The first myth I want to address goes something like this: Sure, housing is important, but when you consider vital social issues, it's not at the top of the list. Health care, education and jobs, for example, demand more attention and resources.
The reality is that health and education suffer and job opportunities diminish if affordable housing is not available. In fact, the lack of adequate housing directly undermines society's massive investment of tens of billions of dollars in health and education.
Consider the recent headlines. Government officials have wrangled endlessly about health care and jobs—particularly in relation to the federal budget. Obviously, those issues are key. But think also about the number of people nationwide who have lost their homes in the last couple of years. Foreclosures and skyrocketing housing prices have left many people stunned at their new predicaments and have wreaked havoc on local and national economies.
Having a place to call home—a place to feel secure—is foundational. Knowing that you can remain in your home without fear of being forced to leave makes a world of difference.
A decent place to live creates stability, launching families into a promising cycle of possibilities and progress. A home offers warmth in winter, shelter from the wind and rain, and a barrier against disease. For girls who fear sexual assault, simply living in a place with a door that locks provides safety and security. And for the world's poor, a simple, decent home offers a respite from the daily battle for survival.
However, for the 1.6 billion people around the world who lack adequate shelter, stability and permanence are elusive.
It is intolerable that more than 10 million people worldwide die each year from conditions related to substandard housing, unsafe water and poor sanitation. That's more than 1,100 each hour…nearly 20 per minute.
Study after study has concluded that poverty, inadequate housing and poor health are inextricably connected.
An Emory University research study in Malawi found that children under five living in Habitat houses had 44% fewer cases of malaria, respiratory or gastrointestinal diseases compared to children living in traditional houses.
And Lisa Harker, a British child poverty expert, found that poor housing conditions increase the risk of severe health problems and disability by up to 25% during childhood and early adulthood.
Safe, solid housing, on the other hand, eliminates many of the environments that pose health threats to children and parents alike.
Let me give you an example. Candace George is a college-educated professional, but she doesn't make a lot of money as a fraud investigator for the city of New York. She's also a single mother with five children.
Before partnering with Habitat for Humanity, all six of the Georges lived in a one-bedroom, fifth-floor walkup that was infested with rats—so many, and so bold, that the children had actually begun to give them names. The rats weren't the only health hazard confronting the family, however. Candace's baby boy, Daniel, had become really sick. He started having asthmatic seizures so severe that he had to be rushed to the hospital.
He would always recover rapidly, but each time he returned home, he would relapse. Eventually, a city health inspector identified the cause of these mysterious attacks…toxic black mold around the apartment's windows. Candace knew she had to get Daniel out of that apartment. Once the family moved into their own Habitat row house in Brooklyn—and into a healthy environment—everything changed. Daniel is a healthy, lively, talkative little boy.
When looking at the link between health and housing, it's not a huge leap to see that inadequate shelter also negatively affects students' performance in school. Overcrowding, inadequate light, leaky pipes and deteriorating walls at home make it difficult to concentrate.
A safe, quiet place to study is not only an environment in which one can learn. It is also a space in which to plan and dream.
According to a University of Tennessee study, the children of homeowners in the U.S. are 25% more likely to graduate from high school, and 116% more likely to graduate from college compared to children in families who do not own their homes.
I want to be fair here. The research doesn't answer all the questions. The children in this study were from homeowner families. Can we say definitively that their academic successes were related to homeownership? Or are the findings more about children not having to move to a new home or school year after year? How much of a factor was parental involvement? Or the quality of schools in areas of high homeownership? We don't know. What we are certain about is that homeownership contributes to stability, and stability increases academic achievement. Around the world, we see that stable housing has a positive effect on health and education.
We also find in many cases that homeownership positively influences family income and spending habits. Adults often increase their own levels of education—earning degrees or completing professional certification courses—when they buy a home. We hear frequently about ambitious homeowners who receive raises, promotions and new or better jobs.
Another myth I often hear is that affordable housing is someone else's problem.
If this recession has taught us anything—it's that housing is as important to community health as it is to individual health. Investing in affordable housing attracts new businesses, creates jobs and, many times, makes communities safer. When these investments are absent, communities struggle and the ripple effect is devastating. Eventually, those ripples affect everyone.
Housing is not a product. It's a process, and housing at all economic levels has to be set in the context of community, involving many people and organizations. If we are to provide affordable housing for all, the public, private and social sectors must work together.
We are seeing this clearly because of the housing crisis. Foreclosed and vacant properties are draining the life out of neighborhoods and surrounding communities throughout the U.S. At Habitat for Humanity, we had to take a step back and determine how we could best serve both families who were hit the hardest—those who could not afford traditional financing even before the recession closed in—and the communities that were steadily dying.
We encouraged our affiliates to think not only about new construction, but also to consider repairs and weatherization. Purchasing foreclosed properties to rehab and sell at affordable prices to low-income families has become a key strategy for Habitat. In the process, we focused on creating partnerships within communities to address the multiple challenges of declining neighborhoods. We have, in effect, become a catalyst for neighborhood revitalization.
This is the Cherry Street community in Winston-Salem, N.C., which, until recently, had been in decline for decades and had also become a haven for violence. A local Habitat team met with neighbors whose desires were very clear: Rid Cherry Street of the blighted, vacant housing and do something about the crime. They had a vision—to make this neighborhood with such a rich history inviting to young families again.
The Habitat affiliate announced plans to replace 16 of the worst houses with new ones. Because of that commitment, private developers purchased and renovated six more houses as well as historic apartment buildings in the area. Soon, businesses, community leaders, schools and other groups came forward with their own resources and big ideas for change.
The results have been amazing. Since the project began three years ago, crime has dropped by 50% and drug offenses are down more than 70%. In fact, when I was touring the area, I talked with a police officer named Billy, who was also a volunteer for the project. He said, “If you had been in this community three years ago, I would have been assigned to protect you.” With a grand sweep of his hand, he proclaimed, “Look at what we have done.”
Remember, the process started with the residents of the Cherry Street community. When they were able to give voice to their dreams, when they were eager to invest themselves in the solution, other people started getting excited. Success required all sectors to get involved.
So how does this all come together? Let's look first at the public sector—which creates the context and environment for private investment in housing. One of critical roles of the government is to regulate land use. The best community designs include mixed-income, mixed-use developments that include the foundation for future growth. Offering incentives such as density bonuses or requirements for inclusionary zoning help assure that affordable housing options are available in communities.
Governments also establish infrastructure. Affordable housing works best when it is in the right location—near transit systems, shopping areas and good schools, and when it is close to the areas where residents work.
A third role for governments, especially in the international arena, is to develop policies for land tenure. Some 80% of the world's population lacks title to their home or to the land that it sits on. Adequate housing opportunities are dependent on the government establishing and enforcing laws for property protection. Developing sustainable housing is almost impossible without clear tenure policies and an honest legal system.
Thriving communities also require investment from the private sector, which has the unique ability to mobilize capital and create scale. But if businesses have to make a profit, they are less likely to gravitate toward low-income markets where the margin is lower and where properties are harder to sell, right?
Not necessarily. With the upper end of the market overbuilt, we are seeing new models that are incorporating some very creative ideas. For example, a private developer in Australia's elite Victoria Harbor sold the lowest three floors of an eight-story upscale apartment building to Melbourne Affordable Housing, which, in turn, will sell the units to those who work in service industries (childcare workers, teachers, police officers, etc.). This was a win-win since the economics of the building did not work when the developer had to fill eight floors of expensive apartments. However, by offering more modest homes on the three lowest floors with no harbor views, the numbers worked for the developer, and low- and middle-income families were able to afford housing in the area where they work.
So where does the nonprofit sector come in? A common thread in successful community development projects all around the world is the engagement of the local community. This seems obvious, but it is amazing how often the voices of those who will be directly affected—particularly in low-income areas—are left out of the conversation. Doing it right is slow and messy. Every community has a few of those “extra-grace-required” folks, but community engagement throughout the process is essential.
The final myth I want to address is that homeownership really isn't for low-income people. That is absolutely not true.
A few years ago, homeownership was widely—and unwisely—encouraged. Now many argue that purchasing a home is a bad idea for low- and even middle-income families. Rental is being touted as the better option. The reality is that we need the full spectrum of housing products, and that people of many income levels can be successful homeowners.
Exactly who are the families struggling to find housing they can afford? Many of them are the people we encounter every day—the people whom we trust to care for our parents, teach our children and protect our neighborhoods.
Discussions about low-income homeownership can be extremely complex, or they can be as simple as imagining a family either continuing to live in a cycle of poverty…or having the opportunity to break free, make changes and discover a world of hope and promise.
Homeownership, especially for the poor, has taken a bad rap because of the housing crisis. Purchasing a home, no matter what the income level of the buyer, ought to require a mortgage with fair and reasonable terms that are fully understood by the borrower. Lenders also should confirm sufficient family income to cover monthly mortgage payments and other associated living expenses—including utility and transportation costs. Perhaps it really is that simple; perhaps the only real problem is that we strayed so far from this path.
The housing crisis arose out of a giant affordability problem. Prices escalated far faster than incomes for many years. Now property values have fallen, but financing has all but disappeared for low- and moderate-income families. We still have a problem with access to affordable housing.
But this is not just about low-income families. An article that ran in The New York Times in July 2010 said that regardless of whether you are talking about a primary residence, a second home or a house bought as an investment, the rich have stopped paying their mortgages at a rate that greatly exceeds the rest of the population.
More than one in seven homeowners with loans in excess of a million dollars are seriously delinquent, according to the article, which also suggested that the rich might simply be dumping financially draining properties. A Las Vegas agent for luxury apartments cited in the article said the wealthy made plans based on the best of all possible scenarios—that their incomes would continue to grow and real estate would never drop. Not many had a plan B, he said.
The suburbs reflect the same struggles across demographics: In the states with the most foreclosures, rates in suburban areas rival those in center cities, and rates in predominantly white neighborhoods differ little by income.
In the current political climate, the expectation is that federal housing subsidies will be reduced, so where do you make those cuts? Who will get squeezed the most?
At Habitat for Humanity, we believe that owning a house is a “power move” for many low-income families. One homeowner said it powered the creation of his own small business and helped him afford to send his children to college. A single mom said that at first owning her own house was a dream come true, but now it's “a push to do something more.”
Because we set out to help families succeed, the majority of Habitat families are thriving; and foreclosure rates remain extremely low—around 2%, even in cities where general foreclosure rates have hit 20% to 30%.
In fact, we have been offering families what you would consider “sub…subprime” mortgages for 35 years; yet, we are seeing more and more families pay off the loans on their homes.
That success comes as the result of preparation, education and accountability. Habitat homeowners are carefully screened for need, ability to pay and willingness to partner. That partnership agreement includes financial and homeowner education. When difficulties arise, Habitat affiliates work with the family partners to help them stay on course—even when holding prospective homeowners accountable is tough…as in this final example.
While preparing documents for a real estate closing in Michigan, Habitat affiliate leaders discovered the prospective homeowner had run up quite a bit of credit card debt since her last financial review. She had been doing sweat equity—performing hundreds of hours of work on her home and the homes of others. That's part of our requirements for receiving an affordable mortgage. She had worked long and hard and was excited about moving in. However, the amount of new debt she had incurred was just too great, and she could not close on the house. It took her nine additional months of dedicated effort to pay off her bills.
She had been devastated when she first heard the bad news, but she later told me that this was the best thing that ever happened to her. Having the accountability of the Habitat agreement changed her financial behavior.
We also emphasize the importance of treating homeowners as partners and helping families participate in their own housing solutions. Families in Mississippi and families in Mongolia help build their homes and pay off no-profit mortgages. Condominium residents in Eastern Europe and community development teams in Indiana are examining local challenges and working together to find answers. When people invest their time, money and effort into improvements, they gain the dignity of knowing they have accomplished something significant. Often they are eager to take on new challenges and seek additional opportunities as well.
Ideally, Habitat for Humanity and other low-income housing providers not only help improve current housing situations, but also serve as a stepping stone for upward mobility.
I stipulated from the beginning that I was speaking to you as an advocate for homeownership, and I stand by that. I will repeat, however, that homeownership is not for everyone. Renting is best for some people and their circumstances or lifestyle. After more than three decades of working with those who can't afford market-rate rents and mortgages, however, Habitat for Humanity has found that homeownership provides many families with a path to self-sufficiency through the ability to build equity by repaying debt.
We believe that whether you are in the affluent suburbs of the U.S. or the slums of India, resources are available to address poverty housing. So we will continue to seek ways to help more families improve their living conditions.
Jonathan Reckford is CEO of Habitat for Humanity International.
