December 14, 2018
Studies Look at Housing Supply-Demand Imbalances and Decline in Renter Households
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- An analysis by the Brookings Institute explores why housing markets are prone to supply-demand imbalances. It notes that most U.S. housing markets show signs of one of two very different problems: either tight housing inventory that contributes to sharp home price increases, or high vacancy rates that typically result in long-term price declines and neighborhood blight. The study argues that housing markets have several distinctive features that make them more prone to these imbalances, including: changes in housing supply are typically slow, adjustments to supply require explicit approval from local government, and local government regulation of housing production can harm regional economic well-being. Finally, the report emphasizes the importance of increasing understanding of those housing markets that have a balance between supply and demand. (Brookings Institute, December 14)
- An analysis by the Harvard Joint Center of Housing Studies (JCHS) looks at the decline in the number of renter households over the past year, as the latest Housing Vacancy Survey (HVS) and 1-Year American Community Survey (ACS) indicate that the number of renter households dropped by between 129,000 and 459,000 over that time. The analysis argues the major factor behind the decline is an increase in the number of renters switching to homeownership. A small decrease in the number of newly formed renter households and a modest increase in the number of newly formed owner households also contributed. ACS data suggest that increased transitions to homeownership among renters age 30 and over is the primary cause of the decline in renter households. (JCHS, December 14)
- The Federal Housing Finance Agency (FHFA) is seeking public comment on a proposed rule that would “establish standards and criteria for the validation and approval of third-party credit score models used by Fannie Mae and Freddie Mac (the Enterprises).” The proposed rule would establish a four-phase process for each Enterprise to validate and approve credit score models: 1) Solicitation of applications from credit score model developers, 2) Review of submitted applications, 3) Credit score assessment, and 4) Enterprise business assessment. Comments are due within 90 days of the rule’s publication in the Federal Register. (FHFA, December 13)
- Curbed San Francisco notes that earlier this week Mayor London Breed of San Francisco announced the appointment of Judson True, served as the chief of staff for Assemblymember David Chiu (D-San Francisco), as the city’s first director of housing delivery. This new position was created specifically to streamline and expedite the city’s housing approval and permitting system. Mayor Breed hopes to streamline the process in a way that enables the city to create at least 5,000 new housing units every year. (Curbed San Francisco, December 13)
- The Chicago City Council is considering a proposal to expand the city’s transit-oriented development policy to eight bus corridors. The TOD policy, which was established in 2013 and was significantly expanded in 2015, offers incentives for developers in these areas, such as eliminating parking requirements and allowing for greater height and density. It allows developers of projects -- within a quarter-mile of the bus route or within a half-mile if the development is located on a pedestrian-designated street -- to build denser multifamily developments without parking garages under a streamlined approval process. (Curbed Chicago, December 13)
In Case You Missed It
- On Wednesday, President Trump signed an Executive Order establishing the White House Opportunity and Revitalization Council with the goal of aligning federal agency priorities and funding with the new Opportunity Zones tax incentive. This council will be chaired by HUD Secretary Ben Carson and comprised of 13 federal agencies. Our blog post points out that the Council is tasked with developing strategies to help communities address entrenched issues of economic inequality, facilitate economic growth, and identify areas in which federal agencies can prioritize investment in Opportunity Zones. Importantly, the Executive Order instructs the council to evaluate the effectiveness of investments in Opportunity Zones by establishing best practices for reporting requirements. Enterprise Community Partners President Laurel Blatchford noted that “Enterprise is encouraged by the Administration’s commitment to measuring the effectiveness of the new Opportunity Zones tax incentive…We look forward to continuing to work with the Administration and Congress to create the kind of accountability and transparency that will enable stakeholders – including government officials, investors, community-based organizations, and neighborhood residents – to evaluate if this program is benefitting the residents and businesses in these lower-income areas.” At the same time, Enterprise has concerns that the Interagency Council may unintentionally divert resources away from the tens of thousands of census tracts that have a great need for capital and economic revitalization but were not designated as a Qualified Opportunity Zone.