Wednesday, February 14, 2024

Ensuring Houston's Housing Momentum Endures Preceding the Next Storm

 

Despite concerted efforts to enhance the availability of affordable housing in Houston, the city continues to grapple with significant housing affordability issues. As plans to implement a comprehensive housing plan gain traction at City Hall, it is imperative to reinforce existing city initiatives to capitalize on the slow but steady momentum that has been building around housing as a primary concern in recent years.

With the transition to a new mayoral administration, it is crucial for the city to remain focused on addressing broader housing challenges, especially considering external factors that could exacerbate affordability issues. These risks include rising construction costs, dwindling housing supply, and the looming threat of major storms that could damage existing housing stock. Of particular concern is the prolonged interval since the region’s last significant weather event, excluding the recent winter freezes, which had a more muted impact on housing.

Since 2001, Houston has endured a series of major storm events approximately every seven to nine years, including Tropical Storm Allison (2001), Hurricane Ike (2008), and Hurricane Harvey (2017), alongside noteworthy rain events such as the Memorial Day Flood in 2015 and the Tax Day Flood in 2016. Given this historical pattern, it is reasonable to anticipate the likelihood of another significant storm or hurricane event occurring within the next 18 to 30 months, necessitating foresight from public officials as they address housing challenges in the region.

Should current housing trends persist, the occurrence of a major storm event within the next two and a half years is poised to exacerbate existing housing challenges for renters and prospective homeowners. The abstract nature of housing affordability issues makes it difficult to grasp this reality, heightening concerns that the most vulnerable residents could be overlooked, mirroring the plight of those displaced by Hurricane Harvey who continue to grapple with housing insecurity.

Thursday, November 10, 2022

Houston’s Housing Affordability – An Action Plan for 2023 and Beyond

 INTRODUCTION

 

Since the 2015 publication of the initial white paper titled “Maintaining Houston’s Affordability for Working Class Families”, which took a comprehensive look at the state of the housing market of one of the most affordable of America’s largest cities. Prior to the 2008 financial crisis, Houston was for a long time regarded as a hidden gem for housing stock and affordability and the region was recognized consistently in national and international rankings of best places to live. In contrast to the economic malaise that hung above most of the United States, the improvement in horizontal drilling/fracking technology in the country led to a major boom in the oil and gas sector, a significant driver of Houston’s economy.

 The rapid recovery of Houston’s economy post financial crisis in 2010-2015 led to a steep climb in the local real estate market as thousands of families fled California, New York and other economically challenged regions for the greener hydrocarbon-fueled pastures of Texas. Neighborhoods in Houston and other major cities in Texas characterized by long-term owner residents gave way to new buyers offering above list price for homes, and newer ever more grand multifamily apartments were being constructed within Houston’s urban core, middle region, and suburban outskirts to meet the growing demand. This unabating demand from new residents led to a real estate building spike, which drove up land and rent prices seemed to only attract more new entrants. Then we experienced the crude oil crash of 2015, which unwittingly demonstrated just how resilient and diversified Houston’s economy had become.

Coinciding with these shifts in Houston’s economic fate, were changes in lifestyle and generational tapestry of Houston’s residents, many of whom increasingly became interested in living in urban environments characterized by denser more walkable neighborhoods within close proximity to retail and other urban amenities. Around the same time, Houston initiated the Downtown Living Initiative that provided a $15,000 per housing unit incentive for construction of multifamily housing in the eastern half of Downtown Houston, with the result being a boom in housing construction in the area stretching from Buffalo Bayou to Highway 45 between Main Street and Interstate 69. Additionally, the city made a determined commitment to invest in its pedestrian infrastructure embarked on the ambitious Bayou Greenways project, which led to construction of the longest intra-city bike network system in America, a 190-mile trail of connections along the city’s system of ubiquitous bayous.

The market response to the shifts in desires of urban dwellers, led to a frenzy of redevelopment and new development activity and rising rent rates within the urban core that resulted in the displacement of long-term residents of communities dispersed throughout the urban core and within proximity of Houston’s major employment centers. This displacement forced residents to seek housing in far-flung areas of the region, increasing the pressure on housing rents in suburban communities at or around the boundaries of the city limits. 

In our original paper, we cited important statistics about population, households, income, and real estate market data for Houston, which represented the conditions as they existed in 2015 (the “base year). For purposes of this update to the white paper, you will see terms such as ‘base year’, ‘original paper’, ‘initial white paper’, and 2015, where the reference being made is to data captured in the initial white paper the author penned in 2015. This paper updates those statistics for 2022 and examines the governmental actions needed to create a workable solution to the affordable housing market in Houston.

HOUSEHOLDS, INCOME, AND HOUSING NUMBERS

The 2020 census recorded Houston’s population at 2.304 million residents, representing a 4.75% increase from 2015, though lower than what was projected to be a 1.36% annual growth rate that would have resulted in a 6.33% increase in the population. A demographic phenomenon that took hold since 2015 has been a reduction in the average household size decreasing from 2.70 persons to 2.61 persons per household. During the same period the percentage of owner-occupied dwellings decreased from 45% to 42.9%, continuing a trend of a decline in homeownership rates for Houstonians.1 The percentage of homeownership not only stands out for being low when compared to other major American cities, it is abysmal in the context of a nation that prides itself on the idea of the ‘American Dream’ with a homeownership rate of 65.5% across the United States.2

Our original white paper recorded the US Census estimated the 2015 area median income for the Houston area at $48,258, a number which as of 2020 has risen to $53,600, representing an approximate 11% increase in income.1 In its June 2022 report, the Houston Association of Realtors’ monthly housing report indicated that the median home sold in the Houston Metropolitan Statistical Area (MSA) was priced at $354,440, which when compared to the base year figure of $223,000 in August 2015 represented a 59.42% increase. The August 2022 median home value retreated to $341,950 in the aftermath of aggressive repeated rate hikes by the Federal Reserve Bank. That number still represents a 10.8 percent increase from the same month in 2021.3 It is also worth noting that the average price of a single-family home in the Houston area is now reportedly at a historic high of $411,671. 3 The combination of those two factors greatly impacts the affordability index for Houston.

A quick analysis of the data reveals a staggering divergence from the base year to 2022 in the growth trends of income as compared to housing values, a fact underpins what has become a tipping point crisis for the Houston housing market. What you we observe is the growth in housing values outpacing the growth in incomes by a factor of five, which is simply unsustainable in the long run for a region that has long attracted people and industry based on its reputation as a place with a highly attractive affordable cost of living.

The conventional measure of housing affordability has historically stipulated that households should spend no more than 30% of their income on their total housing expenses. A study conducted by Rice University’s Shell Center for Sustainability in 2013 indicated that in five of Houston’s 11 city council districts, 31% of households spent in excess of 30% of their income on housing.4 The study further ranked Houston 26th on the list of top 50 U.S. cities for affordability when transportation costs were factored in, a fact best appreciated by suburban residents most familiar with Houston’s traffic. In a separate report by the Harvard Joint Center for Housing Studies, 45.5% of rental households in the Houston MSA spent more than 30% of their income on housing.5

The rental market in Houston has fared considerably better when compared to the homeownership market, though finding affordable rental housing opportunities is increasingly out of reach for even more families. According to reporting on Houston-based Apartment Data Services, the average rent for all apartment types in Houston had risen to $1,188 per month as of 2021, with Class A apartments averaging $1,675 per month, and the forecast for a 5% rental rate growth in 2022 for the Greater Houston area.6  In its report of comprehensive tracking of apartment rental information the Apartment List revealed that the average rent for a one-bedroom apartment within the Houston MSA is now $1,092 per month and $1,301 per month for the average two-bedroom.7  

In its 2022 State of Housing Report Rice University’s Kinder Institute illustrates how the median home value within the city of Houston and Harris County have nearly doubled over the last decade, with the sharpest increases occurring in the intervals between 2012-2014 and more profoundly between 2020-2022.8 The same report reveals that the median lease price per square foot of single-family homes rented within Houston and Harris County has grown a more modest 9% and 22% respectively from 2015 to 2022. 

When the growth in median income from the base year to the current year is compared with the increase in median home sold, a picture emerges of a stark divergence in the average family’s ability to purchase a home within the Houston market. Based on the current rate for a 30-year mortgage and depending on how much they have for a down payment, the average family looking to purchase a median priced home would need an income above $130,000 to qualify for a mortgage. For an individual earning the median income, the maximum mortgage their income will allow them to afford is a home at or below $125,000, a home that would be a rare find anywhere in the market given the current housing situation. 

When we consider the decline in homeownership rates the dynamics within the rental housing market holds greater significance as a greater percent of the population and a larger total number of households are now reliant on the rental market for housing. As the cost of homeownership has exploded over the last several years, a less acute spike has occurred in the rental market though the cost of renting a home has grown continually in every housing sector over that time span. The outlook for homeownership has been even more bleak for millennials and Gen Zers who continue to bear the brunt of the inequities in the housing market with less than 25% of that population segment being homeowners according to metrics cited by various national organizations.

Many within that age group are trapped in between the stagnation of slow growing incomes and the rapidly increasing housing costs, especially during the Covid-19 pandemic, causing many to revert to moving back home with parents, while others sought out alternative arrangements such as roommates’ co-occupancy or short-term guests as a means of relieving the housing costs burden. The student loan relief executive order issued by the current administration, when enacted is expected to relieve some of the burden faced by those with student debt, however, the student loan relief affects only a fraction of that populace and will not go far enough to provide housing relief for many who owe a greater amount in student loans than the act covers.

It is worth noting that our original paper cited that many within that age segment, who were otherwise able to purchase a home, were opting to rent to be closer to work or the inner city, as was confirmed by a national survey conducted in 2015 where majority of millennials planned to put off buying a home till 2018 and beyond. Now the additional pressures have made homeownership almost impossible.

POVERTY NUMBERS

The results of the 2020 US Census revealed that the City of Houston had an overall poverty rate of 19.6%, which is just below the average for the State of Texas and represents approximately 452,368 persons or 173,321 households. At a broader scale, the concentration of poverty in particular communities continued throughout the United States over the last several years. While poverty prior to the 2008 recession was concentrated in distressed neighborhoods within the urban core of most cities and in rural areas, many of these hotspots have now expanded to suburban and other areas a trend that has grown in the aftermath of the Covid-19 pandemic.9

According to a 2017 report by the Brookings Institute poverty which had historically been a problem associated with large urban centers and rural communities, grew at pace double of that seen in smaller metropolitan areas, with suburbs in the country’s largest metropolitan areas experienced the number of residents living below the poverty line grow by 57 percent from 2000 to 2015.10 A 2014 analysis of the American Communities Survey (2008-2012) affirmed the impact concentration of families living in poverty had in instigating challenges similar to those faced by disadvantaged neighborhoods – namely escalating crime rates, failing schools, poorer health outcomes, and fewer employment opportunities — making it harder for families to break the cycle of poverty.11 The report further cited that the number of distressed neighborhoods, census tracts where poverty rates exceed 40 percent, rose by 75% during the early 2000’s, and nearly every major metropolitan area witnessed the growth of suburban poverty during the same time period.

Figure 1.


HOUSTON’S HOUSING SITUATION

In 2015, Houston was sliding towards an era, where the average family could no longer enjoy the abundant availability of moderately priced housing for rent or homeownership. The reality at the time, though concerning, was still largely within the grasp of policymakers to redress and implement a decisive plan of action to stem the tide of what was to come. A series of successive natural disaster events, the Memorial Day flood of 2015, the ‘Tax Day’ flood of 2016, and Hurricane Harvey in August 2017, introduced a highly destabilized housing environment with internally displaced residents needing to fend for themselves, while externally displaced persons (a la Louisiana and other parts of Texas) sought refuge within the existing housing in the Houston region.

Despite significant efforts by private sector non-profit and for-profit developers, Houston has not been able to build enough housing units to replace the number of affordable units (statutory and “naturally occurring”) that were lost to this string of disasters. While grappling with a housing market facing significant upward pricing pressure, emergence of the COVID-19 public health crisis led to even further disruptions within the housing market and construction industries, then Winter Storm Uri in February 2021 introduced the term “fix the grid” into our Texan lexicon as families were confronted with a different type of disaster than previously encountered.

In the aftermath of the aforementioned period capped off by the COVID-19 endemic, the Houston MSA experienced an increase in the ‘Relative Property Value’ both within the Urban and Suburban submarkets, that applied additional pressure on both market segments, unlike in other comparable major MSA’s that witnessed a divergence with a much more significant impact on property values in suburban as compared to urban areas.12 This bifurcated effect has rendered futile any current efforts by families to flee to the outlying areas and surrounding counties of Houston in search of lower cost housing. That is an issue further complicated by the rise in transportation costs reflected in the cost of automobiles, vehicle maintenance, and gasoline prices.

The difficult reality of the challenges surrounding around affordable housing have only accelerated since the 2015 base year and created a further chasm between what working families need –- a balanced housing market with an adequate number of affordable options for renters and homeowners –- and what the market offers. Data from the Texas Department of Housing and Community Affairs indicated that in 2015, 46,261 affordable housing units available in the Houston from the state’s Housing Tax Credit programs.13 The most recent report from July 2022 revealed that the total number of affordable housing units available in Houston grew to 56,438 units, representing a 22% increase or a total increase of 10,177 units the equivalent of a 1,454 increase in the number of units delivered annually.

The Houston Housing Authority publicly reports that the agency currently owns 5,700 housing units in 25 housing developments and administers a Housing Choice Voucher program that serves over 17,000 families for a combined total of approximately 23,000 housing units serving about 60,000 low-income Houstonians and serves an additional 40,000 individuals via its Public Facilities Corporation’s involvement in multifamily developments. Combining data from both agencies, we can approximate that affordable/rent-restricted housing units for Houston’s low to moderate income families, earning between $16,000 and $57,000 or 30% to 80% of Area Median Income (AMI), totals approximately 80,000 housing units. It is important to note that with a decline in the average number of persons per household (-3.3%), the number of households needing affordable housing has also increased by the corresponding factor to the decrease in household size. 

The analysis of the household and population data from the 2020 American Communities Survey indicates that there are approximately 833,000 households within the city of Houston or a total of 1,437,000 within Harris County. The Harris County ‘My Home Is Here’ report indicated that the 2020 median household income for Houston and Harris County were approximately $61,900 and $73,000 respectively.14 The income data coupled with the low level of homeownership in Houston reveals the difficulty of homeownership as a viable option for most of Houston’s families, leaving over 700,000 Houston area households with rental housing as their primary option. Considering other socioeconomic factors such as credit, employment stability, and upward mobility, you find that most of those residents simply are unable to leverage homeownership as a tool to climb up the economic ladder.

The same Harris County report indicated that there are approximately 315,000 naturally occurring affordable housing (NOAH) units in Harris County or about 22% of the total households. With the high number of renters, and such low levels of rent-restricted affordable units, nearly 400,000 households must rely on market supply for affordable housing options. Though the market does supply housing for some within that gap, the reality is those options can often be limited to substandard dwelling units. Further, many of the neighborhoods characterized by naturally occurring affordable housing in Houston usually result from housing units built four or more decades ago. The aging housing supply in these areas are sometimes surrounded by declining neighborhoods or areas attracting throngs of investors rehabilitating some of the older housing units to flip for a profit or put back on the market at much higher rents. All told, over 500,000 households within Harris County were reported to be spending above the recommended 30% of their income on housing costs, leaving less for other living expenses including transportation.14

In its ‘The State of 2022 Housing in Harris County and Houston’ report, the Kinder Institute at Rice University observed that the Houston region was short 160,000 housing units affordable for households earning less than $20,000 a year.15 In October 2022, of the 5,706 homes with a Houston address on the Houston Association of Realtors website, only 1,660 (29%) were priced below $292,000 (City of Houston’s 2022 affordability threshold for single family), and 302 two-plus bedroom Townhouse/Condominiums priced at or below $200,000. Most “would be homeowners” nationally cite affordability challenges tied to soaring home prices and higher mortgage rates as significant barriers to homeownership.16 When a full accounting of the facts and statistics is taken into consideration, we are left with the unmistakable conclusion that homeownership has become unattainable for a significant majority of Houston’s families who do not already own a home.

 

RECOMMENDATIONS: A PATHWAY FORWARD

The City of Houston’s embrace of higher density policies has facilitated construction of more dense housing initially within the 610 Loop and now inside the Beltway 8 loop, which contributes significantly to more Houstonians having access to housing units that are comparatively more affordable. More recently, revisions to parking requirements along transit corridors and greater flexibility in allowable housing types and materials have been positive steps in the right direction. Furthermore, the City’s establishment of the Houston Community Land Trust and the reinvigoration of the Houston Land Bank during the current administration have equally been important advancements towards addressing and protecting long-term housing affordability for Houston’s families.

The City’s planning commission, however, has in recent times implemented major revisions to the development code that impacts and stands to counter so many of the gains that have been achieved in terms of policies promoting housing affordability. One example is the revision of the building setback that extends the necessity for a fire-rated exterior wall for structures from within three feet of a property’s boundary threshold to within five feet of the property boundary line. The revisions were ostensibly approved as a means of reducing fire hazards for adjacent property owners. However, the potential dollar value in fire damage it would reduce pales in comparison to the cumulative increase in housing costs that will result from this change alone. To put it succinctly, the average 5,000 square feet single family lot, which spans 50 feet wide by 100 feet deep, has effectively had development curtailed across 400 square feet (both sides from boundary line) or 8% of its coverage area or would force developers have to develop within those areas at a higher cost. 

If Houston is to stem the tide of its housing crisis, the urgency of the moment must come into focus, and Houston and Harris County will need to apply every tool at their disposal in hopes of mitigating the imminent housing catastrophe. Small incremental steps are no longer sufficient and relying on federal dollars is wholly unsustainable as those dollars will only flow after another disaster has wreaked havoc on the already anemic supply of affordable units. Policymakers need to go BIG in the development of solutions to improve access to affordable housing, both from a funding and public policy perspective. Houston needs a Comprehensive Housing Plan and a statutorily codified implementation plan to bring the plan to fruition.

In addition to the Comprehensive Housing Plan, new financial priorities must be established to provide significant funding for implementation of the plan. The City and County need to pursue housing bond referenda that will raise no less than a combined $500 million to be committed to the preservation and production of affordable housing over the next ten years. Additionally, significant budgetary resources need to be committed to housing by both entities, particularly given the positive impact that access to safe quality housing has on other social determinants of health and life outcomes. To put it another way, making considerable investments in affordable and mixed-income housing will arguably significantly reduce the resources that will have to be spent on healthcare, incarceration, and social benefits in the long run.

The City of Houston must continue to pursue revisions to its Development Code to promote the reduction of costs associated with building new multifamily and single-family housing. To achieve this action, an advisory board of external stakeholders, including industry professionals and neighborhood organizations, should be established to provide periodic recommendations for the planning commission for discussion and action. Policies to be routinely reviewed include should include parking requirements, setback regulations, the development ordinance, and streamlining of the permitting process. Finally, to achieve its long-term aims, the City of Houston needs to collaborate with key stakeholders including developers, non-profit organizations, real estate professionals, quasi-public agencies, and neighborhood organizations, many of whom comprise the recently formed Houston Housing Collaborative, to generate a workable needs and market driven comprehensive plan for housing affordability.

In the initial white paper published in 2015, we outlined specific recommendations for actions the City of Houston administration needed to take and most of those same recommendations are being restated below since action on them has not occurred:
(The following italicized segments restate verbatim recommendations from the initial 2015 white paper)

The City of Houston should take action to implement the following:

-                  Adopt and implement a Comprehensive Housing Plan.

-                  Replicate the $15,000 per door incentive program used to drive development of residential units in the eastern half of Downtown during the Parker administration, by offering abatements to developers whose projects incorporate at least 60% of the units restricted to below market rents for residents within 30–80% AMI.

-                  Leverage existing HOME and CDBG funds with State 4% Tax Exempt Bonds and 9% Housing Tax Credits to drive development of affordable housing in target areas.

-                  Utilize CIP spending to drive infrastructural improvements in target areas spelled out in the Comprehensive Housing Plan, and apply housing dollars from TIRZ’s, and development incentives such as tax abatements and lower permit fees to accelerate workforce housing development

-                  Implement a standard reimbursement for builders who tear down structures cited as dangerous buildings by the City of Houston, provided they construct affordable housing in its place within three years

-                  Establish a policy that stipulates that in the event the City of Houston funds are expended towards a development or on City-owned land, there is a requirement that between 10 - 25% of affordable housing units be included within the project.

-                  Incorporate fast-track permitting for “affordable” housing to facilitate faster delivery of housing units.

-                  Fast-track the Planning Department approval process for affordable housing developers with an established track record with the City.

Homeownership

The goal of achieving development of affordable homes within the urban core must focus on overcoming the significant barriers of high cost of land, scarcity of assembled large contiguous tracts, lack of qualified buyers, tightened mortgage requirements, higher interest rates, and the unfavorable risk/reward ratio that drives most builders to respond to the needs of the higher end of the market. The City of Houston needs to rebuild and rebrand its homeownership incentive program to make it more robust, flexible, and accommodating to the development of affordable single-family homes within the urban core. Some of the proposed goals for City’s single-family program should include: 

-                  Achieve a 40% annual conversion rate of Houston Land Bank owned lots into development of single-family dwelling units from 2023 – 2025.

-                  Facilitate construction of 10,000 single family homes for working class families between 2023 – 2028.

-                  Partner with developers and offer reimbursements for infrastructural improvements (sidewalks, lighting, pocket parks) in communities needing revitalization.

Rental Housing

Using its internal data, the City of Houston should identify target goals for affordable rental housing units to be developed over the next ten years within its boundaries. Furthermore, the City should establish targets for development of housing in certain opportunistic areas with good schools that are within proximity of major employment centers including: Downtown, Texas Medical Center, NRG Stadium, Westwood/Sharpstown, Energy Corridor, and NASA/Clear Lake. (Galleria, Greenway Plaza, and City Center/Town & Country have been deleted as those areas have largely become closed off to affordable rental and homeownership opportunities)
 

CONCLUSION

The City of Houston needs to commission a Comprehensive Housing Market Analysis, which would measure income and households against housing options available that fit within the 30 percent income test. This study would help the city better understand the shortages in affordable housing, identify areas of greatest need, and offer a defined basis on which to prioritize affordable housing development. The study should quantify the percent of current dwelling units that are substandard housing, and those that need to be rebuilt or rehabilitated to extend their useful life. Quantitative data from this study should be evaluated against the aforementioned recommendations to ascertain whether the suggested actions go far enough in helping the City meet its long-term affordable housing needs.

Given the Comprehensive Study data available, the City’s Housing and Community Development Department can work with the Planning Department and community stakeholders to apply necessary revisions to the goal of completing affordable housing units within the five-year span from 2023 to 2028. The data can also help establish a more comprehensive decade-long forecast. This longitudinal forecast can then be incorporated into a prioritization chart, where housing development numbers are targeted by geographic area, type (family or elderly), and category (rental or owner occupied). Lastly, the action plan should be integrated within the City’s Neighborhoods and Public Works & Engineering Departments, so that they can be part of the process of improving target neighborhoods, and prioritizing capital improvement spending.

A few other factors that will affect the trajectory of the Houston region over the next decade include the so-called doughnut hole effect, where the suburban areas within Harris County continue to outpace the rate of growth within the City, a trend further exacerbated by the shifts in the housing preferences of millennials.17 The continued undersupply of the Houston housing market will also continue to render consequential effects as the region’s population growth continues to outpace the growth in its housing stock.18 Houston’s diversity, geography, and dynamic economy will for the foreseeable future continue to foster vibrancy of the region, but the housing challenges it faces could become intransigent over time leading it on an intractable path to unaffordability. It is safe to assume that housing unaffordability will remain a malignant problem in Houston for the foreseeable future absent an aggressive housing action plan backed by government policy.

 

*         *        *

Laolu Davies-Yemitan is principal of Five Woods Realty, a real estate development firm focused on developing affordable multifamily and urban in-fill residential development. (Contact: Linkedin.com/in/laolu).

 

REFERENCES

 

        1. US Census Bureau: https://www.census.gov/quickfacts/houstoncitytexas


        2. FRED Economic Data: https://fred.stlouisfed.org/series/RHORUSQ156N

          

        3. HAR (September 2022): https://www.harconnect.com/houston-housing-remains-robust-in-august-as-the-market-cooldown-continues/

 

         4. Rice University Shell Center for Sustainability (2013) - http://news.rice.edu/2013/09/23/affordable-housing-and-flooding-among-sustainability-issues-to-address-in-houston-2/; https://shellcenter.rice.edu/uploadedFiles/Shell_Center/Indicators/HSISocial2013sml.pdf

 

         5.  Harvard Joint Center for Housing Studies - http://www.jchs.harvard.edu/sites/jchs.harvard.edu/files/jchs-sonhr-2015-ch5.pdf 

 

         6. Houston-area apartment affordability has ‘left the building,’ apartment data analyst says, Houston Business Journal (2022) - https://www.bizjournals.com/houston/news/2022/02/07/houston-apartment-state-of-the-industry-2022.html

 

         7. Apartment List (2022) - https://www.apartmentlist.com/research/category/data-rent-estimates

 

         8. The 2022 State of Housing in Harris County and Houston (2022) - https://kinder.rice.edu/research/2022-state-housing-harris-county-and-houston

 

         9. American Poverty is moving from the cities to the Suburbs, The Economist (2019) – https://www.economist.com/special-report/2019/09/26/american-poverty-is-moving-from-the-cities-to-the-suburbs

 

        10. The changing geography of US Poverty, Brookings (2017) - https://www.brookings.edu/testimonies/the-changing-geography-of-us-poverty/

 

         11. The Growth and Spread of Concentrated Poverty, 2000 to 2008-2012 (2014) - http://www.brookings.edu/research/interactives/2014/concentrated-poverty#/M10420

 

         12. Did the Pandemic advance new suburbanization? https://www.brookings.edu/blog/up-front/2022/05/23/did-the-pandemic-advance-new-suburbanization/

 

         13. Texas Department of Housing and Community Affairs - http://www.tdhca.state.tx.us/multifamily/housing-tax-credits-9pct/index.htm

 

         14. My Home Is Here: Harris County’s Housing Needs Assessment and 10-Year Strategy (2021) - https://www.myhomeishere.org/Portals/myhomeishere/Documents/Resources/-48034192993MHIH_Final_Report_10292021_compressed.pdf

 

         15. The 2022 State of Housing in Harris County and Houston (2022) - https://kinder.rice.edu/research/2022-state-housing-harris-county-and-houston  

 

         16. Nearly two-thirds of Non-Homeowners Polled say Affordability woes Block Homeownership, BankRate.com (March 30, 2022) - https://www.bankrate.com/mortgages/homeownership-remains-centerpiece-of-american-dream/

 

          17. How Covid-19 migration, housing trends will remake the suburbs, Houston Business Journal (2022) -            https://www.bizjournals.com/houston/news/2022/08/31/population-housing-migration-suburbs-covid-19.html?utm_source=st&utm_medium=en&utm_campaign=ae&utm_content=HO&j=28908576&senddate=2022-08-31

 

18. Houston’s housing market is undersupplied and overpriced, studies find, Houston Business Journal (2022) - https://www.bizjournals.com/houston/news/2022/08/29/housing-supply-houston-population-stessa.html?utm_source=st&utm_medium=en&utm_campaign=ae&utm_content=HO&j=28908576&senddate=2022-08-31

Tuesday, April 28, 2020

Automobile Fatalities or COVID-19, Which Should We Fear More?




Photo credit: AP

As a resident of Houston, Texas, it was only to be expected that following Texas governor Greg Abbott's executive order allowing institutions and businesses to take the first steps towards reopening our "economy", there would be a crescendo of folks opining on where that leaves the Lone Star State. I have heard friends describe Texas (along with Georgia) as a canary in the coal mine, while others have attempted to rationalize the risk of death from coronavirus as analogous to that from an automobile fatality. Regarding the latter, let us be very clear that the two are very different things, though the comparison could offer some important lessons in how to analyze risks of the coronavirus and individual choices going forward.


Without delving too deeply into the number of traffic fatalities that occur daily or annually, let us assume that the numbers are nearly identical to the fatalities from COVID-19. With that said, there are a few factors we can consider as key contributors that cause traffic fatalities including: driving at a high rate of speed, distracted driving, failure to wear a seat-belt, failure to maintain good brakes and tires, using of a mobile device while driving, driving late at night, impaired driving, failure to drive defensively, human error, and the driver of the other car engaging in any of the aforementioned behaviors or failing in any of the safety precautionary procedures.

The parallel to that in analyzing risk factors associated with fatality from COVID-19 would be: failure to wear a mask, failure to wear gloves when touching surfaces touched by others, failure to wash or disinfect your hands regularly, being in contact with a lot of people, touching your face frequently when outside your home, failing to maintain social-distancing, working out at the gym with others, being in contact with an asymptomatic carrier of the virus, being in close proximity of people in public outdoor spaces, and being indoors in public places with people not from your household.


Consideration of the risk factors of dying or seriously harming oneself from a car accident is the reason most people take precautions and make efforts to focus while driving, wear a seat belt, drive defensively, and why some do not drive late at night. Similarly, it is only reasonable that many people wear gloves and masks voluntarily, stay home as much as possible, limit interaction with others, and will not go into your restaurant, gym, mall, retail store, or movie theater come May 1st. So from a strictly comparative standpoint, most people will effectively be taking precautionary steps to continue to protect themselves from contracting the coronavirus, in the same manner most drivers will continue to take precautionary measures to protect themselves while driving.

Finally, a fear of dying is not the only risk associated with contracting COVID-19. Rather, one has to consider the consequences it stands to wreak on your family, finances, and your future. If you are one of the many "lucky" ones who are asymptomatic carriers, you now carry the burden of not infecting those in your household or family who may not fare as well against the disease. If you are one of the mis-fortunate ones who are sickened by this disease, you have a grueling pathway ahead, which includes weeks spent in isolation from your family, potentially high medical bills, and other potential long-term health consequences that many who have recovered from the disease have to endure.

Laolu Davies-Yemitan is a real estate broker and developer who specializes in housing, multifamily development, and urban revitalization. He editorializes on issues related to affordable housing, real estate markets, public policy, and current affairs. LaoluD.blogspot.com; Twitter: @laoludavies

Friday, March 20, 2020

ENOUGH TALK: Coronavirus Signals it's Time to Restructure the American System




The healthcare crisis brought on by the coronavirus pandemic has forced the nation to accept new standards of doing things, from people being encouraged to telecommute, to bars and restaurants in conservative states like Texas and Kentucky being allowed to deliver alcohol to patrons in the safety of their own homes. If necessity is the mother of invention, then a global pandemic is the mother of modernization.

We have watched the United States, like other democratic countries in the world, undergo an unprecedented shift in the curbing of individual rights in the interest of public safety. Right along with that, there’s been a dramatic shift in how business is being done, services are being delivered, and how government is operating. This ground shift has led to an upending of norms in just about every industry and societal system, which begs the question, why haven’t we adopted these changing norms all along despite having the capability to do so?

During every biennial legislative session in the Texas legislature, we routinely hear horror stories of people who travel hundreds of miles to show up to testify on a bill, only to be held up at the Capitol until the wee hours of the morning, as legislative committees endure the drudgery of marathon hearings. Similarly, working class citizens are routinely hard pressed to show up for City Council meetings or public hearings that take place smack in the middle of the workday in Downtown, making it impossible for a staggering number of the population to ever make it before their elected representatives to present their case.

It’s time for America to accept these critical lessons as a clarion call that we heed by adapting these new norms, which will help transform our society as we approach the 2nd quarter of the 21st century. To achieve this transition, we must build a robust online security infrastructure, which leverages blockchain technology and the latest security tools to help protect basic online transactions. The federal government should similarly build a secure internet system to support every level of government, which would provide a platform and portal through which smaller local governments can process their transactions and also backup their systems, helping them avoid breaches by nefarious online actors that have become all too common.

Taking these foundational steps will help us build a platform through which we can fundamentally modernize government at every level, and adopt a new standard where online and technology supported systems are the primary option for everything from car registration to voting, with manual/hard copy serving as a backup system for redundancy and security. This would speed up the process of helping smaller governmental entities better serve their constituents, operate more efficiently, and increase their capabilities. Within the next five years, all public meetings by governmental and quasi-governmental entities should be accessible online, with key witnesses and stakeholders being able to provide testimony via teleconferencing. Furthermore, citizens will be able to conduct more transactions online, saving them time and making government more accessible.

Earlier this week, in a fell swoop Texas’ governor Greg Abbott waived the physical meeting requirement of the Texas Open Meetings Act, allowing political bodies and governmental agencies to conduct their meetings via teleconference. Similarly, at the beginning of the coronavirus outbreak, major universities all over the country promptly announced they would be moving all courses online for the remainder of the semester. Public school districts have also begun following suit with several transitioning to online virtual learning. One issue that this transition online will undoubtedly make glaring is the digital divide that has existed and become further exacerbated over the last five years, as technological advances were made with 4-G and recently 5-G.

Notwithstanding, public K-12 education should immediately shift all curriculum design to include an online track for parents to follow, which would also be a backup for students to fall back on during illnesses, seasonal disease outbreak, and other emergencies. Higher education should increasingly shift to an online model, with students only being compelled to classroom attendance for exams and laboratory exercises. Furthermore, universities and colleges need to make emergency preparedness a standard part of the education degree (minor) offerings for their social and natural science departments, so that we have more localized expertise that can step up in times of crisis.

On the industry side, telecommuting for work should become a readily acceptable work model, particularly during seasonal health outbreaks, natural disasters, and other man-made disruptions. We now see the critical need to possess internal manufacturing capacity, as supply chains have been significantly strained, first by China’s slowdown following the outbreak, and now due to restrictions on public movement. We need to invest more significantly in 3-D manufacturing, light manufacturing, and small-scale personal manufacturing capability. We also need to incentivize the local manufacturing of critical goods that are essential in crises situations, particularly medical equipment, sanitary goods, and non-perishable food items.

The healthcare industry needs to shift its model to one primarily reliant on telemedicine for routine patient visits, non-critical emergencies, and continuous care. Through existing available technology, doctors can issue prescriptions online for patients, and pharmacies would be able to deliver to prescriptions to patients who are immobile. Additionally, we need to have a public health option that serves as an appendage to the existing private healthcare system.

We should further consider setting up an Emergency Disaster Preparedness fund for every American. This can be done in the modified form of a universal basis income, which provides one-time payments to every adult American at age 20, 35, and 50, which will be in a restricted account that accrues over time and can only be accessed during federally declared disasters. This in effect sets up a personal disaster escrow account, which is invested on behalf of every American, can be easily accessed when affected individuals are experiencing a disaster without need for action by Congress or the federal government having to spend money it does not have budgeted.

 Laolu Davies-Yemitan is a real estate broker and developer who specializes in housing, multifamily development, and urban revitalization. He editorializes on issues related to affordable housing, real estate markets, and public policy. LaoluD.blogspot.com; Twitter: @laoludavies

Monday, July 8, 2019

Review: Sen. Kamala Harris Racial Homeownership Gap Plan



In reviewing the plan put forward by Sen. Kamala Harris to combat the Racial Homeownership Gap, I find the core principles put forward in the plan laudable, which aim to redress generations of housing discrimination. The plan as summarized invests $100 billion in down payment assistance grants of up to $25,000 for individuals/families purchasing homes in historically red-lined low-to-moderate income (LMI) neighborhoods, which could at minimum assist 4 million families/individuals. The requirement of the home being a primary residence, should be coupled with a requirement that the $25,000 should be a forgivable grant that requires homeowners live a minimum of five years in the home they purchase. This in effect allows $5,000 to be forgiven annually, and any remainder balance recaptured from the proceeds of a sales transaction, should the homeowner sell the home earlier, should be reinvested back into the program.

The tenancy requirements of the program, however, is likely to exclude a lot of what we call the 'Missing Black Middle', younger upwardly mobile African Americans under the age of 45. The Missing Black Middle are not likely to meet the qualification requirement of living in the historically red-lined community over the preceding 10 years, being that the Black community has been highly transient over the last 50 years. To this end, additional guidelines must be incorporated to account for this Missing Black Middle of potential homeowners whom the plan would unintentionally omit. 

Take for example a 35-year old person who attended college out of town, and graduated twelve years ago. The likelihood of them having lived in a historically red-lined low-to-moderate income (LMI) neighborhood consistently for the preceding 10 years is low, as they likely had to change addresses at least twice over that period; with quality of area, availability of housing options, and proximity to work being key determinant factors in where they chose to live. A lot of the other residents who meet the criteria would likely be older longstanding homeowners who are etched in place or long-term renters for whom the likelihood of purchasing a home is quite low.

For a plan of this magnitude to work effectively, the tenancy requirements should be adjusted to better target and accommodate the demographic of African Americans most likely to be able to capitalize on the opportunity, and inure the benefits of returning to the communities where they were reared. The criteria as proposed should add language that provides access to the homeownership grants for African Americans under the age of 45 who lived for five years or more in historically red-lined LMI neighborhoods during the preceding 25 years. There should also be an exception for under-40 college graduates whose families (within the third degree of consanguinity) have historic ties to any neighborhood nationally targeted by the plan. Lastly, there should be greater flexibility on the annual income and maximum home price caps by indexing it as a percentage (125%) of the Area Median Income and Median Home Price in certain urban areas (think: Houston, San Francisco, Washington DC, Boston, Los Angeles and New York).

(This article should not be taken as an endorsement of any political party or candidate)

Laolu Davies-Yemitan is a real estate broker and developer who specializes in housing, multifamily development, and urban revitalization. He editorializes on issues related to affordable housing, real estate markets, and public policy. LaoluD.blogspot.com; Twitter: @laoludavies

Tuesday, December 4, 2018

Gentrification Hits Houston's Urban Core With New Vigor: How The Issue Can Be Tackled



Houston's urban core is undergoing gentrification at a rapid pace, a trend which corresponds with the experience of the urban core of most major cities in America. However, few people are willing to talk about, much less formulate ways to tackle the issue head on. The issue of gentrification is not new, with earlier examples being traceable to several generations before. At varying points in the history of American cities dating back to the 1800’s, neighborhoods have undergone significant gentrification as new immigrants displaced what were once neighborhoods dominated by a prior group of immigrants. And in some cases, neighborhood revitalization simply led to displacement of older residents within a particular community.

Houston neighborhoods have a long and familiar history with gentrification, which has often been characterized by the flight of one ethnic group from one neighborhood to another. Take for example the Riverside Terrace community at the southern edge of Houston’s Third Ward, which was historically occupied by Jewish families, who later transitioned further west to resettle in the area around Meyerland. The now predominantly Black neighborhood is on the precipice of a significant shift in the racial makeup of its residents, with an increasing number of non-Black residents seen walking their dogs or pushing baby strollers along Brays Bayou and the Columbia Tap Trail in the evening and on weekends .


The main drivers of the present day gentrification, are however, arguably primarily geography and socioeconomic. In several of Houston's urban core neighborhoods, what were once eclectic and counter-cultural residents are being replaced by an invasion of the trendy upwardly-mobile professional class. Take for example Montrose and the Museum District, two neighborhoods which lie just within an earshot of downtown Houston. Both communities for a longtime catered primarily to working class residents, young people, and the creative artistic class. The impact of gentrification over the last 15 years has left these neighborhoods, once characterized by traditional ranch-style homes, duplexes, and small apartment complexes, with a smattering of new mid and high-rise apartments, as well as luxury townhomes, condos, and large magnificent single family homes. The older residents have not only been displaced, but the new residential and commercial developments have left only trace remnants of the neighborhood’s historical character visible.

The same fate that befell Montrose and the Museum District, has similarly overtaken areas such as Upper Kirby, and the historic Fourth and Sixth Wards. These once culturally distinct neighborhoods are hardly reminiscent of their glorious pasts, as newer residents usher in a new vibrance often characterized by an influx of trendy retailers, coffee shops, white linen restaurants and flashy bars. The cat is out of the bag in these areas, and their experiences foretell what lies ahead for some of the historic neighborhoods now on the verge of tipping over namely Second Ward, Third Ward, and Fifth Ward.

While the gentrification process has commenced, it has yet to take full hold, and through carefully considered policies, Houston can attenuate its impact in displacing long-term residents of those endangered communities. The bevy of long-term solutions all point towards permanent affordable housing development, and the Mayor’s Complete Communities initiative is a step in the direction of securing long-term affordability in the areas most at risk of gentrification. However, this strategy also holds the potential of having the countereffect, wherein new infrastructural investments in an area accelerate the pace of gentrification.

Due to its lack of zoning, Houston is able to actively promote housing development in various areas of the city, and encourage partnership with and incentives for the private sector to develop affordable housing units in greater number. The City could further streamline the development process to enable such projects to be more feasible and allowing them to be built faster. Examples of measures that would be beneficial for delivering more affordable units include creating a fast-track permit for projects, reducing parking requirements, and alleviating some of the burdensome development requirements affordable housing developers have to meet that do not apply to market rate developers. In addition to taking these steps, the City has a tremendous opportunity to utilize Harvey Community Development Block Grant-Disaster Recovery (CDBG-DR) funding from HUD to accelerate the pace of affordable housing in the aforementioned "at-risk" communities and in other areas of Houston facing tremendous housing price pressures.

Laolu Davies-Yemitan is a real estate broker and developer who specializes in housing, multifamily development, and urban revitalization. He editorializes on issues related to affordable housing, real estate markets, and public policy. LaoluD.blogspot.com; Twitter: @laoludavies