Broad-based coalition launches independent balanced housing policy campaign.

Five years after launching a balanced housing policy campaign, NAA/NMHC are no longer the lone voice calling on policymakers to re-evaluate the current "homeownership at any cost" approach to housing.

On Jan. 11, a 12-organization coalition sponsored a briefing for more than 100 Congressional staffers and reporters to rebut what they call the most prevalent myths "undermining a balanced housing policy in Washington." Their joint report, "The Crisis in America's Housing: Confronting Myths and Promoting a Balanced Housing Policy," presents evidence to correct the following three myths:

Myth 1: Homeownership is the best housing option for everyone, all the time, everywhere.

Myth 2: Subsidized housing is unnecessary; market forces will provide safe, decent and affordable housing for everyone.

Myth 3: Federal housing subsidies go disproportionately to low-income renters in urban areas.

At the briefing, Dean Baker of the Center for Economic and Policy Research (CEPR) said that contrary to the thinking of many policymakers, homeownership is not a "one size fits all" housing policy. And pushing low-income families to buy a house can make them financially worse given the transaction costs of buying a house and the relatively short length of time many low-income families own their homes.

Veteran housing counselors said that providing low-income homeownership was a very time- and money-intensive endeavor that required significant subsidies to help a small number of families. They said that their experiences taught them that homeownership could not replace successful rental assistance programs such as housing vouchers and that many low-income families are being hurt by the pressure and rhetoric from the U.S. Department of Housing and Urban Development (HUD) and elsewhere to become homeowners.

The coalition backing this new movement includes a broad range of groups, such as the Consumer Federation of America; Children's Defense Fund; National Urban League; and National Low Income Housing Coalition. Their report is available at www.nlihc.org/ research/housingmyths.pdf.

Homeownership Advocate Urges New Thinking About Rental Housing

Former HUD Assistant Secretary of Housing William Apgar has authored a new working paper for Harvard's Joint Center for Housing Studies concluding that America overstates the benefits of homeownership and fails to appreciate the benefits of rental housing.

Apgar found that much of the research on homeownership sets out to "prove" the preconceived notion that homeownership is the most beneficial form of tenure. He wrote, "Today, homeownership is widely viewed as the 'silver bullet' solution to a range of individual and social problems. Yet there are downsides to excessive focus on promoting homeownership. Notably ... owning a home may prove unhelpful or even financially disastrous."

He provided evidence that "many low-wealth and low-income families are being 'pushed' into homeownership," because they are told that homeownership is a prerequisite for economic and social success, and they "perceive [or rather hope] that homeownership in and of itself will help them achieve a better life.

"In the worst-case scenario," he said, "lower-income homeowners may become trapped in declining neighborhoods with little access to employment, good quality schools or social services and equally limited potential for price appreciation. In these situations, all too often the dream of homeownership becomes the nightmare of a financially devastating foreclosure."

Apgar said that by denigrating rental housing, current policies limit housing options, noting that many low-income households buy even though ownership is not a good choice simply because there is no quality affordable rental housing available. Not only does our current policy framework push people into bad tenure choices, it also causes us to miss out on opportunities to use low-cost rental housing as a "pathway to social and economic opportunity."

Echoing NAA/NMHC's long-held claims, Apgar said that "public policy should focus on the larger goals of promoting access to decent and affordable housing, along with expanding social and economic opportunity for all, and in doing so recognize that promoting homeownership is just one of many possible means for achieving these end goals."

He also said that "in addition to being valuable for families and individuals, a well-functioning rental housing sector helps preserve mixed-income communities and contributes to the social, economic and political health of local communities. At the same time, a robust rental housing sector also contributes to the prosperity of national and local economies."

The paper, "Rethinking Rental Housing: Expanding the Ability of Rental Housing to Serve as a Pathway to Economic and Social Opportunity," can be found at: www.jchs.harvard.edu/publications/markets/w04-11.pdf.

Bush Budget Pressures Housing

President Bush's FY2006 budget proposal is expected to make 2005 a challenging year for housing advocates. Early reports show that funding freezes and across-the-board spending cuts are expected for most domestic discretionary programs. Bush released his budget Feb. 7, the day "Capitol Beat" was compiled.

Officials have already leaked news of cuts to the housing voucher program. On Jan. 14, The Washington Post reported in a front-page story that the administration is planning to move HUD's community development programs to other agencies. According to the article, the $4.7 billion Community Development Block Grant (CDBG) program would be moved to the U.S. Department of Commerce along with the Brownfields and Economic Development programs.

On Jan. 19, the U.S. Conference of Mayors held a press conference to object to the rumored cuts, swing they would be devastating to the nation's cities. NAA/NMHC will be monitoring these developments closely and will seek to protect funding for vital rental housing programs.

NAA/NMHC to Monitor Tax Reform

The Bush Administration announced that tax reform will be one of its top priorities, and the president has already taken action to advance this issue by appointing an advisory committee headed by former U.S. Senators Connie Mack and John Breaux. Their recommendations are expected to be submitted by mid-July, presumably so the U.S. Treasury Department can submit a formal legislative proposal to Congress in the fall.

NAA/NMHC will follow the work of the advisory committee closely to ensure that the interests of the apartment industry are well-served during the general discussion of tax reform by the advisory committee as well as any subsequent legislative activity. NAA/NMHC will urge members of Congress, who are currently taking a wait-and-see approach to the issue pending more definitive guidance from the administration, to undertake tax reform initiatives carefully.

Bankruptcy Reform Legislation introduced

NAA/NMHC's multi-year effort to reform the U.S. Bankruptcy Code resumed Feb. 1 when Sen. Charles Grassley (R-Iowa) introduced bankruptcy reform legislation in the Senate. Grassley's bill is similar to one passed by the U.S. House of Representatives last year, but which failed to secure final Senate passage before the 108th Congress adjourned. It does include a NAA/NMHC-supported provision that corrects a loophole in the U.S. Bankruptcy Code regarding automatic stays that allows residents to live "rent-free" for months at a time after filing for bankruptcy protection. This loophole has even spurred marketing campaigns that promote it as a way to avoid paying rent.

This "free ride" is an abuse of the Bankruptcy Code's "fresh start" principle. The widespread bipartisan support for bankruptcy reform reflects strong public opinion that the loopholes in the Bankruptcy Code that permit abusive behavior should be eliminated. Congress has tried unsuccessfully to pass bankruptcy reform legislation the past four Congresses. In the 108th Congress, the measure failed because of an unrelated controversial amendment on abortion clinic violence. Fortunately, the House version (H.R. 975) included an important provision (Section 311) that would have preserved existing resident protections, while also expediting eviction actions in bankruptcy court of residents who lacked a valid lease.

Information compiled by NAA/NMHC Joint Legislative Staff: Senior Vice President for Government Affairs Jim Arbury; Lisa Blackwell, Vice President of Housing Policy; Vice President of Capital Markets and Technology David Cardwell; Vice President of Properly Management Jeanne Delgado; Vice President of Communications Kim Duty; Vice President of Environment Eileen Lee; Tax Advisor Howard Menell; Vice President of Building Codes Ron Nickson; Chief Economist Mark Obrinsky; and Director of Property Operations Betsy Feigin Befus.