Housing News Roundup: January 21, 2016
Bay Area Startup Accelerator Joins Inequality Fight
Y Combinator, a startup accelerator in the San Francisco area, has a new investing interest: reducing costs in housing, health care and education. According to president Sam Altman, “These issues are important because they’re areas where costs have gone massively up over the last decades, instead of down, which is what you’d normally expect technology to make happen and what’s happened in a lot of other areas.” Although Altman remains active in Bay Area efforts, the organization is not just focused on these issues in the Bay Area. This is a stark contrast from the interests of his predecessor, Paul Graham, who wrote a controversial essay asserting that efforts to reduce inequality will hurt startups. Y Combinator had already listed housing, healthcare, and education cost reductions among their priorities, but had not seen many proposals in these areas.
Oil Slump is Affecting Houston’s Housing Market
As U.S. metro areas experience increasing housing demand and costs, an 18-month slump in oil prices is slowing Houston’s housing market. Potential buyers have become scarce in the Houston metro area, prompting many sellers to slash home prices to attract buyers. Between 2009 and 2014, Houston outpaced all other U.S. metro areas in home construction as the price of oil tripled. Now analysts estimate that it could take up to four years to clear the area’s supply of homes priced at $400,000 or more. Despite the diversification of Houston’s economy and industries, the city remains tethered to oil and gas. According to a monthly survey of Texas business owners by the Federal Reserve Bank of Dallas, increasing numbers of businesses with no direct link to the oil industry are buckling under market pressure incited by the price of oil’s steady decline.
Source: Wall Street Journal
Tennessee Bill Would Ban Inclusionary Zoning
Tennessee Rep. Glen Casada introduced legislation that would prevent localities from adopting mandatory inclusionary zoning ordinances. Some believe that the state ‘s current ban on local control of rents already limits inclusionary zoning, but the new bill would remove any confusion and ensure that local affordability requirements could not be placed on rental properties or for-sale homes. Despite speculation that bill is directed primarily at the rapidly gentrifying Nashville, its introduction was touted as a response to “a national movement” of cities increasingly enacting inclusionary zoning mandates that limit development and thereby drive up housing costs, according to Cascada.
Source: The Tennessean
The Difficulty of Making Financial Decisions While Poor
The complex lives and repeated difficult decisions made by the poor may impede their financial decision-making capacity. “At the end of the day of making difficult, tough decisions, it’s very hard to have the energy to think about things with the right mindset,” says Dan Ariely, a behavioral economist at Duke University. Good financial decisions are also impeded by a lack of long-term thinking when faced with hunger. Life realities, such as insufficient funds for household supplies and a lack of savings accounts, further impede financial progress. A randomized controlled trial found that, when parents have college savings accounts for their children, the children exhibit higher cognitive and social skills – all apparently due to the forward-looking mindset that the regular account statements foster.
Source: PBS NewsHour
421-a Tax Break Expires in Stand-off Over Prevailing Wages
New York City’s 421-a tax abatement for multifamily housing has lapsed after the Real Estate Board of New York (REBNY) and the Building and Construction Trades Council could not reach an agreement about linking the tax break to a prevailing wage requirement. The parties plan to continue negotiations. According to REBNY president John Banks, “Without a program like 421-a, one can’t build multi-family rental housing with a significant below-market or affordable component on a scale necessary to address the city’s needs.” In 2015, prevailing wage laws would have reduced the number of rent-regulated apartments created by 17,000, per city estimates. A study by the city’s Independent Budget Office found that a prevailing wage standard would raise the cost of affordable housing development by 13 percent or about $45,000 per unit.
Source: Politico New York
Does the U.S. Have a “Missing Middle” in Housing Options?
Townhouses, duplexes, courtyard apartments, and other middle-sized housing were common in the U.S. through the return from World War II, but they have become atypical. Among new single-family home sales, the share of attached units has gone from 20 percent in 1986 to 10 percent in 2014. Daniel Parolek of Opticos Design, a New Urbanist architect and planner, describes these housing types as “the missing middle,” in contrast to large-lot single-family homes or high-rise multifamily buildings. One of the limitations to their expansion is zoning. “If you have a big site, you tend to go for the absolute maximum you can,” says Alan Mallach, a senior fellow at the Center for Community Progress. “And you can’t get small sites because there’s no suitable zoning.”
Source: Next City
Minneapolis Affordability Shrinks with Market-Rate Conversion
Affordability restrictions for the Alden, a 68-unit apartment building in downtown Minneapolis, expired December 1. The Alden has since been sold and will be upgraded and converted to market-rate housing. About half of the existing tenants have been asked to leave by the end of February; the remainder can stay through their leases’ expiration. Council Member Lisa Goodman worries about the implications for affordability in her downtown district. “We want our downtown area to have incredible economic integration,” Goodman says. The conversion was forced by investors in a partnership that owned the building, according to Elizabeth Flannery, president of the Community Housing Development Corporation, which formerly owned the building.
Source: Minneapolis Star Tribune
D.C. Homeless Youth Census Yields New Funds for LGBTQ Programs
More than two-fifths (43 percent) of Washington D.C.’s 330 homeless youths identify as lesbian, gay, bisexual or transgender (LGBTQ), according to the district’s first Homeless Youth Census. The count included those living on the streets, in shelter programs, or otherwise without a permanent place to live. The findings prompted the city to announce seven new grants to organizations that serve LGBTQ youth. Two non-profit organizations will receive a total of $45,000 from Verizon, five additional organizations will receive $5000 each from the city. According to Mayor Muriel E. Bowser, “We know that these young people face the most bullying and discrimination and assault, you name it, not only from the outside world but often from their own families, neighbors and close associates.”
Source: Washington Post