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Washington DC Archive
| Posted: March 1st, 2013
The Federal Housing Administration (FHA), which insures mortgages to help underserved borrowers, is still feeling the sting of the foreclosure crisis. The agency has lost money on troubled loans, particularly those that originated in 2008 and 2009 during the housing bust. Because of these losses, the FHA does not have enough in its insurance fund to cover all expected claims over the next 30 years, according to its November actuarial report. But the agency is still strong and still has a crucial mission to carry out. So, what should be done to get FHA’s finances back in order and prevent unnecessary losses in the future?
Enabling the agency to better manage, price, and mitigate risk would help, Urban Institute President Sarah Rosen Wartell advised Thursday in her testimony before the Senate Committee on Banking, Housing and Urban Affairs.
Wartell proposed innovative strategies to allow FHA to respond effectively to rapidly changing market conditions. She noted that, unlike private mortgage insurers, FHA’s ability to mitigate risk is constrained by complicated rulemaking and legislative processes. For example, for three years, the agency has been trying to strengthen the indemnification process, which requires congressional approval of two key authorities: to force lenders whose loans do not meet agency guidelines to reimburse taxpayers for the cost of those claims, and to immediately stop known irresponsible lenders from originating FHA-insured loans. Despite near consensus among experts about the need for these additional authorities, FHA has had to continue insuring excessively risky loans without collecting appropriate penalties as it awaits required input from Congress.
Wartell’s recommendations included granting the HUD secretary emergency powers, subject to congressional oversight, to suspend or modify FHA insurance programs in times of crisis to quickly avert these risks. Additionally, she called for directing the HUD secretary to develop and continuously improve early warning indicators of risk and allowing FHA to offer higher salaries to recruit talented staff that can develop and run analytical and risk management systems.
While Wartell’s testimony offered concrete proposals, policymakers are sure to encounter more questions as they consider how to address FHA’s challenges: What does FHA look like in the context of broader housing finance system reform? How will changes to FHA’s practices affect private insurers’ market share? And most important, how can FHA best improve its financial situation while continuing to provide underserved borrowers with access to credit and serving as a countercyclical force in times of crisis? The next few months will be critical for the future of American housing.
The Urban Institute is partnering with Next City, Bank of America, the Penn Institute for Urban Research, and the National Building Museum for a panel discussion on “The Future of the FHA and Affordable Housing in Cities.” Sarah Rosen Wartell and other key leaders in housing, lending, real estate, and government will discuss the future of housing policy by examining the FHA’s role.
To learn more about housing finance system reforms, see the Bipartisan Policy Center’s Housing Commission report, which outlines a possible blueprint for changes.
Filed under: Built Environment, Government, Washington DC Add a Comment »
| Posted: February 22nd, 2013
It is good news indeed that the number of students enrolled in traditional DC Public Schools (DCPS) and public charter schools increased by 5 percent between October 2011 and October 2012, the fourth consecutive annual increase. Those familiar with the District know that the sizeable public charter sector—second only to New Orleans—played a significant role.
Public charter school enrollment exploded since its start in 1996. Today, 57 charter schools on 102 campuses serve approximately 43 percent of all District public school students. And more charters are expected to open in 2013 after approval by the DC Public Charter School Board.
But DCPS enrollment has recently stabilized as well, which is an accomplishment in the midst of tough charter competition and recent school closings.
Looking at the total student enrollment by grade, we see that the expansion of early childhood grades drove this overall increase. DCPS and public charter schools expanded slots for preschool (which serves 3-year-olds) and prekindergarten (4-year-olds) by almost 7,000 students between 2001 and 2012. These grades are not compulsory in the District but reflect the commitment and investment the city has in early childhood education to later improve children’s educational outcomes. According to a recent Washington post article, preschool and PreK enrollment in public schools and other programs offering free early childhood education approaches “universal” enrollment (approximately 85 percent of age-appropriate children are enrolled).
Also promising is that the early childhood influx that started in 2008 now extends to 1st grade with a new uptick in 2nd grade as well. The fear that the new preschool and prekindergarten students would leave after receiving free “daycare” has not occurred, yet. Instead, DCPS and public charters are working to keep these families by expanding already successful schools and offering a wider array of programming such as Montessori, language immersion, and “expeditionary” learning. The back-to-the-city movement appears to have contributed as well. Many new young families want to remain in the District, reduce their work commute, and invest in their communities. Families of young children are enrolling and getting involved in public schools.
Stay tuned for future posts that show where schools experienced some of the largest public-school enrollment increases.
Filed under: Washington DC Add a Comment »
| Posted: February 14th, 2013
Homeless man sleeping in John Marshall Park, NW Washington, DC. Photo by: Flickr users rjs 1322 used under a Creative Commons License (cc-by-sa 2.0)
It is difficult to reconcile the recent reports of 600 children living in improvised shelters in abandoned DC General Hospital buildings with the District’s year-end surplus of $400 million. As someone who has studied the lack of affordable housing in DC for more than a decade, I agree with Mayor Gray: it’s time to pay out a "prosperity dividend."
Living in a resilient, booming city has meant great things for middle- and upper-income DC residents: ramen on H Street, oysters at Union Market, ice-skating at Canal Park, and events at Living Social. New amenities like these have made the city more attractive. People want to live and play in DC, and they are buying houses in Bloomingdale, Hill East, Trinidad, and along H Street.
At the same time, the city’s prosperity has put pressure—in the form of rising rents—on its poorest families. Most are rent burdened, so even a minor fluctuation in salary or benefits puts their housing at risk. The result: homelessness among families in DC has steadily risen every year for the past five (increasing 72 percent during that time). Stimulus programs that helped slow the rise, like the Homelessness Prevention and Rapid Rehousing Program (HPRP), are long gone.
The Washington Post’s picture of two adorable babies sharing a stroller to keep warm is likely to pull on some heartstrings—and it should. However, budget-minded policymakers should also know that the temporary option isn’t necessarily the cheapest option. Shelters can cost significantly more than subsidizing rent. (See this HUD study.) Some homeless families languish in shelter and transitional housing for months, or even years, a very costly response. So the lack of action is not only morally repugnant; it is bad policy.
In his state of the city address, Mayor Gray announced a $100 million commitment to affordable housing. It is unclear what he plans to do with those funds, since his office has yet to share any formal strategy. If the mayor wants to help the 600 children and their families living in DC General, along with other homeless families throughout the city, here is where he should put the money:
- $10 million for a new Homelessness Prevention and Rapid Rehousing Program (HPRP). During the recession, HPRP provided DC $7.5 million from the federal government to fund housing and supportive services. The program ended in September 2012, leaving an enormous gap to fill. This model is critical for helping families pay the rent and avoid long, costly stays in the shelter system.
- $40 million for the Local Rent Supplement Program. This established program, which operates similarly to the housing voucher program, is ready to provide subsidies to families so they can rent housing in the private market. All it needs is more money. For the past several years, funding for local rent supplements has hovered between $12 and $19 million and has served only a fraction of the need.
- $50 million for the Housing Production Trust Fund. In recent years, the Housing Trust Fund has been an unstable source for affordable housing preservation and production. It is time to shore up resources, set preservation and production goals, and build capacity among nonprofit housing developers, especially ones that develop permanent supportive housing for poor, disabled families and veterans.
A surplus of this size leaves no excuse. It is time to act.
Filed under: Built Environment, Economy, Government, People, Quality of Life, Urban Culture, Washington DC |Tags: homeless children, homeless prevention and rapid rehousing program, homelessness, housing production trust fund, HUD, local rent supplement program, washington dc budget surplus, Washington dc mayor vincent gray 1 Comment »
| Posted: February 7th, 2013
I recently had a conversation with a friend who was moving and said she preferred to live in Maryland than in DC because DC residents pay higher taxes. She wasn’t the first local to tell me that. But is this claim true?
It appears in this case, conventional wisdom is out of touch with the facts. The DC Fiscal Policy Institute compared hypothetical families earning $50,000, $100,000, or $200,000 and found that, in most cases, DC residents have lower combined income and property taxes than Maryland or Virginia residents. The primary reasons cited are lower property tax rates and benefits such as the homestead deduction, which combine to limit homeowners’ taxable assessment.
However, the DC Fiscal Policy Institute’s study focuses on middle-class families, and notes that for low-income families, taxes are higher in DC than in Maryland and are similar to Virginia. The DC Chief Financial Officer’s most recent comparative tax study confirms that DC taxes are lower relative to neighboring jurisdictions for families earning $50,000, $75,000, $100,000, and $150,000. This does not hold true at the $25,000-income level, where DC taxes are middle-of-the-pack.
So, it would appear that whether it is preferable to live inside DC or just outside of it depends on your income level.
A report from the Institute on Taxation and Economic Policy, comparing tax systems in all 50 states, finds that taxpayers in DC with incomes of $20,000 to $252,000 pay about 10 percent of their incomes in property, sales, and income taxes. Conversely, the top 5 percent pay about 8 percent of their income. On the upside, those earning below $20,000 pay the lowest rate, 6.2 percent.
The reason for this regressive taxation on moderate-income families is DC’s reliance on sales and excise taxes, which fall heaviest on low-income families. Low-income tax benefits, particularly DC’s earned income tax credit, offset this regressivity for the poorest families, but not for those of low to moderate income.
Conventional wisdom and the current US tax code suggest that Americans on both sides of the aisle favor a progressive tax system, even if they disagree on the extent. Regressivity creeps into the tax code through taxes other than the income tax. DC is not alone in this problem, or even an egregious example: the Institute on Taxation and Economic Policy report finds nearly all state and local tax systems take a greater share of income from middle- and low-income families than from the wealthy. In DC, the sales, excise, and property taxes are regressive enough to overbalance a progressive income tax.
Not only DC but other state and local jurisdictions could stand a comprehensive review of how taxes are collected and who pays. However, in neither quantity nor quality is DC remarkably different from its neighbors in taxation.
Filed under: Washington DC 1 Comment »
| Posted: February 5th, 2013
A new tool released by NeighborhoodInfo DC provides detailed, ward- and neighborhood cluster-level information on condominium and single-family home sales in the District of Columbia from 1995 to 2011, with data updated annually. The interactive map and data display allows for analysis across neighborhoods over time. For those interested in conducting their own detailed analysis, the full dataset can be downloaded.
This interactive tool allows people to explore changes in the city’s housing market during the housing market bubble, the recent recession, and the current recovery. Despite declining home sales throughout the District from 2005—just before the height of the nation’s housing boom—to 2011, median sales prices for single-family homes have held steady and even increased slightly through the recession and the start of the recovery. In contrast, both sales volume and median condo prices fell significantly between 2005 and 2011.
However, these broad trends mask significant disparities between wards and neighborhoods. (Click the image below to go to the interactive tool.)
Home prices went up in all wards during the housing market bubble, followed by declines during the recession. But in places such as Wards 2 (downtown), 3 (Northwest), and 6 (Capitol Hill), the price increases started sooner and lasted longer than in other areas, such as Wards 7 and 8 (east of the Anacostia). Later price declines were also steeper in Wards 7 and 8 (27 to 28 percent lower between 2007 and 2011) than in Wards 2, 3, and 6 (7 to 10 percent lower).
Differences among neighborhoods are also striking. Some neighborhood clusters, such as the Near Southeast–Navy Yard cluster in Ward 6, have experienced large gains in sales prices for median single-family homes (49 percent) and condos (27 percent) between 2006 and 2011. On the other side of the coin, some of the hardest hit neighborhoods, such as the Ivy City–Trinidad cluster in Ward 5, experienced large drops in single-family median prices (-39 percent) during that same time period.
These data can tell many other stories, and we invite you to explore the interactive tool and download the data to find your own. NeighborhoodInfo DC will update these maps with new sales data as they become available. We expect the 2012 data to be added by early summer. Sales data for single-family homes are also available in NeighborhoodInfo DC’s Neighborhood Profiles, along with additional information on housing, foreclosures, demographics, and many other indicators across different geographies. Other local interactive features on the site include our map of foreclosures in Prince George’s County.
Filed under: Washington DC Add a Comment »
| Posted: January 24th, 2013
Hundreds of thousands of low-income Americans receive housing vouchers to help them afford a place to live. The Housing Choice Voucher Program subsidizes part of a household’s rent (up to a designated cap) and lets families pick their neighborhood and housing type. A major goal of the program is to break up concentrated poverty and provide wider access to higher-quality neighborhoods, but years of research have shown that voucher households tend to stay in poor and distressed neighborhoods.
Though local outcomes of voucher programs vary greatly, the persistent concentration of voucher households suggests a lack of housing choice and housing market information. A 2005 Urban Institute study of Chicago voucher households showed that they concentrate in predominantly black, mid- to high-poverty neighborhoods. More recently, a PRRAC and NYU study built on this evidence, showing that voucher holders throughout the country tend to live near lower-performing, high-poverty schools compared to other poor households. The outcomes of voucher households in the District of Columbia are in line with these national trends. Like other housing authorities, the DC Housing Authority (DCHA) has had trouble moving voucher households from high-poverty, high-crime neighborhoods despite considerable effort.
Recently, DCHA commissioned the Urban Institute to look at the quality of the DC neighborhoods where voucher holders live and compare them with other affordable neighborhoods. Using 2010 DCHA administrative data on voucher holders and neighborhood indicators from NeighborhoodInfo DC, we looked at where most voucher holders reside and assessed the quality of those neighborhoods. We also estimated which neighborhoods have a majority of houses and apartments that would be affordable to DC voucher households.
The overall pattern is clear. Voucher holders are concentrated in neighborhoods with higher poverty, crime, and infant mortality rates and with lower performing schools than neighborhoods where they are not living. Even when we examine neighborhoods with a majority of affordable housing, voucher holders still seem to concentrate in those neighborhoods that are distressed.
We spoke with several voucher holders seeking to move to different homes. Most were unsatisfied with their current buildings or neighborhoods. When asked about searching for new housing, many said they had difficulties navigating the rental housing market in DC. Some believed that their status as a voucher holder discouraged landlords from even setting up appointments to view apartments. In DC, landlords are not allowed to discriminate based on an applicant’s source of income, such as voucher subsidies. However, a 2011 report from the Equal Rights Center found that almost half (45 percent) of the DC voucher holders they observed in test housing searches faced discrimination from landlords.
The reasons for voucher concentration are complex and interrelated. Voucher holders may choose to stay in neighborhoods where their family and friends live and where the demographic makeup reflects their own household. On the other hand, voucher families may have limited options because of landlord discrimination or their own lack of knowledge about how to navigate the market. The most significant factor limiting choice is rental housing supply and demand. The tighter the rental market, the more difficult it is for a voucher household to find a unit and a landlord willing to accept the voucher. In DC, an increasing population is driving vacancy rates down and housing costs up in all parts of the city, creating a challenging environment for anyone searching for housing.
We have much to learn about the constraints voucher households face when shopping for housing and deciding on a neighborhood. Once we understand the root causes of concentration, we can identify programs and policies to address barriers to choice. DCHA for its part has launched mobility tools and programs that aim to reduce concentration, such as a database of rental housing in high-quality neighborhoods and rent exemptions that raise the subsidy amount in high-cost areas. DCHA also provides housing counselors to advise people about options in opportunity neighborhoods. Further research may help us better understand why voucher families tend to concentrate in poor and distressed neighborhoods and how policymakers can ensure these families have a true choice in where they live.
Filed under: People, Washington DC 4 Comments »
| Posted: January 4th, 2013
In Washington, D.C., crews are a significant source of violent crime, much of which occurs between crews. These neighborhood-based, loosely organized gangs are mostly made up of young people, and reaching these youth is a potential strategy for deterring crime. If we can get kids from different crews to interact through positive social activities, can we deter inter-crew violence? And can those interactions help keep youth from identifying with different crews?
At its core, crew or gang identity appears to be influenced by social context—whether that context is the neighborhood, crew, or gang. Yet, few interventions have seriously attempted to address crew- or gang-based identity at the group level; most are aimed at changing the behaviors of individual crew members. Such efforts may have missed an opportunity to change the norms of crime and interpersonal violence by changing the behavior of the group as a whole.
Recent research and anti-gang efforts, however, point to the possible benefits of such an approach. Urban Institute research on the social networks of delinquent youth found that belonging to a greater number of separate social groups tends to constrain youth delinquent behavior. A replication of that work supports those findings.
Much inter-group violence—including ethnic violence in other areas of the world and crew violence here in D.C. and in other U.S. cities—is grounded in a clashing of identities. Finding ways to cross these lines constructively could help discourage violence by enabling members of different crews to identify with each other, settling at least some inter-group conflict.
A few programs have tried to change group-based norms that support crew activity and have had some anecdotal evidence of success. Outreach workers from a D.C. nonprofit have taken District youth from oppositional crews on trips to West Virginia and Colorado, taking them out of their environments and encouraging honest and personal interaction. Studies of similar programs suggest that such trips have limited long-term impacts, but they haven’t been extensively studied. Still, they hold potential to positively affect participant behavior, especially if these positive interactions continue after the youth return to their communities.
The same nonprofit also brought together youth from multiple crews for a summer basketball league. The outreach workers noted that while the league was active, inter-crew violence and murder dropped. Inter-crew violence appeared to increase when the rec-center hosting the league was closed.
The first strategy bumps up against the potential problem of what happens once youth return to the communities in which their identities and social relations are embedded. Do the benefits of the intervention hold? The second strategy—the inter-crew basketball league—provides what appears to be a promising alternative: getting kids to mix through positive activities within the community. But this strategy is necessarily less intense and its effects may not be as strong. But both show promise as alternatives to standard, individual-level interventions. The basketball leagues present an especially appealing opportunity to build relationships between youth because of their potential for a big return on a small investment.
How leagues are structured and how teams are created will likely affect the outcomes. While it may be unclear exactly how to go about such community building, research and anecdotal evidence signal a new opportunity to gang intervention that can sever toxic group identities and encourage youth to interact across crew lines.
Filed under: Quality of Life, Washington DC 2 Comments »
| Posted: January 2nd, 2013
The U.S. rental housing market has come under increasing strain recently. As homeowners with unsustainable mortgages have to leave their homes and fewer homebuyers are able to qualify for new mortgages, more people are looking for places to rent. As a result, rental vacancy rates have fallen from 11.1 percent in the third quarter of 2009 to 8.6 percent in the third quarter of 2012. With affordable housing already in short supply, there is growing concern that stronger protections are needed to prevent rents from rising too fast, pricing more low-income and vulnerable renters out of the market.
One idea to protect renters that may be getting renewed interest is rent control. Rent control policies have been tried in a number of cities, first during World War II and later again in the 1960s and 1970s. Relatively few places have rent control today though and most states have laws prohibiting the practice. Given the challenges in today’s rental market, does rent control deserve a second look?
A scan of the research literature revealed very little evidence that rent control is a good policy. Arguments against rent control go back as far as the 1970s and the RAND housing allowance experiments in New York City. More recently, a MIT study of the 1995 repeal of rent control in Cambridge, Massachusetts, found that investment in housing increased after rent control ended, leading to “major gains in housing quality.” A National Bureau of Economic Research paper also examined the Cambridge experience and concluded that “elimination of rent control added about $1.8 billion to the value of Cambridge’s housing stock between 1994 and 2004, equal to nearly a quarter of total Cambridge residential price appreciation in this period.” These findings have been used to argue for removal of rent control in New York and other places.
In a comprehensive overview of the research literature, Blair Jenkins examined studies of different aspects of first-generation rent control (strict price ceilings) and second-generation (limits on increases, also referred to as rent stabilization). The upshot is that, at best, rent control does little harm but probably not much good and, at worst, it has negative impacts on landlords and tenants. There is near universal agreement that strict price ceilings, such as the kind imposed in New York City in the 1940s, are always bad because they severely inhibit housing production and investment. Even those most sympathetic to rent control seem to agree with this.
That leaves the softer, rent stabilization policies, like those currently in place in New York City and Washington, D.C. These regulations place limits on how much landlords can raise rents on sitting tenants, but generally allow much larger rent increases for new tenants. They also often allow exceptions for landlords to pass along certain costs to tenants, such as capital improvement costs or utility charges.
On rent stabilization, the strongest finding in Jenkins’s overview appears to be that tenants in noncontrolled units pay higher rents than they would without the presence of rent control; one reason being that landlords need to make up the difference for lower rents in controlled units. Interestingly, one study found that New York City tenants in controlled units also had higher rents initially, because they were willing to pay more to get into a rent-controlled unit with the understanding that they would have smaller rent increases in the future. The net effect, however, is that tenants don’t save much in the long run—they simply trade higher rents now for lower rents later.
The conclusion seems to be that rent stabilization doesn’t do a good job of protecting its intended beneficiaries—poor or vulnerable renters—because the targeting of the benefits is very haphazard. A study of rent stabilization in Cambridge, for example, concluded that “the poor, the elderly, and families—the three major groups targeted for benefits of rent control—were no more likely to be found in controlled than uncontrolled units.” And, as noted earlier, those in uncontrolled units tend to pay higher rents, so they are actually hurt by rent control.
Given the current research, there seems to be little one can say in favor of rent control. What, then, should be done to help renters obtain affordable, decent housing? A better approach may be adopting policies that encourage the production of more diverse types of housing (different densities, tenure types, unit sizes, etc.), implementing strong regulations and practices to ensure housing quality and to protect tenants from abuses; and providing targeted, direct subsidies to people who need help paying their rents.
Filed under: Economy, Washington DC 4 Comments »
| Posted: December 11th, 2012
After four agonizing years of crisis in the nation’s housing market, we’re finally seeing positive news. As of November, the nation’s five largest mortgage servicers have distributed $26.1 billion in relief to over 300,000 homeowners in danger of foreclosure, actions taken as a result of a national settlement over improper loan servicing practices.
This assistance will prove critical for many communities, like Prince George’s County, Maryland, a Washington, D.C., inner-ring suburb, where one in six homes entered the foreclosure process between January 2011 and June 2012.
The national mortgage settlement was the result of a lawsuit between 49 states’ attorneys general and the nation’s five largest servicers: Bank of America, Wells Fargo, JPMorgan Chase, Ally/GMAC and Citi. According to a report by the monitor of the settlement, the majority of the funds distributed so far have gone to direct debt relief, a substantial portion of which is principal reduction that lowers the total amount the borrower owes and, as a result, monthly payments. This is “significant progress on the broadest and most robust principal reduction program in the nation’s history,” according to the monitor’s summary of the report.
Interactive Map of Settlement's Consumer Relief by State
On average, the 22,000 households that received debt relief saw their principal fall by $116,000. Further, for 37,000 loans, refinancing lowered interest rates by an average of 2.34 percentage points, saving $400 in monthly payments. According to new Urban Institute NeighborhoodInfo DC research, the median Prince George’s borrower receiving a Notice of Intent to Foreclose from Bank of America owed $9,300 in late payments, penalties, and fees after 5 months of delinquency. With sharp debt relief and reductions in monthly payments, some of these homeowners likely could have avoided delinquency.
In 2013, the settlement will require several key checks with the five servicers to ensure they are complying with the settlement’s requirements, including ensuring that 60 percent of all funds go toward debt relief. The funds will also provide significant support for housing counseling services and legal aid for homeowners.
NeighborhoodInfo DC will continue to monitor developments in Prince George’s County to see if the situation improves.
Filed under: Washington DC 1 Comment »