Despite the Crash in Prices, Affordable Housing Still Lacking

Despite the Crash in Prices, Affordable Housing Still Lacking

When Florida legislators recently struggled to balance the battered state budget, they decided to plug holes with $190 million from a $300 million affordable-housing trust fund. After all, why should a cash-strapped state shell out money for new home construction when there are tons of vacant homes just waiting to be snapped up? One of the few benefits of a housing crash, theoretically at least, is supposed to be that home buyers who were previously priced out of the market might finally be able to afford a place of their own.

But that’s certainly not the way it’s working in Florida, one of the states hardest hit by the foreclosure crisis. Even as a backlog of hundreds of thousands of newly built and foreclosed homes are languishing on the moribund housing market, more than 750,000 families are in need of affordable housing. Some low-income residents are finding fire-sale deals, but many more are not; just this past weekend, Fort Lauderdale police had to be called in for crowd control when 5,000 people lined up to get on a waiting list for subsidized housing.

The fact is, most of the Floridians seeking affordable housing still can’t muster the means, credit history or job security to land a mortgage — even for a $100,000 fixer-upper — especially with lending requirements tightening in the wake of the subprime catastrophe. This is, after all, low-wage Florida: housing costs may be falling — in exorbitant South Florida, they’ve tumbled 45% since the median cost peaked at $375,000 two years ago — but take-home pay isn’t rising. Unemployment, in fact, is at 8.1%, Florida’s highest level in two decades.

Despite the housing glut, Florida is fast discovering that there is still a glaring need for targeted low-income properties, for renters and owners alike. For that reason, housing advocates say the $10 billion in affordable-housing funds contained in President Barack Obama’s economic stimulus package is as crucial as his more ballyhooed $75 billion bailout for homeowners facing foreclosure. “It’s going to prevent a much greater crisis than we otherwise would have seen,” says Jaimie Ross, affordable-housing director for 1000 Friends of Florida, a community-development organization. “Without it, our homeless rates would have skyrocketed this year.”

That’s true not just in Florida but the entire country. A lack of affordable
homes helped spawn the economic crisis in the first place. The past two
Presidents made growing homeownership rates a core goal, but to
achieve that, they allowed overly loose lending standards. That caused a spike in demand for houses, which in turn raised home prices so steeply that the modest-income people whom Washington hoped to add to the homeowner rolls couldn’t afford them — or eventually couldn’t afford the monthly payments they had taken on. Meanwhile, affordable home construction became passé. What developer wanted to build humdrum houses for teachers and police officers when he could make a killing with waterfront condominiums that promised the glamorous lifestyle of murder suspects on CSI: Miami

Too many of those condos and McMansions are now homes for little more than
the ghosts of greed and stupidity. Federal Housing Administration
loans, which have more lenient credit and down-payment requirements, can
help some low-income buyers scoop up some of those units. “But most of those
homes will never be available to the people we serve,” insists Lloyd Boggio,
a Miami developer and chairman of the Florida Coalition of Affordable Housing Providers. Some communities are using federal Neighborhood Stabilization Program funds to buy up foreclosed homes and convert them into rental units, but they say it’s hardly enough to fill the large gap.

Which is why Florida’s plundering of its affordable-housing reserves looks so ill-advised to many observers. The move could nix some 50 low-income projects slated to be built on the peninsula this year. And it seems particularly unwise when you consider that construction is one of the
state’s most crucial industries but is suffering the highest unemployment of
any sector.

Florida’s Republican-led legislature — as well as moderate GOP Governor
Charlie Crist, who signed on to the trust-fund diversion — was probably
hoping the federal stimulus package would help make up for the
affordable-housing gap. Indeed, the $787 billion stimulus gives Florida more
than $250 million for public housing, homeless prevention , affordable homes and rental assistance as well as tax credits for affordable-housing builders.

But even if the stimulus gets states like Florida off the affordable-housing
hook in the short run, will it do enough to make low-income shelter a
national priority again in the long run To critics, the Florida legislature’s decision reflects not just fiscal
necessity but a cultural bias against affordable housing that has grown
since the Reagan era and got outright absurd in recent years. At the turn of
the century, Florida was averaging about 10,000 new affordable-housing units
per year; today it’s about half that. Some Florida towns have even enacted
minimum square-footage requirements for single-family homes and have all but zoned out affordable rental units. Last year a Miami developer, who was convicted because he used almost $1 million in
public funds meant for affordable housing to build upscale condos, received a punishment of only probation.

This affluent mindset will have to change. The boom did
raise the national homeownership rate from 60% to more than 67%, but the bust
is bringing it right back down again — probably to less than 60% by the end
of the year. As a result, demand for affordable rental units is bound to rise. And no amount of empty five-bedroom, three-bath dream houses is going to satisfy it.

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