Houston Has 6th Lowest Cost of Living Among Major US Cities

Low Cost Housing Project

The Council for Community and Economic Research produces a cost of living index that has Houston at 1.2 points below the national average – lower than Dallas and similar to Atlanta.

But in the past, the gap used to be much wider.

Patrick Jankowski, regional economist with the Greater Houston Partnership, which collected the data for the Houston area, said that’s because housing has become more expensive here.

“The thing is, we’re seeing housing values flatten now with the soft economy,” he said. “And as housing values flatten, I expect to see this gap widen and Houston to return to being even more affordable than it is now.”

But why exactly is Houston – the fourth largest city in the U.S. – so affordable?

Jankowski said part of that is because we have a lot of space and as a result, cheap real estate.

“Even grocery items, there’s a labor component in it, there’s a transportation component in it and there’s a real estate component in it,” he said. “And if the grocers are having to pay less on taxes and the wages are more competitive, that will eventually be passed on to lower prices on the shelves.”

The cost of living report does not take into account how much residents earn and how much they pay in taxes.

Source: Florian Martin (http://www.houstonpublicmedia.org)

Houston Mayor Sylvester Turner Announces Homeless Housing Plan

Low Cost Housing Project

Houston Mayor Sylvester Turner announced his plan to expedite efforts to permanently house the homeless population in Houston amid a flock of faith leaders, city officials and law enforcement officers.

The plan calls for an expansion of The Way Home, a collaborative group that includes local governments, school districts and nonprofits, created in 2012 with the goal of preventing and ending homelessness in Harris and Fort Bend counties. Turner called for increasing the number of beds in the regional shelter system and restricting encampments like “tent cities” by city ordinance.

The plan will also include an anti-panhandling awareness campaign, increased collaboration with “charitable feeding groups” and a push for mental health and substance abuse resources.

“I am committed to doing even more,” Turner said. “It is simply not acceptable for people to live on the streets; it is not good for them, and it is not good for the city.”

“We will tackle this complicated issue, and we will do it humanely with a meaningful approach that balances the needs of the homeless and the concerns of neighborhoods they impact.”

The Way Home initiative has already reduced overall homelessness in the Houston area by 57 percent over the past five years, according to the Coalition for the Homeless. Turner’s plan would help take an additional 500 “chronically homeless” people off the streets and into “permanent, supportive housing” in the next six months.

“The old way of thinking used to be that homeless individuals needed to get their lives in order before anything else,” said Sara Brown, communications manager for the Coalition for the Homeless Houston, in an interview.

Previously, social service agencies often required the homeless to get sober and get jobs before being considered for housing. Now, the approach is to provide the homeless with housing at the onset, which can provide the foundation for improvement in other areas of their lives.

“As homeless providers, we don’t need to reinvent the wheel,” Brown said. “We just need to make sure that homeless individuals don’t get lost in the shuffle, so collaboration is key.”

Temporary outdoor shelters will be built under overpasses and on private property to help accommodate those who might be displaced by new ordinances relating to the plan, Turner said. The shelters will be professionally staffed and covered.

As of right now, Turner says there aren’t any cost estimates for the project, including the professional staffing of those shelters.

Source: Glissette Santana

In the Trump Era, Cities May Have to Pursue a Self-Help Approach to Affordable Housing

Low Cost Housing Project

A variety of tools are available to cities looking to protect and create affordable housing. But traditionally, the federally-funded programs like housing vouchers and low income housing tax credits have been the lifeblood of many cities’ affordable housing strategies.

Now, as a new administration shapes federal housing priorities, advocates fear some of those programs are under threat, leaving cities to fill in potential gaps.

And the gaps are already sizable. In the Houston area, there’s a shortage of roughly 139,000 affordable and available units for people making a third of the area’s median income, according to the National Low Income Housing Coalition, according to a 2015 report. In Dallas, that gap is above 165,000. Los Angeles, meanwhile, is short some 371,000 units.

And those numbers tend to be conservative. In Houston, for example, there are roughly 214,000 households that make less than 80 percent of the area’s median income but spend more than 50 percent of that income on housing costs, according to the most recent numbers from the Census Bureau’s Comprehensive Housing Affordability Strategy. Those households are considered severely “cost-burdened.”

Cities have often looked to federal programs to help close those gaps. So, in Houston, assistance funded through the Housing Choice Voucher program helps support some 22,300 households in the city and county. The Houston Housing Authority also operates some 5,500 public housing units. And the low-income tax credit has helped finance the construction of 47,700 affordable units since 1990 (though the affordability periods attached to some of those units may have expired).

But the new federal administration seems poised to change that. “All federal housing programs are at significant risk,” Diane Yentel, president of the National Low Income Housing Coalition, told the Atlantic shortly after the election.

In addition to cutting funding, the Republican Congress and administration have championed tax code changes that would lower corporate tax rates, which effectively reduces the value of the low-income housing tax credits that have helped fuel construction and rehabilitation of affordable housing across the country.

The tax credit market depends on affordable housing developers selling their federally-funded tax credits to interested investors as a way to finance new projects and give those corporations a break on their taxes. Builders across the country have already reported that market is suffering.

“The threats that we face and the need that is there has never been greater,” said Tory Gunsolley, president of the Houston Housing Authority at a recent housing symposium co-hosted by the Kinder Institute for Urban Research.

With the federal government’s role in question, cities and counties may have to think creatively about affordable housing, said Susan Popkin, a senior fellow with the Urban Institute, at the symposium.

“The low-income housing tax credit is under threat,” she said. “We might be having a very different discussion about local innovation.”

Partnerships with other departments and private organizations can help make affordable housing developments more effective, said Louis Bernardy, director of development in Texas for the national affordable housing developer McCormack Baron Salazar. Transit-oriented development, for example, can help direct both transit and housing dollars to a project.

Tools like inclusionary zoning, that can require developers to set aside a certain percentage of new units as affordable housing, and community land trusts, operated either by the city or community groups, can also help direct development.

“I think we’re going to see a lot less federal resources for at least a few years so the communities that are going to be successful are the communities that are going to step up and find local resources,” added Chuck Perry, managing partner with Jonathan Rose Companies, a national development and investment firm.

And he, added, it takes a local administration invested in affordability. “Unless you have a mayor that is highly committed to housing,” he said, “the housing community and neighborhood [community development corporations] need to help the administration get there.”

New Housing Trust Fund a Small Step against Growing Affordability Gap

Low Cost Housing Project

Nearly every metro area in the country is facing an increasingly desperate picture of housing affordability. But now, there’s some good news: a new federal program that funds housing for extremely low-income households is being hailed by advocates as a smart way of addressing the problem. The bad news: once the funds are distributed this summer, it’s unlikely there will be enough to close the affordable housing gap plaguing many states.

Texas would need roughly 600,000 new affordable units to close the gap for households living at 30 percent of the median area income or less, according to advocates’ estimates. In the Houston area alone, some 139,000 units are needed, according to estimates from the National Low Income Housing Coalition. That’s a number unlikely to be changed dramatically by new funds headed Texas’ way from the U.S. Department of Housing and Urban Development’s newly launched National Housing Trust Fund.

The fund was created in 2008 as part of that year’s Housing and Economic Recovery Act. The idea was to fund the program using some of the revenue from Fannie Mae and Freddie Mac’s new business. But when the programs were put into federal conservatorship, contributions were temporarily stopped, and the effort ground to a halt. In December 2014, the Federal Housing Finance Agency announced the start of contributions to the fund, and this year marks the first year those funds will be distributed to each state. After years of waiting, advocates are eager to put the dollars to work.

“In Texas, there is a massive shortage of housing that is affordable and available for extremely low income households,” said William Livesley-O’Neill, communications director for the Texas Low Income Housing Information Service. “Houston has one of the highest, just by pure numbers, of missing affordable units.”

Because of the shortage, many people in Texas are spending more than 30 percent of their income on housing, the amount widely viewed as the threshold of affordability.

Among those who earn 31 percent to 50 percent of area median income, 80 percent are spending more than the “affordable” amount on housing. That rate rises to 91 percent for the category of residents considered “extremely low income,” according to the National Low Income Housing Coalition.

The feds awarded Texas nearly $4.8 million from the permanent trust fund this month. Only New York and California got more, at $7 million and $10.1 million, respectively, under the formula that weighs relative cost burdens and affordable housing shortages. “This year was not quite as big as people were hoping,” explained Livesley-O’Neill, but funding is expected to grow in the future.

While he welcomed the news of the fund, he said it’s nowhere near enough to close the housing gap.

Across the country, communities are experiencing a shortage of affordable housing. In San Francisco, for example, the typical renter can only afford roughly a third of the city’s available units, according to a recent study from New York University’s Furman Center. In that study of the country’s 11 largest metro areas, Houston and Dallas were actually among the most affordable to the median renter household. But even there, the outlook for the least well-off isn’t great amid rising inequality.

Affordable Housing Shortages Across the CountryPercent of households spending more than half of income on housing

Extremely low-income households are those at or below 30% area median income. Very low-Income households are those at or below 50% area median income. To be severely cost-burdened, a household must spend more than half of its income on housing costs including rent and utilities.Source: National Low Income Housing Coalition

“At a national level, aside from the housing trust fund, there’s not really good news,” said Tory Gunsolley, CEO and president of the Houston Housing Authority. While places like California have faced huge affordability housing gaps for years, Gunsolley said, Houston is relatively new to the problem. “We’re at the very beginning of that curve, so today we don’t have robust public support for increasing affordable housing and the resources it requires.”

Houston gets little help from the state either, which recently put limits on rules known as inclusionary zoning, which mandate a certain percentage of a development be affordable units. The city can negotiate with developers, but their participation is voluntary. And though there are exceptions within the state ban, they aren’t often utilized. “The vast majority of all the new housing that is being built is all targeted as luxury housing,” said Gunsolley, “so that’s not affordable for extremely low income families or even low income families.”

Houston’s tax increment reinvestment zones supply a significant chunk of funding for affordable housing projects in the city, but, Gunsolley said, the city needs to create more ways to support affordable housing. “They need to be local solutions,” he said.

Still, the money from the feds’ housing trust fund will provide some assistance. “It’s certainly not nothing,” said Livesley-O’Neill.

“It’s a very tiny amount compared to the need,” said Isabelle Headrick, executive director of Accessible Housing Austin!, which provides and advocates for housing for low-income people with disabilities.

Under the new program, the vast majority of funding — about 90 percent — will go toward building or renovating new rental units, while the rest can go toward homeownership for first-time buyers. Rents in the new units will be affordable to people making roughly 30 percent of the area median income, but for those making less, the housing costs will be more than 30 percent of their income. Even the Housing Trust Fund’s own list of frequently asked questions acknowledges, “many people [who] the NHTF is intended to serve will not be assisted because the rents will be more than they can afford.”

That’s why Livesley-O’Neill would have liked specific funding dedicated to affordable housing units for households making 15 percent of the median area income or less. And, he said, he would like to see longer limitations on how long a property must remain affordable.

After the Texas Department of Housing and Community Affairs receives the money, groups like the one Headrick runs will compete for funding. Headrick said the trust fund has the potential to help a wide variety of people, from the homeless, to the disabled, to the working poor. “One of the things I’m advocating for is that mission-driven, smaller nonprofits have access to these funds,” she said. In order for that to happen, Headrick said, many of the typical costly application requirements, like market studies, environmental reviews and schematic designs, would have to be suspended. Those steps can add up-front expenses many groups can’t afford. “On my application for a 27-unit project, I spent at least $25,000 dollars,” she said of a past project.

Advocates are also pushing for the projects to have as few hurdles as possible for potential renters and dispersed in areas with features like well-rated schools, public transportation access and job centers close by.

Gunsolley knows just how challenging that can be. For the first time ever, the Houston Housing Authority is building an affordable housing development in what’s considered a “high-opportunity” area, meaning it has all the things that attract people to neighborhoods: safe neighborhoods, good schools and plenty of employment opportunities. Gunsolley said unsurprisingly, it’s been met with resistance. “By and large, all of the arguments they raise are classic NIMBY arguments,” he said. “The research that has come out over the last year as well as the Supreme Court ruling have made it really clear that the best model, the best place to put [affordable housing] would be in a good neighborhood in terms of outcomes for the people who live there.”

A 2015 Supreme Court ruling declared that any housing policies that steered minorities to low-income areas, intentionally or not, were racially discriminatory and illegal. It was a victory for housing advocates who say clients still face a litany of barriers, including discrimination based on conviction history or credit rating that end up concentrating poverty even further.

“As much as the state can help make this housing low barrier,” said Livesley-O’Neill, “that will be extremely beneficial.”

Source: Leah Binkovitz

In Houston, health of housing market depends on your price range

Low Cost Housing Project

For Houston real estate professionals at the start of the new year, business remains steady. Many agents are still receiving multiple contracts on one listing, and certain homes sell as soon as they hit the market.

At the same time, inventory has increased, helping to alleviate the high demand-low supply market of 2014. Certain price ranges and neighborhoods remain in high demand, while others have cooled off. For instance, areas located near energy corridors have slowed slightly, except where homes are priced from $150,000 to $300,000.

The buyer demand “line of demarcation” in Houston home sales for November tells an interesting story. Homes priced at $400,000 and below still enjoy a “months of inventory” (MOI) ranking as a sellers’ market — from 4.6 MOI to 1 MOI. Homes priced $400,000 to $500,000 are categorized as a normal market at 6.1 MOI. Meanwhile, homes priced $500,000 and above are experiencing a strong buyers’ market starting at 7 MOI and moving up the scale to 10 MOI for a home priced over $1 million. Depending on your goal and price range, the market can mean drastically different things.

As for sales numbers, Houston residential real estate took a tumble in November, recording 4,595 single-family home sales and 11% fewer sales than last year. The slight drop brought year-to-date sales to 67,771 — 2% fewer home sales than in 2014.

The average price of a single-family home declined 3% from November 2014 to November 2015 and currently stands at $262,064. Larger gains were reported for the year-to-date average price, which increased 4% to $280,253. Median sales price for November experienced a modest 2% increase to $200,000 whereas the year-to-date median sales price reported a 7% gain and is currently $211,500. All sales figures cited are from the Houston Association of Realtors.

With this in mind, it’s obvious that Houston will not surpass the sales recorded in 2014, the greatest real estate year in Houston’s history. However, it will certainly be the second best. Heading into 2016, we’ll be looking towards the energy industry and the national economy as indicators for future performance. In all, Houston’s economic diversity and health will continue to protect and preserve home values over the long haul, and it will continue to be a great place to live, work and raise a family.

Source: Toni Nelson