAR INSURANCE PUBLIC TRANSIT MAINTENANCE MAINTENANCE CAR INSURANCE MAINTENANCE YEARLY REGISTRATION YEARLY REGISTRATION YEARLY REGISTRATION INSPECTIONS INSPECTIONS INSPECTIONS

Other Housing Expenses: Area Median Income Income [AMI] represents the income Area Median [AMI] represents the income As you can see in the chart above, transportation is the second largest

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Particularly in areas in where dependent on cars to of households in the of middle of the income range exspense.

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For example expenses.

When thinking about where live, most for afamily of four in is $74,900, which means transportation expenses.

When thinking abouttowhere to live, most for afamily ofHarris four inCounty Harris County is $74,900, which meanstransportation have to have balance housinghousing and transportation costs. Ideally, your your to balance and transportation costs. Ideally, they could comfortably spend $25,100 a year, or $2,092 they could comfortably spend $25,100 a year, or $2,092 familiesfamilies City not combined housinghousing and transportation costs should more than combined and transportation costs not should more than County a montha on housing. month on housing.

45% of 45% your household’s income.income. of your household’s INSURANCE: PROPERTY TAX: MAINTENANCE COSTS: UTILITIES:

Home and Rental insurance provides households protection from the loss of property in the event of disaster, theft, or major event.

Additionally, floodprone communities need to supplement their coverage with flood insurance.

Property taxes are based on tax rates of relevant governing entities, the assessed value of your land, and the assessed value of your home.

Neighborhood changes, like new housing or declining conditions, may affect your property values.

Maintenance costs can be unpredictable, especially in older homes. Protect your investment by regularly checking and maintaining critical elements such as your roof, HVAC system, and plumbing.

(electricity, water, sewer/septic, gas, trash, phone, internet): Utilities are a necessary households expense and vary based on the providers for your area.

Tax Credit

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Why is finding Affordable Housing Hard?

Finding affordable housing can be a challenge. The availability of housing, the type of housing build, where it is located, and who can afford it is shaped by the housing market. Housing markets are never static and are influenced by a variety of players and changing variables. Investors and developers are often the most visible forces in a changing housing market. Bankers and lenders also play a significant role in not only what gets developed, but also who can access loans to buy a home. Other factors like the supply and demand of housing and the cost of land, labor, and building material also drive housing costs.

I lend money to individuals to buy homes or to developers to build neighborhoods

BANKER

I build houses for buyers

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DEVELOPER

BUILDER

HOUSING MARKET

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I buy land to create new neighborhoods

apartment building

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The higher the demand, the harder it is to find what you are looking for.

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LANDLORD

INVESTOR

WHO IS INV OL VE D

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I own and maintain rental properties

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I invest in new real estate to make a profit

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tiny houses and cottages

Town Homes

manufactured homes

Duplex

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GOVERNMENT AGENCY

Housing can come in many types, shapes, and sizes. Areas with a greater variety of housing types offer more choices for those looking for housing, and potentially more affordable options.

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I regulate new housing develoments and decide how to spend money meant for affordable housing.

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Land Values Labor Costs Building Materials Costs

What drives affordability?

DENSITY:

Increasing housing density can reduce housing costs by increasing supply.

Yet, density does not always deliver affordability. Many of Houston’s densest areas are also highly desirable, resulting in high housing costs.

DESIRABILITY:

The desirability of a home or land control its value. More affordable housing options are often found in less desirable areas, farther away from jobs and shopping, with weaker school systems, in poorer condition, or with lower quality design.

LAND COSTS:

Because housing costs are a combination of land cost and building costs, housing is more affordable in areas with lower land costs such as undeveloped areas outside of town, certain neighborhoods in a city, or land that has a higher risk of flooding.

SUBSIDY & INCENTIVE:

Subsidies help developers produce affordable housing by covering the difference between cost to build and the listing price.

Incentives encourage developers to build affordable housing in exchange for zoning variances and tax benefits.

State of Housing in the Houston area The average Houston household spends 25% of their income on housing. That number rises when looking at neighborhoods closer to the urban core, rising to 40-50%. On average households spend $1,242 a month a on housing.

Houston’s key housing issues include housing quality, increasing the supply of affordable housing, and rising housing costs.

HOUSING QUALITY ISSUES:

DEFERRED MAINTENANCE /NEED OF REPAIRS :

DEMAND AND SUPPLY

COST OF HOUSING:

Housing quality and affordability are persistent challenges for many households. In Harris County, roughly 306,000 households live in housing that lacks a kitchen or bathroom, is overcrowded, or is overly expensive.

Some pre-Harvey estimates show that Harris County needs between 124,000 and 400,000 new affordable or less expensive existing housing units to meet the demand. Harvey further reduced supply, leading to rising costs, particularly in rental housing.

Putting off regular maintenance can lead to unsafe housing conditions. Paying for home repairs can be hard for many homeowners, but deferring maintenance can lead to damage too costly to repair.

Additionally, a number of Houston’s rental properties suffer from neglect and substandard conditions.

Currently, Houston’s average home price is $232,542.

When looking at existing homes, prices have increased from roughly $140,000 in 2011 to $216,000 in 2017.

The median rental rates for the area is $919.

Building New Homes New construction must follow the building standards adopted by the local jurisdiction.

Regulating and permitting new construction promotes the health, safety, and welfare of residents and visitors. Increased building code standards can result in higher upfront building costs, but it can also lead to increased efficiency and savings over time. Additionally, new requirements like windstorm certification and foundation elevation help protect structures from damage related to disaster or severe weather events.

Houston has adopted the 2012 International Building Code with Houston Amendments.

All new construction in Houston receives a combination of building permits, inspections, and final approvals before the structure can be used or occupied.

WINDSTORM CERTIFICATION: Ensures that a home is built to withstand storms and high winds (impact-resistant windows, hurricane straps).

ACCESSIBILITY: Design standards that ensure people with disabilities can access and use a space.

ENVIRONMENTAL : Building material standards to limit exposure to harmful chemicals [formaldehyde-free building products].

FIRE PROTECTION: Fire prevention and safety related to building materials and the presence of fire extinguishers for example.

FLOOD PROTECTION: Elevation requirements that keep your home out of a floodplain.

ENERGY & WATER CONSERVATION: Helps to reduce the amount of energy and water your house uses. [Energy Star appliances, low-flow toilets, insulation]

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How Do Subsidies Shape Affordable Housing Options?

Subsidies are government programs to support access to affordable housing for low to moderate income households.

BENEFITS OF SUBSIDIES:

Subsidies make many affordable housing projects financially possible.

CommonReasons Reasons Common Housing IsIs Affordable Affordable Housing

Subsidies may be the most direct way to support the development of affordable housing in more desirable areas that typically have high land values, which makes housing more expensive to build.

However, building or preserving affordable housing in these areas often offers greater opportunities for households and children.

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High Density High Density

Low Density Low Density

DENSITY: DENSITY: Density doesn’t always mean tall buildings with small Density doesn’t alwaysmeans mean tall withbetween small the apartments.

It simply thebuildings relationship apartments.

It simply means the relationship between amount of land used for the buildings on top of them.the amount of land means used forless theland buildings on topbuildings, of them.and Higher density with more Higher density means lessland landwith withless more buildings, low density means more built on it. Inand areas low means more land with less built it. always In areas withdensity high value land, increased density doeson not with high value land, increased density does notlike always equal affordable housing options, but in areas the equal housing options, but inputting areas like the Valley,affordable where land is more affordable, more Valley, where land is more putting more the averaged sized houses on affordable, less land could increase averaged sized houses on less land could increase the affordability of each house. affordability of each house.

CHALLENGES OF SUBSIDIES:

Subsidies are widely used to support the development of affordable housing. The biggest challenge isCity that there needs to be more subsidy County County City funding available to meet the housing needs of lowand moderate-income households.

LAND COSTS:

LAND COSTS: Housing costs are a combination of land cost and building Another challenge is the overwhelming reliance of Housing are a combination offind landmore cost and building costs. Itcosts is common for people to affordable housing subsidies to build affordable housing.

The housing costs.

It isin common for people find more affordable housing options areas where land isto inexpensive.

That could include market (developers, lenders, etc) has comein options in areas whereoutside landbuilder, isof inexpensive.

That could include undeveloped areas town, certain neighborhoods undeveloped of town, certain neighborhoods in expect that subsidies will a part of ato city, or landareas that outside has a higher risk be of flooding or any housing a environmental city, or land has a higher risk ofof flooding or concern.

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This does not that less land will always from coming up with new ways to deliver housing areas.

This does not mean that less valuable land will always be lessisvaluable, but it is important to understand the reasons that affordable low- and moderate-income befor less valuable, but it isto important why land is valued the way it is.to understand the reasons forhouseholds. why land is valued the way it is.

Types of Subsidies Tax Tax Credit Credit

DESIRABILITY: DIRECT SUBSIDIES: This is money that provides DESIRABILITY: direct support to anorindividual household.

Common The value of a home property isorbased on a variety of The value of a home or property is based on a variety of factors reflect its desirability.

The desirability of a types ofthat direct subsidies include: factors that reflect its desirability. The desirability of a property will increase the value of that home; reducing the property will increase the value of that home; reducing the HOUSING VOUCHERS: vouchers home’s affordability.

AffordableHousing housing options are help often home’s affordability.

Affordable housing options are often qualified households housing in the found in less desirable areas,afford fartherdecent away from jobs and found in lessmarket. desirableVouchers areas, farther awayused from jobspay andfor all private shopping, in poor condition, or acan less be preferred to home design. shopping, in poor condition, or a less preferred home design. or a portion of their monthly rental payment.

Common qualities linked to desirability: Common qualities linked to desirability: DOWN PAYMENT ASSISTANCE: Buying a home • Quality of the neighborhood • Quality of the neighborhood commonly down payment, or a initial • Quality ofrequires the localaschools • Quality of the local schools payment for the home.

• Condition of the homeDown payment assistance • Condition of the home potential homeowners programs help qualified • Age of the home • Age of theneeded home to make a down payment. with funds • Closeness of shopping, jobs, and recreation • Closeness of shopping, jobs, and recreation

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GOVERNMENT SUBSIDY OR INCENTIVE: DEVELOPMENT INCENTIVES: This is money used GOVERNMENT SUBSIDY OR INCENTIVE: to support in building housing that is The market developers does not supply enough affordable housing The market not supply enough affordable housing has options to does meet theto need.

In response, the government affordable to low moderate income households. options to meet the need.

Into response, government has developed a funding tools increasethe access and production Common include: developed a examples funding tools increasetools access of affordable housing.

Thetoprimary are:and production of affordable housing. The primary tools are: LOW INCOME TAX CREDIT PROGRAMS: Are Subsidy is a sum of money given to a developer for the Subsidy sum money given to a developer for the programs thatofoffer developers financial support purposeisofa lowering the price of housing for consumers

purpose of lowering price of housing forof consumers Subsidies fill in for thethe gap between the cost providing in exchange building housing is affordable Subsidies the gap between the cost ofthat providing housing fill andinwhat people can afford to spend on housing. to lowand to what moderate income households. housing people can afford to spend on housing.

Incentives are a way of encouraging a developer to build Incentives a waybut of encouraging a developer to build affordable are housing, not giving them directprograms sums of money SINGLE-FAMILY PROGRAMS: These affordable housing, not giving them sums ofto money A common type ofbut incentive is to allowdirect a developer build financing for the development, the Aprovide common type of incentive is to allow a developer to build more on a property than the current zoning allows. more on a property thanof the current zoning allows. purchase, or both affordable single family

Both can be used to help build single family and multifamily Funds can come from federal, state, Both housing. can be used to help build single family and multifamily housing. However the need for affordable housing is much housing.

However the need for affordable housing is much local, and special taxing district jurisdictions. larger than the money available to subsidize it, leaving many larger than the money available to subsidize it, leaving many familiesstill stillunable unabletotoaccess accessaffordable affordable housing options. families housing options.

Where does the money come from?

Currently most housing programs are funded through the federal government, with states, counties, or municipalities deciding how to best use the funds available. Additionally, in response to years of declining federal housing funds, some cities and states have begun to set up their own funding pools to help families get into affordable housing and help stabilize communities.

City of Houston: Local governments set the affordable housing goals for their area, which guide how local governments use funds allocated by the state or federal government. Additionally, local jurisdictions can support the development and retention of affordable housing options through local housing programs, fee reduction, affordability requirements, or land bank programs. The community’s engagement in Houston’s upcoming comprehensive housing plan and updated consolidated plan will impact the future development of affordable housing in the city.

Local Government

Special Purpose Districts: These independent governmental taxing entities are established locally to provide services or infrastructure. In some cases, they provide developers money to offset the cost of residential development, and, in return, the developer is required to provide a housing that is affordable to those making less than the area median income.

Texas Department of Housing and Community Affairs (TDHCA): This state agency is responsible for administering money from HUD, including Community Development Block Grant and HOME program funds. Additionally, they manage the Low Income Housing Tax Credit program that supports the development of affordable multifamily rental development across the state.

State

General Land Office: This state agency manages and oversees disaster recovery activities for the state. This includes coordinating with federal agencies, submitting disaster recovery plans, overseeing recovery activities, and distributing disaster recovery funds.

Department of Housing and Urban Development (HUD): This federal department is the primary source of housing and community development funds. HUD funding programs cover single-family development programs, community level programs (Community Development Block Grant), mixed income, homeless assistance programs, and disaster recovery housing programs.

Federal

United State Department of Agriculture (USDA): Has several programs to support rural community development, including both individual housing support and community infrastructure.

How can I advocate for more affordable housing?

Get involved in your local TOP chapter, civic club or super neighborhood group.

Comment on Consolidated Plans and Annual Action Plans (local).

Review yearly city and Community Development Block Grant budget (local).

Support individual financial literacy.

Offer community support for local Low Income Housing Tax Credit projects being proposed to the state (local/state).

Support local ordinances or state legislation that opposes income discrimination in rental housing.

Support robust home repair and renovation programs for low-income homeowners.

Important concepts ACCESSIBILITY: Refers to guidelines set by the Americans with Disabilities Act for housing units, routes, and elements

like appliances, which ensure the public or common use areas of the building can be approached, entered, and used by individuals with physical disabilities.

AREA MEDIAN INCOME (AMI): Is the middle point of an area’s income distribution. It divides the income range of a region

into two equal groups with half of the household/individuals making above that income and half making below that amount.

BUILDING CODES: Building Codes are regulations or standards for the design, construction, rehabilitation, or

maintenance of a structure. They represent the minimum standards for ensuring the health, safety, and welfare of those who use or occupy a building.

COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) - Federal funds for local community development activities such

as affordable housing, anti-poverty programs, and infrastructure development.

CONSOLIDATED PLAN: A plan that helps states and local jurisdictions to assess their affordable housing and community

development needs and informs how CDBG funds will be allocated to achieve local goals.

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT (HUD): Federal agency responsible for programs concerned

with housing needs, fair housing opportunities, and improving and developing U.S. communities.

FAIR HOUSING ACT: Legislation that prohibits discrimination in home sales, rentals, and financing based on race, color,

national origin, religion, sex, familial status, or disability.

HOME FUNDS: The HOME Investment Partnerships Program (HOME) provides states and localities with grants to fund

building, buying, and/or rehabilitating affordable housing for rent or homeownership, as well as direct rental assistance.

HOUSING STOCK - The total number of rental and owner housing units (single family, multi family, manufactured, etc.)

in an area.

HIGH OPPORTUNITY AREAS: Areas that have low rates of poverty, well performing schools, and low concentrations

of subsidized housing. These areas tend to offer greater opportunities for residents and better outcomes for younger children.

LEASE - A contract that allows the use of land, property, services, etc., for a specified time, usually in return for a regular

payment.

LOW INCOME HOUSING TAX CREDIT (LIHTC) - The LIHTC program provides tax incentives instead of housing subsidies

to encourage developers to create affordable housing. Administered by the IRS, these tax credits are distributed to each State, and those agencies award the credits to projects that best meet the State’s affordable housing needs.

MIXED INCOME: A housing development type that is intended for a variety of income groups. Mixed income

developments are built through federal, state, or local efforts using public, private or non-profit funding. They can be built exclusively for low-to-moderate income residents or come in the form of housing with a few units priced for lowincome residents.

MIXED USE: A pedestrian-friendly development type that integrates residential, commercial, cultural, institutional, or

entertainment.

PUBLIC HOUSING: Rental housing for eligible low-income households, persons with disabilities, and the elderly. These

units are managed by local Housing Authorities and funded by Federal aid.

PERMANENT SUPPORTIVE HOUSING PROGRAM - A combination of housing and services intended as a cost-effective

way to help homeless people live more stable, productive lives.

How to keep my home safe and healthy?

One of the best ways to preserve affordable housing is to help housing that is currently affordable for low- and moderateincome households stay affordable. Helping households stay in homes that are affordable requires a different set of strategies. Improving or maintaining the quality of existing housing has been shown to be an effective tool in helping current residents stay in their homes and stabilizing low- and moderate income neighborhoods. The Department of Housing and Urban Development has come up with 8 principles to maintain your home and keep your home healthy.

KEEP IT DRY: Prevent water from entering your home through leaks in roofing systems, leaks in interior plumbing or

poor drainage that allows rainwater to enter the home. This will reduce the likelihood of mold growing in your home.

When water does enter, make sure it dries completely, especially carpets and drywall, which can retain water more easily.

KEEP IT CLEAN: Control the source of dust and contaminants, creating smooth and cleanable surfaces, reducing clutter,

and using effective wet-cleaning methods, using products that kill surface germs.

KEEP IT SAFE: Store poisons out of the reach of children and make sure that they are properly labeled. Secure loose rugs

and keep children’s play areas free from hard or sharp surfaces. Install smoke and carbon monoxide detectors and keep fire extinguishers on hand.

KEEP IT WELL-VENTILATED: Ventilate bathrooms and kitchens to the exterior and use whole house ventilation for

supplying fresh air to reduce the concentration of contaminants in the home.

KEEP IT PEST-FREE: All pests look for food, water and shelter. Seal cracks and openings throughout the home; store

food in pest-resistant containers. If needed, use sticky-traps and baits in closed containers, along with less toxic pesticides such as boric acid powder.

KEEP IT CONTAMINANT-FREE: Reduce lead-related hazards in pre-1978 homes by removing or encapsulating (sealing

off) deteriorated paint, and keeping floors and window areas clean using wet-cleaning approach. Test your home for radon, a naturally occurring dangerous gas that enters homes through soil, crawlspaces, and foundation crack. Install a radon removal system if levels above the EPA action-level are detected.

KEEP YOUR HOME MAINTAINED: Inspect, clean, and repair your home routinely. Take care of minor repairs and

problems before they become large repairs and problems

TEMPERATURE CONTROL: Houses that get too hot or too cold may place the residents at increased risk. Young children,

babies, and the elderly are vulnerable to negative health events when exposed to extreme temperatures.

IMAGE REFERENCES:

1. Cover photo: Casitas Los Olmos. Elaine Morales-Diaz/buildingcommunityWORKSHOP. 2. Low density & High density photo: Houston 2018, Google Earth 3. Desirability photo: Casitas Los Olmos. buildingcommunityWORKSHOP. 4. Land Cost photo: Casitas Los Olmos. Jesse Miller/buildingcommunityWORKSHOP. 5. Subsidy & Incentive photo: Houston City Hall. www.goodfreephotos.com 6. Housing Issues photo: buildingcommunityWORKSHOP 7. Deferred Maintenance photo: buildingcommunityWORKSHOP 8. Demand & Supply photo: Casitas Los Olmos. buildingcommunityWORKSHOP. 9. Cost of Housing photo: Casitas Los Olmos. Jesse Miller/buildingcommunityWORKSHOP. The purpose of this series is to build an informed and engaged resident base, support organizing efforts, and build the capacity of neighborhood leaders to impact disaster recovery planning and prioritize future development in 7 neighborhoods of Houston.

Texas Organizing Project T TX 77004 24044 Caroline St, Houston, 832.582.0061

buildingcommunityWORKSHOP 708 S Main St, Houston, TX 77002 712.304.6277