The Housing Needle: Part Two
Editor’s note: This is the second of a three part series on housing in Muncie and Delaware County.
By John Fallon and Steve Slavin—
MUNCIE, IN—We believe strongly that the housing needle in our community needs to be moved. Further, we think that there is some urgency for this and that we need to do this aggressively. The natural forces of the local housing market will not resolve our housing dilemma by themselves…at least not anytime soon. In fact, we are certain that it was these very forces that led to our present situation. While we will benefit from additional related research and analysis, what we need is an unbridled commitment to action.
To be certain, this will not be easy. There are no shortcuts along the way and no amount of pixie dust can fix this for us. We need a clear-eyed assessment of the variables that contribute to our need for more and better housing and an understanding of potential solutions. And all of this begins with a clarion call for change: we can fix our housing situation ourselves…but not by relying on the same old strategies and approaches. Business as usual won’t work.
Any overview of the challenges associated with addressing our housing situation includes a variety of factors that are seemingly intractable and daunting for their effect. Such fundamental and well-known considerations as the shortage of materials and supplies required for new construction and the availability of skilled and able workers to build are prominent. Supply chain issues and inadequate supplies of able personnel are relatively recent developments, but their impacts are no less significant. Some local folks are also quick to point out that the availability of land, particularly in desirable or high-demand sectors of our community, looms large as a problem. And these issues exist against a backdrop of longstanding and large-scale neglect of housing here.
On another level, money itself occupies center stage as a major consideration. The economic calculus of home construction, as it presently exists, is such that it is not particularly profitable for builders. And there are few, if any, other types of incentives toward the construction of new homes. Affordability is yet another challenge as increasingly higher home prices result in a progressively smaller pool of buyers. Lending practices are also a factor. According to American Financing, a national home mortgage lender, the American home mortgage model largely in use today is nearly one century old. While this model has been tweaked along the way, particularly in the aftermath of the 2008 housing crisis, the basic approach to lending was developed in an earlier era…and for a different era.
These challenges are not for the faint of heart. Their difficulty and complexity are, in fact, reasons why we haven’t fixed our housing situation already. But difficulty alone, and the confounding nature of this, shouldn’t stand in the way of innovation and entrepreneurship in approaching this now. Truth be told, this is likely the only way forward.
There is no single silver bullet solution to our housing challenge. But there is a variety of strategies that, when pursued together, can have a significant impact. The World Economic Forum (3/24/22), for example, identified several promising policies financial incentives that impact both supply (tax abatements) and demand (low-interest loans and lower down payments on mortgage loans). CNN, in its online Business Perspectives (2/16/22), published an opinion piece by Janneke Ratcliffe (VP for the Housing Finance Policy Center at the Urban Institute) titled “How we can solve the nation’s affordable housing crisis,” in which she advocates toward incentivizing new construction with better lending terms, embracing manufactured housing, and improved financing for existing homes. Ivory and Colton, in the Stanford Social Innovation Review (December 1, 2020), mention several pathways toward greater housing affordability and availability. While all of their ideas are interesting, three appear particularly appropriate for our community.
–Removing regulatory barriers to allow homes and apartments to be built faster and less expensively.
–Construction innovations toward increases in construction productivity and speed.
–Creative financing that would allow more people to qualify for a mortgage.
While it might be tempting, perhaps even convenient, to look to state and federal governments for zippy solutions to our local housing challenges, we agree with Minott and Selby (“Ten Actions Cities Can Take to Improve Housing Affordability,” Bipartisan Policy Center, August 10, 2022) in their view that “local governments have considerable influence over housing costs and many policy levers at their disposal to increase the supply of homes and affect their affordability.” Among their recommendations are included faster and more predictable approvals for developments that meet local zoning laws, the establishment of housing trust funds, and support for community land trusts.
Other organizations have yet other perspectives that hold promise.
–“Rent-to-own and shared equity models” deserve consideration, according to the US Chamber of Commerce in an article entitled “3 Important Future Housing Trends,” (November 1, 2020).
–The Urban Institute’s “Next 50” report on housing (February 2019) suggests “widening home ownership options.”
–“Securing housing funding through municipal bond elections has worked in various communities,” says Pramod Sukumaran in Salud America’s “6 emerging ways cities can solve the affordable housing crisis,” (March 29, 2019).
Even a cursory review of media reports and the literature highlights yet more possibilities…like repurposing vacant buildings, improving housing design, actively engaging neighborhoods in their housing development, and looking to other countries for promising solutions.
But amid the myriad of housing ideas and strategies, there are three themes that emerge as indisputable general propositions to us.
- Housing challenges are patently local and require tailored local solutions.
- Effective strategic housing solutions will best emanate from a broad-based local cadre of bankers, realtors, appraisers, developers, builders, and government leaders.
- The scope for examining housing challenges and exploring solutions must be community wide.
It is these notions that represent the needle that must be moved.
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