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| HUD looks at housing policy in America |
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Susan Wachter, nominated to become Assistant Secretary for Policy Development and Research, has been chairperson of the Wharton Real Estate Department and Professor of Real Estate and Finance at the Wharton School of the University of Pennsylvania. William Apgar, Assistant Secretary for Housing/Federal Housing Commissioner, has been a lecturer in Public Policy at Harvard University’s John F. Kennedy School of Government and Executive Director of the Joint Center for Housing Studies. Xavier de Souza Briggs, Deputy Assistant Secretary for Policy Development and Research, has been an assistant professor of Public Policy at the John F. Kennedy School of Government at Harvard University. FW: The Housing Act of 1949 established for the United States the most ambitious goal for housing in our history: “a decent home and a suitable living environment for every family.” What did the country’s housing situation look like at that time? In what ways have we advanced toward the goals of the 1949 Act? In what ways have we fallen short? WA: In the post-World War II period, homeownership was not a universal given for the broad middle class. Substantially fewer than 50 percent of Americans owned their own homes, and many of these were modest or in poor shape. The plight of renters was worse, and rural housing was pretty dismal. The next 50 years brought a lot of progress. Now two in three Americans own their own homes. Much of that progress had to do with the guidance of federal policy coordinated with state and local interventions. SW: Yes. Prior to World War II, we were a nation of renters; we have become a nation of homeowners. We were a nation of city dwellers; now the majority of our citizens are in the suburbs. How does that relate to our housing outcomes? On one hand, we have created a middle America of homeowners, many of whom are in the suburbs. But the poverty that remains has become more isolated, more concentrated. FW: How well do you think the 1968 Fair Housing Act has functioned to extend the goals of the 1949 act to minorities and other groups? Are we doing enough now? WA: Let’s first put this question in the context of where we were in 1949. At that time, homeowners could make a covenant with their neighbors not to sell to black, Asian, Catholic, Jew, or any specified group—yet still obtain a federally insured FHA mortgage. But the burst of social energy exemplified in the Fair Housing Act wasn’t necessarily followed up with a similar burst of implementation energy. Even today, despite HUD’s current commitments to doubling the number of fair housing actions, there is still the sense that we are not anywhere close to enforcing the current law—30 years after the Fair Housing Act. SW: The Fair Housing Act was the first piece of a whole set of legislation—including the Community Reinvestment Act (CRA), the Home Mortgage Disclosure Act, the Equal Credit Opportunity Act, and the transformation of FHA—that really revolutionized housing policy. At the same time, the private sector has been encouraged to lend to minorities through CRA, through a whole set of legislative initiatives. And PD&R’s own audit studies of racial steering and loan discrimination have become an important part of the arsenal of antidiscrimination legislation, demonstrating a clear need for it. There is still a lot more to be done. And discrimination takes new forms over the years. Strengthened zoning in suburbs—if it precludes low-income folks from finding affordable housing there—can isolate the poor and minorities, with much the same effect of the more brutal and blunt discrimination of the past. FW: How important, as you see it, is the goal of reducing this kind of isolation in housing? SW: I think this is the most important social goal in front of this nation today. The poverty that we have today is a stigmatizing poverty that reduces life opportunities—by isolating the poor from networks of jobs and mentors. XB: We have also learned that physical proximity alone does not social neighbors make. Our best evidence says that even where blacks and whites, for example, coexist physically, they often don’t “neighbor” to any great degree. So the task is really giving people of a variety of backgrounds access to an opportunity structure. That entails a whole series of additional investments: in education, job training, social services, and other institutions that connect people to one another and to opportunity. WA: And it’s not just a question of isolation of the poor. Many middle-class people never come close to a low-income person. Their children aren’t in the same schools; they aren’t in the same workplaces, not in the same towns, or churches—and all this affects their capacity to understand and address social problems. Secretary Cuomo’s Places Left Behind tour and President Clinton’s New Markets tour shone a spotlight on high-poverty places that ordinarily don’t get much attention. SW: Secretary Cuomo said that the rest of America needed to see the places that were left behind. America, literally, has not seen the poverty. It is not just that there may be new markets or cheaper resources in the places left behind. Americans are fundamentally compassionate and they wish to help. There are new solutions out there. We know that the government cannot do everything, but it can do a lot to turn around communities of poverty. XB: On one hand, the movement to reinvent government has made progress in restoring the credibility of government—acknowledging limits, ensuring performance, and mandating performance reporting. But there is a certain tension about federal government authority, an uncertainty concerning where authority should lie.
There has been a devolution trend; we Americans believe almost religiously in localism. But when we find approaches that work, we are not always very good at replicating them. Although a program can’t act like a cookie cutter—taking a model from one place and mandating it all around the country—there are certain aspects of any system that need to be standardized. We are, I think, shifting from a conversation that says in effect, “Devolve everything, let everyone figure out locally and on their own what they do to tackle these big problems,” FW: The graying of American will create a much greater demand for elderly housing. What is HUD doing and what do you see local communities doing to prepare for this surge over the next three decades? WA: This is an interesting question, because of course today’s older Americans are the richest generation with the highest homeownership rate of elders ever. The era of rising home prices, which handicapped younger families, built up equity for the current generation of older Americans. But there are still problems. Many people will outlive their income and their wealth. And many are not well housed in these homes where they raised their families. We want to help people remain in their current homes as long as it makes sense. Too many people end up—for lack of a little help around the house, for maintenance help or food service or some medical attention at home—moving into more elaborate institutional facilities that are not appropriate. The President’s budget had a tax proposal for providing incentive payments to families who provide care to relatives, including elders. Our FHA program has the Home Equity Conversion Mortgage, which helps older Americans convert equity in their home to cash income, which they can use for rehabilitation needs. The Section 202 program, currently our biggest expenditure in terms of production activity, is targeted to the elderly. And 20 percent of all our vouchers are used by older Americans. But it’s not just about housing, of course. It’s about providing a service-rich environment and working with service coordinators and with the U.S. Department of Health and Human Services to round this out. Where can we work to meet the other players in this halfway? We’d like to have our elderly housing facilities not only serve the people who live in the buildings, but also become community resources to serve the wider neighborhood. FW: As we look forward to, say, the next 10 years, what are the key trends that will affect low-cost housing? Do you spot any “sleeper” issues? Do you foresee any pleasant surprises—positive trends—in urban development? WA: The new information technology that is shaping the future means that physical distance does not necessarily mean isolation. In one Appalachian town, they have set up a United Airlines telephone reservation system that employs some 600 people. So there is that element of technology and communications transforming and making everybody closer. On the other hand, you have what Jesse Jackson calls the “digital divide.” People who have no access to the basic technology just get left further and further behind. Will the new technology be just another factor that divides us? Or will it be able to make remote places closer, reach into areas that have been left behind and help them catch up? It won’t happen naturally and so there is a role for HUD and others to make sure that we do our part to encourage access to these expanded technologies and learning mechanisms. XB: Conversations like this are important because HUD has an obligation to help identify and build knowledge about issues that are on the horizon and can help transform the way we live. Secretary Cuomo has made it a part of his vision for this institution that it regain much of President Kennedy’s initial hope for HUD before the agency was born—that it be a center of ideas and of learning, and not just a program administrator or a subsidy operator. Aside from information technology, let me point out two housing-linked issues that do not always get the attention they deserve. One is immigration, which will reshape the ethnic geography of the country and transform its politics. The second issue is design. In much of human history, cities were memorable places, tremendous centers to come to, beyond their economic importance. So far, however, we have not excelled as a country—and we are still young as a country—in creating and preserving places that are memorable. Smart growth in the future will entail rehabilitating what we have, preserving public spaces, and perhaps creating memorable places in new suburban towns. It doesn’t happen through an “ad hocracy”—it takes planning. SW: We have seen some initial indicators of hopefulness. The 20-year trend of constantly increasing urban poverty has halted. The last 3 years brought striking wage gains—even faster in the city than in the suburbs—for the 77 urban areas we are tracking. We have also seen unemployment rates declining faster in the inner cities than in the surrounding suburbs. And for the first time in American history, a majority of families within city limits are homeowners—just slightly over 50 percent this year. And the largest increase in homeownership is among minorities. If our cities do well, then homeownership can act as a vehicle for wealth accumulation for low- and moderate-income residents, minorities, and elderly households, and for rebuilding neighborhoods. I deeply believe that it will, and that we will, in fact, solve the problems of urban America. The opportunity is there, the need is there, and Americans are compassionate. We have solutions that clearly work. We now need to bring them to scale.
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