Housing and Homelessness, Essay Example

Housing policies have a great impact on homelessness, living conditions and affordability of the housing stock. The below essay will review previous examples of how policymakers, governments and city/town leaders. When population changes, due to immigration, worker migration or the industrialization of an area, there is an urgent need for intervention. Reviewing how America dealt with the problems during the “housing crunch”, the authors would like to focus on current issues and policies related to housing stock, living condition and homelessness.

The Housing Crunch

In the 1980-s, America had to face with the low availability of affordable housing. In order to update and increase the availability of affordable, suitable homes, the government stepped in by creating a housing program. There are several causes of the breakdown of the housing market.
According to Barbanel (1), there different parties put down the breakdown to various circumstances. Some blamed the spending cuts of the Federal Government, others the breaking down of social values and structures, and obviously, the capitalist society was also mentioned as a main actor. According to Soffer (2), the “destruction of so much of the city’s low-priced housing stock” was to blame. Independent of the causes, there were several people still on the street. Mayor Koch decided to tackle the issue through local government legislation and programs. The steps he took were openly criticized by politicians and community organizations, charities.

What Koch Did

Soffer (4) summarizes the main goals of the Koch housing and regeneration program. Fist, the local government planned on renovating city-owned suitable vacant buildings. Next, they also made a plan on occupied building renovation, while working with the financial services to offer low interest loans and tax breaks for homeowners to support renovation projects. Finally, they created a project for building new housing stock for private occupancy.
While the program was not a welfare, but an economic development program, it was criticized by Brower (Soffer 4) claiming that it did not support low income population adequately. Considering that the aim of the project was not to improve the welfare system but to create an economic development program, the criticism has no valid ground. The project was not aiming for the good of one social class, but the whole population of New York.
What Koch did was moving away from the welfare model of public housing. Instead of targeting the lowest income families, it aimed to benefit all people across different classes and involving all races. The greatest challenge of Koch, however, was to find sufficient funding for the project. While not all developments were successful, some left a mark on the landscape of New York. The goal of repopulating New York was achieved. However, the participation of nonprofit organizations to transform abandoned streets was also necessary for success.

Can Housing Issues Be Solved Through Policies?

According to a recent policy paper by We Effect (2), the United Nations has determined some governmental responsibilities regarding housing in relation with human rights. The policy recommendation document states that
“All governments without exception have a responsibility in the shelter sector, as exemplified by the creation of ministries of housing or agencies, by the allocation of funds for the housing sector and by their policies, programmes and projects” (UN, Paragraph 5)
The above recommendation clearly confirms that governments today have an increased role and responsibility in protecting the rights of citizens to decent, affordable housing. However, policies are not the only methods of rights protection; projects funded by federal or local governments, program initiatives have to be harmonized with the demand of citizens.

Funding in Hard Economic Times

When poverty strikes, the proportion of homeowners on a national level drops. This is due to financial insecurity, lower income of families and high rate of unemployment. Access to finance is harder, and people are more worried about the future, therefore, they are not likely to take on long-term commitment. As the latest We Effect report (4) states: “poor people can normally not afford to take a regular loan with market interest rates in a formal private or public financial institution to finance construction of houses or housing improvements”, therefore, there are not enough buyers for newly built or renovated homes, unless the government offers support.
At the same time, it is hard to fund projects of renovation and building, as economic crises are usually followed by budget cuts. This is a dilemma Koch had to face, and the U.S. Local and federal government is facing a similar situation today, towards the end of a long-hauled recession.

Today’s Housing Problems

It would be hard to repeat the success of the Koch administration. In New York alone, between 1987 and 1993, over 100.000 housing units were either built or renovated. As Soffer (12) puts it: it was a “struggle to be middle class”. Indeed, today, many of America’s previously middle class families have had to compromise on lifestyle and got closer to poverty than ever before. Helping these families should be the main priority of government policies and programs.
Today, America is facing with the problem of increased number of foreclosed unoccupied homes, as a result of a long-lasting economic crisis and credit crunch. The blow of household wealth as a result of house price collapse affected the spending power of homeowners, while the cut of local government budgets has impacted the rate of public housing stock renovation. A 2012 report by the Board of Governors of the Federal Reserve System (3) recommend the introduction of policies to deal with housing issues within the United States, such as foreclosed properties, negative equity affecting families, as well as credit availability. The report states that “less than half of lenders are currently offering mortgages to borrowers with a FICO score of 620 and a down payment of 10 percent” (Board of Governors of the Federal Reserve System 6), which means that people are unable to buy properties without help. This results in the amortization of the housing stock, homelessness and financial struggle, due to high rates of rent in large cities. Offering foreclosed properties for rental might be a solution, but this approach needs a well thought out plan and support from local charity, community organizations. While house prices are declining, rental charges increase, due to the demand, therefore, those who have lost their property through foreclosure would not be able to get out of debt for a long time. Instead of facing the problem of low property supply, which was present in the 1980-s, today there is an excess supply of homes for sale, while the demand for rental properties is constantly above supply.

Conclusion

The review of Koch’s policies and programs to balance the housing market and adjust the supply to the demand while improving the quality of living in New York has provided the authors with a strong evidence that it is possible to create plans that benefit the whole population. While Koch’s development plan was not solely based on welfare considerations, it had a positive impact on many people’s lives. Today, America is facing a different type of challenge. The lack of housing supply is no longer the problem. Affordability of buying a home, low credit rating, high cost of renting is. Therefore, building on the strengths of Koch’s program: collaboration, discussion and thorough analysis, policymakers on the federal and local level should work towards supporting not only homeless people, but the entire population affected by the consequences of credit crunch and recession.

References

Barbanel, J. (1988) Reacting to homelessness; responsibility is widespread, but the role of the Koch administration is problematic. The New York Times. December 17, 1988

Board Of Governors Of The Federal Reserve System (2012) The U.S. housing market: current conditions and policy considerations. Retrieved from: <http://www.federalreserve.gov/publications/other-reports/files/housing-white-paper- 20120104.pdf>

Soffer, J. (2010) Ed Koch and the rebuilding of New York City. Columbia University Press.

Soffer, J. (2010) Creating Affordable Housing: How Koch Did It. Gotham Gazette. Oct. 18. 2010.

UN. (1996) Habitat Agenda, paragraph 60, UN Conference on Human Settlements (Habitat II) Istanbul 1996

We Effect (2012) Housing and Habitat. Policy Paper. Retrieved from: <http://www.weeffect.org/files/2012/12/SCC_Policy_HousingAndHabitat.pdf>