The press often focuses on the extreme, there were tons of stories about Taylor Swift’s 17.8 million dollar beach house and plenty of articles about foreclosures in the state, but little is reported on one of the most fundamental aspects of housing, affordability. Affordable housing breaks the cycle of poverty, reducing burdens on public programs and injects money into the economy. Areas that combine strong income and job growth along with affordable housing are poised to do best. There's a tremendous ripple effect. Last week, I sat down with Nicole Lagace, Interim Executive Director at HousingWorks RI to talk about affordability in the state.
What makes a home affordable?
Housing is considered ‘affordable’ if a household pays no more than 30 percent of its annual income on housing related costs. (A federal guideline). The rationale is that households spending up to 30 % of their income on housing will still be able to afford other non-discretionary items such as food, health care, and transportation. Households spending more on housing are considered housing cost burdened.
What are some of the obstacles that hinder building affordable housing in the state?
HousingWorks RI has been tracking the development of long-term affordable housing in Rhode Island since voters first approved a $50 million housing bond in 2006, also known as the Building Homes Rhode Island program (BHRI). The good news is that BHRI helped many communities make great progress in growing their stock of affordable housing. In fact, 1,300 affordable rental and ownership homes were developed with support from BHRI in 30 communities throughout Rhode Island. Despite this success, some communities still resist the development of affordable housing as they do many other sorts of developments. Our goal is to dispel many myths surrounding long-term affordable housing so that communities see it as an asset and good for their local economies.
How does investing in affordable housing affect the economy?
HousingWorks RI conducted an economic impact study of Building Homes Rhode Island. We found that the $50 million housing bond passed in 2006 supported over 6,100 jobs and generated close to $800 million in economic activity across the state. We’re confident that the $25 million housing bond passed by voters in November 2012 will yield similar economic benefits.
More recently, HousingWorks has started to look at what the lack of affordable housing and persistent housing cost burdens facing so many of our households mean for Rhode Island’s economy. HousingWorks analysis of U.S. Census data shows that 90 % of cost burdened renter households in Rhode Island earn $38,200 or less annually. If these renter households were in housing that was affordable to them, close to $400 million of purchasing power could circulate into other parts of the Rhode Island economy.
Does affordable housing bring down property values?
This is a common myth that countless national studies have dispelled. Most recently, Princeton researcher Douglas S. Massey published his findings of an extensive study of an affordable housing development known as Ethel Lawrence Homes in Mount Laurel, N.J. The analysis looked at the neighborhood effects of affordable housing including property values, crime and property taxes. The findings clearly showed that after a decade, the Ethel Lawrence Homes did not increase property taxes, decrease property values or increase crime rates in Mount Laurel or surrounding communities. These homes, like the affordable homes built in Rhode Island, were designed to fit with the architecture of Mount Laurel.
There are so many success stories in affordable housing throughout Rhode Island. In this year’s Housing Fact Book we featured a resident of Marshfield Commons, which is an affordable rental development in North Smithfield, developed by NeighborWorks Blackstone River Valley. Before moving into her affordable home, resident Noelia Roman was spending $700 a month on rent and had little income left over to support her son Doniel. Now she spends just 30 % of her income on housing, and because she lives in the same community where she works she has also seen a decrease in her transportation costs. By decreasing these expenses she put more money into savings and more fully participates in her local economy.
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