Shelterforce: The Pandemic Housing Market Is Not Like the Great Recession’s
In this Shelterforce article, Miles Howard explores how despite the fact that the pandemic housing market differs from the Great Recession of 2008, the economic and housing destabilization impacts on owners, renters and communities could be eerily similar. TND’s Executive Director, Rafael Mares, was interviewed about how local CDCs are looking to build new tools to act in the rare instances when housing prices drop.
“All of this underscores the growing need for housing providers to wring more affordable stock from the pandemic market—more than they managed to scrape from the recession landscape. So how can housers muscle into such a white-hot market and compete with institutional investors and cash-flush buyers?
Given the cost of housing and the competition among buyers, one policy change that could make it easier for housers to acquire properties is direct access to capital, with less constrictive rules for how that capital can be used. Some foundations and community development organizations might even be able to get a head start on this approach by pooling capital from their members. Rafael Mares, executive director of The Neighborhood Developers, a CDC based in Boston, sees this as a creative game changer. “If we have easy access to flexible, competitively priced capital that allows for a multiyear hold between acquisition and significant capital investments, CDCs can play a critical role in stopping displacement in this market,” Mares says. “[This] would allow CDCs to purchase buildings in which rents are about to increase by as much as 40 percent, prevent tenants from being forced to move out of their homes and communities, and, in the long term, it would create additional deed-restricted apartments.”
Mares notes that a significant portion of this low-cost, minimal-strings capital for housing acquisitions would have to come from the federal government. In theory, HUD’s NSP program, born from the recession, could be an instrument for vesting housers with capital. The key would be ensuring that this time, unlike during the recession, the capital could be accessed much faster, with minimal bureaucratic hurdles that hamstring nonprofits and give private investors a competitive edge.
There’s also the question of who should be acquiring newly available housing stock, especially in the rental sector. Should it primarily be nonprofit and municipal housers? Or could some tenants themselves get a leg up, with the help of newly enacted TOPAs—Tenant Opportunity to Purchase Acts? In 2020, California, New York, and Massachusetts considered TOPA laws that would give renters the first opportunity to purchase the property they’ve been renting if the property owner decides to sell. That same year, Rep. Ilhan Omar proposed a similar federal law that would have given affordable housing developers front-of-the-line access to multi-unit property sales.
Reid sees potential in a combination of TOPA laws and more federal funding for acquiring housing stock. “All of this shows that people are thinking of the acquisition of naturally occurring affordable housing, or even buying single-family homes and stabilizing them in a community land trust,” Reid says, alluding to the city of Oakland as an example of a municipality that has successfully utilized the latter model. “After the last foreclosure crisis, Oakland decided to use its NSP funds to create the Oakland Community Land Trust,” Reid explains. The first few years were bumpy. The land trust struggled with acquiring properties in the face of institutional investor purchases. Renovation costs, amid the depreciated home values at that time, were another hurdle. “But [Oakland] created a great foundation,” Reid says. “They have the infrastructure, they know how to do the financing, and they’re now acquiring both single-family homes and multi-units.””
Read the full article here.
