State Updates
Greater Boston Housing Report Card Highlights Uncertain Times; Rents and Home Prices Still Pose Affordability Challenges
This week, the Center for Urban and Regional Policy (CURP) at Northeastern University The Boston Foundation, and CHAPA released the Greater Boston Housing Report Card 2008. The report confirms two troubling challenges: 1) rents are rising to increasingly unaffordable levels and 2) home prices are falling quickly, but are still not affordable to most young working families.
Due to very low vacancy rates in Massachusetts (5.0 percent in MA compared to 9.7 percent nationally) and additional pressure from foreclosures and tighter credit, rents are rising. From the second quarter of 2005 to the second quarter of 2008, Greater Boston's average effective rents climbed 12 percent to $1,646/month. However, the income of renters during that same time has fallen. Seven years ago, rent consumed 28 percent of household income in the Boston area, on average. By 2006, that climbed to 36 percent. Rent increases in 2007 and 2008 pushed that to about 38 percent, according to the report.
The report also finds that home prices have fallen but are still too expensive for many to achieve home ownership. Based on sales data from the first half of 2008, median single family prices fell to $366,283 and condominium prices remained steady at $306,303. However, because of low permitting totals during the boom years through today, vacancy rates are still lower than most areas (1.9 percent in Massachusetts, 2.8 percent nationally). Therefore, the report indicates the possibility of additional price escalation when the economy rebounds continuing to keep homeownership out of reach for most.
Based on low vacancy rates for rentals and homeownership and slow to moderate economic growth projections, the report continues to reaffirm the need for additional housing development. In order to meet the needs of our economy and population, the report calls for annual production of approximately 13,380 units/year in the Greater Boston region for the next four years up from a 10 year average of 11,600 units/year.
Emergency Budget Cuts Have Minimal Impact on Affordable Housing Programs
After careful review of the Governor Patrick's October 15th 9C cuts,
CHAPA anticipates little interruptions to the Commonwealth's statewide affordable housing programs. The Administration made cuts to the Mass. Rental Voucher Program, SoftSecond Loan Program and Interest Subsidies for Private Development of Affordable Housing (13A Program). However, the funding for these three programs was restored by generous contributions from MassHousing and Massachusetts Housing Partnership.
Despite affordable housing's relative stability amid the cuts, there will be a significant impact on the supportive services that compliment many housing programs. CHAPA continues to stress the importance of stable housing to the economy and hopes to minimize any damage to housing programs if future cuts are necessary
CHAPA Launches Foreclosed Properties Database
CHAPA and The Warren Group have collaborated to develop an online database of foreclosed properties in Massachusetts. The database will assist community organizations, non-profit developers, and municipal officials to track and target strategies to address and acquire foreclosed properties.
The database includes foreclosure petitions and lis pendens, foreclosure auctions, Real Estate Owned (REO) properties, sub-prime adjustable-rate mortgage data, tax liens associated with properties in foreclosure and sales and mortgage history for each property. The database covers all current properties experiencing foreclosure and is updated on a weekly basis.
Users can access the database through CHAPA's website with a username and password, target specific streets and neighborhoods, save properties and map them, and enter additional fields and notes about specific properties.
Monthly subscriptions start at $40/month and subscribers must be members of CHAPA. Subscribers who pay for a full year's subscription upfront will be given a discount of $80 (2 months free). Higher fees apply to users seeking regional or statewide data.
To learn more about the database or to see a demonstration, please contact Janna Tetreault at CHAPA at 617-742-0820 or via email at jtetreault@chapa.org.
Energy Task Force Calls for Expanded Fuel Assistance Eligibility
On October 30, Governor Deval Patrick, Senate President Therese Murray, and House Speaker Salvatore DiMasi endorsed the Winter Energy Costs Task Force report, including recommendations to expand eligibility for federal fuel assistance to help an additional 55,000
Massachusetts families heat their homes this winter. The Task Force, appointed jointly by the Governor and legislative leaders in July, also calls for increased investments in energy efficiency and weatherization to save money on fuel costs now and in the future.
Department of Revenue Releases Community Preservation Act Match Distributions
The Department of Revenue (DOR) released its October 2008 state match to the 133 municipalities that have adopted the Community Preservation Act (CPA). For the past six years, the state match was 100% because deeds fees were sufficient to support that number. However, due to a significant decline in deeds fees and the program's popularity, DOR was only able to distribute a 67% first round match to what municipalities generated locally.
In the 77 municipalities that adopted a 3% local surcharge, a second round distribution raised that number to between 68% and 100% depending on the locality. DOR anticipates a 35 % match for October 2009. However, legislation has been filed by Cynthia Stone Creem to broaden CPA participation and to stabilize the match.
Supreme Judicial Court Releases Decision on Newton Community Preservation Act Project
The Supreme Judicial Court ruled that the Newton Community Preservation Committee could not use CPA funds to make upgrades to a park that was not acquired or created with CPA funds. The prospective decision is the first SJC decision to define limits on recreation activities for which CPA may be used.
CHAPA supports allowing CPC's to use funds to upgrade parks because that makes the Act more likely to be adopted by denser cities with older park infrastructure that also want and need the additional housing resources provided by CPA. Senator Creem's legislation would update the Act to clarify that upgrading parks that have not been purchased with CPA funding is authorized under the Act.
DHCD Seeks Comments on Draft Plan for HUD Neighborhood Stabilization Program
DHCD has scheduled a public information/public comment session on November 6 (3-5 p.m.) on its draft plan for using its $43.5 million HUD Neighborhood Stabilization Program (NSP) grant for foreclosed and abandoned properties. The draft plan will be posted on DHCD's website on November 3.
The November 6 information session with be held at DHCD (100 Cambridge Street, 2nd floor conference room B). DHCD will also accept comments by emailin writing (addressed to Mark Siegenthaler, DHCD 100 Cambridge St – Suite300, Boston, MA 02114). Persons planning to attend are asked to RSVP by email in advance. The final plan, which is technically an amendment to its FY2008 CDBG One Year Action Plan, must be submitted to HUD by December 1, 2008.
DHCD to Hold Hearing on Proposed Amendment to LIHTC Qualified Allocation Plan
DHCD will hold a public hearing on November 6 to explain and receive comments from the public on a draft amendment to the 2008 Qualified Allocation Plan (QAP) for the Low Income Housing Tax Credit Program. The Department will also accept written comments before or during the hearing. The hearing will be held at 2:00 p.m. in Conference Room 2B/2C, 100 Cambridge St, downtown Boston. Click here for more information on the hearing and how to submit comments.
The proposed amendment incorporates two of the statutory changes to the tax credit program enacted by Congress in July (setting a fixed percentage for 9% credits and raising the state's per capita tax credit allocation for 2008 by 10% or about $1.29 million). It also makes three other changes:
- It establishes a "invitation only" rolling review process for "highly ready to proceed" projects in which at least 25% of the units are for extremely low income households, including many homeless, and for projects which have received prior awards but are facing substantial losses of equity due to turmoil in the capital markets.
- It modifies the "special characteristics" scoring to support fair housing goals (raises points given for projects with units for persons with disabilities and combines two low-poverty location score categories into one).
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It raises the basis cap for production and preservation projects by $25,000 and $5,000 respectively.
September Housing Permits Reach Record Lows
On October 17, the Census Bureau reported September 2008 housing permit and start activity nationwide was at the lowest level since September 1991 and economists pointed out that after one adjusts for population, starts are the lowest since 1959.
In Massachusetts, September permit activity (700 units) broke even older records, the lowest number since monthly data become available in 1980. Overall, September units permitted were down 30% from a year ago and down 60% from September 2005 and September 2006. Statewide year-to-date permits (7,917 units) were also down 30% from the same period in 2007 and down 55% from the 2005 peak (17,781). Single family units permitted year-to-date (4,094) are down 41% from a year ago, while multifamily units (3,426) fell 16%. Among Massachusetts metropolitan areas, drops have been particularly steep in the Worcester MSA (52%).
Massachusetts Foreclosures Reach Over 9,600, Up 72% from 2007
The Warren Group reported on October 22, that 9,609 foreclosure deeds had been filed in Massachusetts between January 1 and September 30, 2008, an increase of 72% compared to the same period in 2007 when 5,593 foreclosure deeds were filed. While the number of foreclosure deeds filed in September (798) was the lowest monthly total in four months, the number of petitions to foreclose filed in September 2008 (2,258) was more than double the August 2008 number (943).
Sales Activity Rises But Home Prices Continue to Fall in Massachusetts
The median single family home price fell below $300,000 in September 2008 for the first time since April 2003, according to a report by the Warren Group. The September median home price of $295,000 represents a drop of 13.2% compared to the median a year earlier ($340,000). However, the total number of sales of single family homes in September (3,637) was up 8.5% from a year earlier. Condo sales activity, on the other hand, fell compared to a year earlier (1,634, down 9.6%), though condo prices declined less sharply than single family homes. The median condo price statewide fell to $255,000, down 7.3% from the median a year earlier ($275,000).
Federal Updates
Housing Experts Release Recommendations for New Federal Administration
The editors of Affordable Housing Finance magazine have issued a white paper, Unfinished Business: What the Next President Must Know About Housing and HUD, recommending a broad rethinking of the nation's housing policies. The primary author of the paper is Andre Shashaty, the magazine's founder. The paper has been endorsed by many individuals with extensive experience in housing policy, including former HUD Secretary Henry Cisneros, Conrad Egan, and Nicolas Retsinas.
It recommends addressing serious management problems at HUD, revitalizing the FHA by making it a government-owned corporation within HUD, making National Housing Trust funds available earlier and shaping that program to reward progressive land use policies and local support, coupling housing assistance with services, preserving the existing affordable stock, including public housing, addressing rural needs, and promoting regional approaches to housing problems in metropolitan areas.
A CHAPA committee, chaired by Vince O'Donnell, has also developed brief recommendations to reinvigorate HUD.
Treasury Department Requests Comments on Bailout Bill Guarantee Program
On October 16, the Treasury Department published a notice in the Federal Register seeking recommendations from the general public for the design of a Troubled Assets Guarantee Program. The bailout bill, signed into law on October 3 ( H.R. 1424), authorized the Treasury to purchase residential and commercial mortgages, mortgage backed securities, and mortgage-related assets originated or issued before March 14, 2008.
If a purchase program is set up, the bill also requires Treasury to set up a guarantee program as an alternative. A guarantee program would allow holders of troubled assets to obtain insurance against some level of losses on the assets in exchange for paying premiums. The Federal Register notice requests comments on a host of guarantee program design questions, including eligible participants, eligible assets, the level of guarantee, events that trigger payment of the insurance, and how to guard against adverse selection (lenders only insuring their worst loans).
In testimony at a Senate hearing on October 23, FDIC Chair Sheila Bair reported that Treasury is actively exploring ways to use this guarantee authority to reduce foreclosures by encouraging servicers to modify loans.
House Passes McKinney-Vento Reauthorization Bill; Revises Definition of Homelessness
The full House approved a bill reauthorizing the McKinney-Vento program with revisions on October 2. H.R. 7221 - the Homeless Emergency Assistance and Rapid Transition to Housing Act (HEARTH) - includes a more expansive definition of homelessness than exists under current law, adding people who will lose their living arrangement within 14 days and people living doubled up or in hotels and motels at their own expense due to a loss of housing.
The National Policy and Advocacy Council on Homelessness has posted a summary of the bill on its website. While the House definition has been agreed to in principle by members of the Senate as well, it is unclear whether the Senate will take up the bill this year after the election. While the Senate Banking and Urban Affairs Committee approved reauthorization legislation in 2007 (S.1518), a Republican Senator placed a hold on the bill to prevent it going to a floor vote. The National Low Income Housing Coalition has posed a side-by-side comparison of current law and the two bills on its website.
Top Post at Federal Agency to Regulate Appraisals Remains Empty
While inflated appraisals are widely recognized to have contributed to the current mortgage meltdown, The Boston Globe reported on October 29 that the top job at the federal agency charged with enforcing appraiser standards has been empty since January.
Some of the difficulty in filling the position has been attributed to an August investigation by the Associated Press that found the agency (the Appraisal Subcommittee) ineffective due to limited enforcement powers and understaffing. The Subcommittee monitors the state agencies charged with regulating appraisers to ensure that they are carrying out their licensing and disciplinary responsibilities. The AP reported that the Subcommittee is unable to force compliance when it finds lapses at the state level because its only enforcement tool is "draconian": to ban all appraisers in a state from handling deals involving federal agencies. Understandably, it has never used that tool.
The AP report also pointed out that new appraisal reforms scheduled to go into effect in 2009 have not provided alternative enforcement mechanisms. The AP report found that since 2005 over two dozen states and territories, including all New England states except Massachusetts and Maine, failed to meet the federal requirement that complaints against appraisers be investigated and resolved within a year, meaning hundreds of appraisers accused of wrongdoing remained in business. Recent Subcommittee reviews of state offices can be viewed online.
Recent Research
NeighborWorks Issues Progress Report on Foreclosure Mitigation Counseling
On October 30, NeighborWorks (NW) submitted its first Interim Report to Congress on its Foreclosure Mitigation Counseling grant program, covering activities between March 1 and September 15, 2008.
NeighborWorks received a $180 million appropriation in the FY2008 budget to make grants to counseling agencies in areas of greatest need and providing training and technical assistance to grantees. The first grants were awarded in late February. During the 6.5 month period covered, NW reports that grantees counseled 105,071 homeowners nationwide. The report includes detailed information on the demographics of the households counseled, the characteristics of their mortgages, reasons for payment difficulties, payment status and housing cost burdens.
As detailed in the Executive Summary, 44% of counseled owners had adjustable rate mortgages, while 45% had fixed rate mortgages. Forty percent were facing payment difficulties due to losses in income, 8% due to medical problems, and 9% due to increases in their monthly loan payment. Married couples with dependents represented the most common household type (30%), followed by single adults (18%) and single parent households (17%).
Over one-quarter of owners (28%) were current on their mortgages when they contacted a counselor, and 50% were less than 60 days late on their mortgage; however 22% were more than 120 days late. About half (52%) of owners were paying more than 40% of their income toward housing costs and 20% were paying more than 75%. Households in Massachusetts receiving counseling had similar characteristics, with 32% reporting losses in income, 32% current on their mortgages at first contact, 37% having subprime mortgages and 22% paying over 75% of their income towards housing.
The biggest challenge counselors reported involved communications with servicers, including long waits for responses and repeated losses of documentation sent to loss mitigation departments. The report also includes an interim evaluation of the NW program by the Urban Institute.
Mortgage Delinquency and Foreclosure Data Sources Available
On October 28, the Local Initiatives Support Corporation (LISC) released revised neighborhood stabilization needs data and advised entities that had used its earlier data to download the new information. The data includes a spreadsheet which shows relative need by entitlement community within each state. Mortgage delinquency data showing the percentage of mortgages that are 90+ days delinquent for most
U.S. counties is also available in spreadsheet and map form from the Federal Reserve Bank of New York.
NeighborWorks Launches Website on Post-Foreclosure Neighborhood Stabilization Tools
NeighborWorks launched a new website this month, www.StableCommunities.org, to serve as an "information hub" for nonprofits and public and private partners working to stabilize neighborhoods hard hit by foreclosures. It includes a wide range of information on program initiatives and legislation relevant to neighborhood stabilization efforts.
Federal Reserve Releases Research on Confronting Neighborhood Impacts of Foreclosure
The Federal Reserve Board hosted a seminar on October 20 in Washington, D.C. to explore policy issues related to stabilizing neighborhoods with high rates of delinquent, foreclosed or abandoned properties. All of the research presented at the seminar is available online. Topics include using new resources authorized under the Housing and Economic Recovery Act, methods for negotiating control of vacant properties, pricing and valuation models, and property disposition models.
New Study Recommends Loan Modification Programs to Prevent Foreclosures
The Contra Costa Interfaith Supporting Community Organization and the PICO National Network issued a report in October 2008, "Too Big to Fail", outlining how a national loan modification program could prevent foreclosures and stabilize falling home prices. The study also describes steps states and localities can or have taken to achieve these same goals, including a successful foreclosure diversion program in Philadelphia that requires lenders to work with borrowers and the courts to modify loans where possible.
Brookings Institution and Federal Reserve Release New Report on Concentrated Poverty
On October 24, the Federal Reserve and its 12 member banks, in partnership with the Brookings Institution, released a detailed analysis of concentrated poverty ("poor people clustered in very poor communities") in the U.S. The Enduring Challenge of Concentrated Poverty in America profiles 16 high-poverty urban and rural communities, including several neighborhoods in Springfield, Massachusetts.
The report found that all 16 faced problems with under-performing schools, low labor market skills among adults, problems with housing quality (and abandonment in some areas) and diversity, and low levels of mainstream capital investment. It also found that local public, private and non-profit capacity to address these problems was often limited. The study concluded that strategies to reduce poverty concentrations must be tailored to the community and include place-based and people-based approaches.
Census Bureau Releases 2007 Data for Massachusetts
On September 23, the Census Bureau released 2007 American Community Survey (ACS) data for states and for jurisdictions with geographies of at least 65,000 persons. ACS provides estimates of social, economic, housing and demographic characteristics in 2007, based on surveys conducted between January and December 2007. Estimates of 2005-2007 characteristics for smaller jurisdictions (down to 20,000) will be released in December.
Because the annual surveys use a relatively small sample, many of the apparent changes in estimates between 2006 and 2007 have large margins of error and may not be statistically significant. The 2007 estimates indicate little or no growth in the state's overall housing supply, but an increase of about 4% (10,500 units) in the number of vacant units statewide compared to 2006.
Upcoming Events
Thursday, November 6, 9:30 a.m. – 11:30 a.m., CHAPA Breakfast Forum: Increasing Diversity in the Housing and Community Development Field, at Boston Private Bank & Trust Company, 10 Post Office Square, Downtown Boston. The forum will build on the work of the Alliance – Advancing Community Development by Confronting Racism, a coalition of 35 community development organizations and practitioners dedicated to fostering racial and cultural diversity in the workplace. Panelists will discuss their experiences, resources and techniques for recruiting, retaining and advancing persons of color into leadership roles in their agencies. Free (suggested donation of $15 to the Alliance – Advancing Community Development by Confronting Racism is appreciated). The deadline for registration is Friday, October 31.
October 22- November 21 (various dates and times), The Massachusetts Housing Market: Assessment of Current Conditions and Projection of Trends. DHCD Undersecretary Tina Brooks is holding meetings across the State to discuss regional housing conditions, trends and needs identified in a newly completed study. Local leaders, housing and community development staff, developers, community action agencies and other interested parties are encouraged to attend. Among other locations, meetings will be held in North Andover (November 11), Greater Boston (November 12), Berkshire County (November 20), Springfield (November 20) and Barnstable (November 21).
Saturday, November 15, 10:00 a.m. – 4:00 p.m., Homeowner Foreclosure Prevention Workshop, Marlborough High School, 431 Bolton St, Marlborough, MA. Sponsored by the State of Massachusetts and Marlborough Mayor Nancy Stevens. The event will bring together mortgage lenders and homeowners from Marlborough and its surrounding towns, providing an opportunity for owners to discuss loan modifications and other foreclosure prevention options with their lender, meet with local housing and credit counselors, and attend seminars on keeping one's home.
Tuesday-Thursday, November 18-20, Seaport World Trade Center, Boston, MA Build Boston, annual regional convention and trade show for the design and construction industries, sponsored by the Boston Society of Architects. CHAPA is a co-sponsor of this event, which includes workshops affordable housing and sustainable development.
Friday, December 5, 8:30 a.m. – 3:45 p.m., New England Housing Network Annual Conference, Sheraton Needham Hotel, 100 Cabot St., Needham, Massachusetts. The conference will provide the latest information on housing issues, with a focus on federal housing policies and programs. It will include morning and afternoon workshops on a variety of topics and a keynote address from Congressman Barney Frank. Cost: $75. The deadline to register is November 24.
