Category Archives: Youth Advocacy

College and Homelessness: An Unwanted Correlation

Homelessness has increasingly become a major issue here in the District of Columbia as housing prices continue to rise and affordable options continue to shrink, a trend that has greatly affected the city’s low-to moderate income households.

In a recent article by Jana Kasperkevic of the Guardian, a new population of the homeless is on the rise: College Undergraduates. There is a small but growing number of undergrads living out of cars or using public facilities to help reduce the ever increasing cost of a college education. And with over $1 trillion in student loan debt  across the across the country, access to opportunities needed to move up the economic ladder are more out of reach now then they have ever been.

In the article, our author speaks to Jeffrey Williams. A month before his 18th birthday, Williams found himself homeless. Told by his adoptive parents that they would not support him after he graduated high school, Williams decided he would do whatever it took to go to college, knowing it was one of his few chances at upward mobility. Working at McDonalds, Williams was earning just enough to pay for his food, transportation, phone bill, and the rest went to tuition. He was finally able to qualify for financial aid after a couple years, and then took out a loan for housing.

There are more than 1.1 million homeless children and youth enrolled in US public schools, according to the Department of Education. For many of them, college education is almost completely out of reach.

This isn’t a problem that’s only facing students coming from the foster system or extremely low income families, but families of more moderate means. There are many cases of students coming from families of more moderates means still finding it increasingly difficult to afford the cost of education even with savings that are dedicated to higher education, having to choose between a degree and the only expense they have the option of cutting – housing.

Another example of this involves a family of more moderate means. Jake Stevens, a mechanical engineering major at Kettering University is homeless. Even after he maxes out his federal student loan limit, scholarships, and college fund his parents saved for him he still is unable to afford housing. Kettering University, a very expensive specialty college, provides a unique curriculum that allows Jake to attend classes half the year, while allowing him to work in the field of his studies the remaining six months of the year. Although this job pays well Stevens must use this money to pay his tuition, and due to financial troubles during the 2008 financial crisis his parents aren’t able to help him with student loans. These cases are both on the extreme end of the spectrum, but the problem is still as potent. During my sophomore year at Howard University a friend slept on our couch for two months in order to finish out the semester, because they could no longer afford housing.

There are many dynamics contributing to college affordability and the access students have to higher education, but homeownership has been one dynamic that has consistently helped in this pursuit. In a study done by Pew’s Economic Mobility Project, students whose family who saw an increase in housing wealth during the years leading up to their college years saw a higher college completion rate. Homeownership continues to provide many long-term benefits to individuals of all income categories, consistently assisting in providing opportunities for lower and moderate income families at generational success.

Busboys East of the River

The Washington Post’s Jonathan O’Connell reported this past Friday that Busboys and Poets’ owner Andy Shallal has signed a letter of intent for opening a new location east of the Anacostia River. This has been in the works for years, Shallal stating that he wanted to make sure the development would be done in a respectful way to the rich history of Anacostia. This project will have significant implications for the Anacostia corridor; Busboys and Poets, similar to Wholefoods, has typically served as an anchor for development and revitalization for the neighborhoods they have been a part of, but this particular development is also slated to provide office space and culinary training programs for the neighborhood. The Far Southeast Family Strengthening Collaborative, who purchased the building in 2012 for $2.2 million, has engaged the community on several occasions to really hear from families in the neighborhood, ensuring their needs are met. This development stands to bring more jobs, entrepreneurial opportunities and skills training to Southeast. In preparation, for those who can, low-to-moderate income individuals East of the River should consider buying a home now, positioning themselves to continue participating in their community and developing an asset for their future generations. This development strategy is key in developing underserved communities, working with them not around them.  It is critical to the long term sustainability of the District that opportunities for upward mobility are available to all of its residents. We must develop a collaborative mentality similar to that of Perry Moon Jr., Executive Director of the Far Southeast Family Strengthening Collaborative, who says “Most people who live in this community, their desires are pretty similar. So it’s really our goal to help kind of be a catalyst for economic development as part of our mission”.

An Increase In Inventory

For the first time in a very long time the District’s housing inventory is slowly creeping towards meeting its extremely high levels of demand. For the sixth consecutive month in a row, the inventory of listings for sale in the DC area increased compared to the previous year, according to research from the Real Estate Business Intelligence released last week.

There were 7,604 active listings in the DC area at the end of March, a 21 percent increase over March 2013. Condos were the fastest growing of the various housing options. Supply increasing 35.1 percent (or 519 listings); townhouses came in close second rising 34.6 percent or 344 listings. Although this increase in housing stock is welcomed news, this doesn’t paint a full picture, and the District’s housing crunch is still a very real issue for at least the foreseeable future.

First, there is an increase in available housing stock in the District, but housing less than 300k has significantly dropped. According to data from home sales of the first quarter of 2014 compared to that of Q1 2013, home sales under the 300k mark are down 45%; condos in this income category are down 6%, while condos under 150K are down 43%. Across the board, housing options under 300 K have decreased 15%. This shows that while the city is beginning to increase its housing stock, housing options for low-to-moderate income individuals is significantly shrinking, while demand for that category of housing is steadily increasing.

Second, people are also continuing to move to the District at an unprecedented rate; demand has consistently remained above supply, resulting in the astronomical housing prices we see today. If the city continues to focus on primarily addressing the housing needs of its more affluent residents, tragic issues like this past winter’s homeless crisis will only be the tip of the iceberg.  All of these things makes it that much more important to support initiatives that address the entire continuum of housing options in the District. The Continuum meets individuals where they are, assisting them down a path potentially ending in homeownership. Only time will tell if the District’s efforts to meet demand will be successful, but funding initiatives that supports housing options for all of its residents is something the city can do now.

Momentum on the Minimum

Around the nation momentum for a higher minimum wage continues to increase. In the Robert Reich film “Inequality for All”, the author outlines how the growing wealth/asset gap will have detrimental effects on our economy. In his film, Reich hits two very simple but critical points: 1) What is a good society? and 2)What role does the widening income gap play in the deterioration of the nation’s economic health? One of the biggest contributors to the growing wealth gap is the stagnation of wage increases over many, many years. If the national minimum wage of 1968 had simply increased with inflation, it would be more than $10.56 an hour rather than $7.25. This is especially critical because most low wage workers are not teenagers, but rather heads of households who carry the bulk of the financial burden. Increasing the minimum wage is simply a common sense solution.

Currently, the American people subsidize corporations like McDonalds and Walmart who refuse to pay their employees a fair wage. When employees are forced to rely on government assistance because they don’t earn a living wage, the taxpayer foots the bill while the corporation reaps the profits. Paying employees a higher wage benefits the entire economic system. Not only do workers have more income to spend on good and services, but providers have a more sustained customer base.

With an eye on bridging the asset gap and helping families move up the economic ladder, there must be more funding for the entire Continuum of Housing, including programs that allow folks to move into homeownership while also paying back what they have received.  Homeownership continues to be one of the few avenues low-to moderate income individuals have to build wealth. The District collects billions in taxes and revenue from its constituents – it would be in the best interest of the District government to reinvests those funds into the development and wealth building of its residents, otherwise it will have contributed to an economic cycle that cannot support itself, only benefiting those with much. Funding programs like the Home Purchase Assistance Program (HPAP) and the Housing Production Trust Fund are only the first steps in growing a city that provides homeownership opportunities for its residents and promotes equality for all.

Ending Homelessness for the youth

In an effort to address the grave situation facing one of the city’s most at-risk populations, Councilmember Mary Cheh, along with Councilmembers McDuffie and Jim Graham and supported by the D.C. Alliance of Youth Advocates (DCAYA), introduced the End Youth Homelessness Amendment Act of 2014. This bill would amend the Homeless Services Reform Act to require the Interagency Council on Homelessness to prepare a comprehensive plan to end youth homelessness by 2020 and submit it to the Council. This piece of legislation is especially important after the District faced one of the harshest winters in recent years, exposing a rapidly increasing homeless population and the city’s inability to provide shelter for them. This has placed the District between a rock and a hard place. On one end of the spectrum, the city is seeing an unprecedented rise in growth and development as well as a rise in wealth, but the other end of the spectrum shows an economically stratified city, one that is leaving longtime residents in the dust. The District must continue to fund the development of housing that meets people at all levels of the Continuum. In addition, this legislation would also require the Interagency Council on Homelessness to include unaccompanied minors in the winter hypothermia plan, which guarantees shelter to all residents, and require the Department of Human Services to establish a grant program to fund street outreach and conduct an extended youth count.

Key Points of DCAYA’s Plan

•  Implement evidence-based family reunification projects

•  Jumpstart a citywide host-home program

Rapid Intervention

•  Increase capacity for emergency shelter and low barrier transitional housing

•  Implement a coordinated entry for youth which includes street outreach

•  Create two drop-in centers for youth engagement, respite, and referral

•  Systematize cultural competency trainings to serve the needs of diverse youth

Evaluation

•  Conduct an extended point-in-time study

•  Systematically track outcomes, utilization rates, and turn-aways across services

•  Adjust emphases and funding levels based on need/capacity gaps

Let the Madness Begin!

To commemorate the beginning of March Madness and the first day of spring, I want to take a look at the components of sound homebuyer education and financial literacy. You may be wondering to yourself, “How does an annual college basketball tournament and the first day of spring parallel with sound financial education?” Well, I’m so glad you asked. This question has two answers. First, on the surface, all of these things represent a fresh start. For all the teams that have advanced to the big dance, essentially they are given a clean slate and are in control of their futures. Spring provides a breath of fresh air and a fresh start from the cumbersome weather that accompanies the winter months. In the same way, a trip down financial literacy lane can provide a fresh start towards financial security. The second answer is that these events all provide a great opportunity for fundamental change. We’ve all heard about the Cinderella stories: Davidson in 2008 reaching the elite eight, George Washington in 2006 advancing to the final four, teams faced with insurmountable odds that focused in on that small chance of success reaching new heights, etc. That change, that opportunity to fundamentally alter one’s course for the better, is how these three very different things all relate.

Manna’s Homebuyer Club, a financial literacy/ homeownership preparation program that seeks to meet individuals where they are, uses a two stage approach to reaching this fundamental change.

During the first stage you:

  • Study budgeting
  • Set your financial goals
  • Begin working and saving to meet them

At the second stage you:

  • Continue to save for a down payment
  • Pay off bills
  • Work on past credit problems
  • Learn about the process of buying a home

These are all very important small things that add up to a bigger picture. The same can be said about spring and success in the NCAA tournament. Little things like unselfish play, sound defense, and working together can turn a small unknown program into a national powerhouse; and the simple progression of time brings about the change in season. However, just like homebuyer education, the investment must be put in. Like the great Michael Jeffrey Jordan once said, “There are no Cinderellas”.

An Economy at ARM’s

In case you haven’t had your fill of cringe-worthy decisions made by Wall St. that lead to even more devastating results for consumers, this may very well put you over the edge.  The Wall Street Journal reports that Adjustable Rate Mortgages and Interest-Only Adjustable Rate Mortgages are back in style. Adjustable Rate Mortgages (ARMs) are mortgage loans with low initial rates, but those rates are subject to change every five years, making the future a gamble. This was very significant in fueling the housing crisis, because not only did you have some people with loans who simply couldn’t afford them, but when interest rates rose their problems and loss of wealth multiplied tenfold. These types of mortgages were especially popular prior to the financial crisis, because they allowed individuals to purchase or refinance at lower rates than the ones that accompanied 30 year fixed rate mortgages, something banks and brokers used to make the product very popular. “The tactics are reminiscent of the period before the 2008 crisis, when ARMs exploded in popularity as banks and mortgage brokers touted their low initial rates to consumers,” wrote Anna-Maria Andriotis and Shayndi Raice of the Wall Street Journal.

In their defense, banks have said that they are being especially careful this time around and are primarily offering this type of loan to higher income borrowers. For the fourth quarter of 2013, of all loans originated, ARMS made up only about 10 percent of mortgages under $417,000, but shoots up to 31 percent for loans between $417,000 and $1 million and then jumps even further to 61% for loans over $1 million dollars. In a city where homes values are rapidly rising such as Washington, DC, these statistics are troubling because there are likely a large number of loans in the city above $417,000.

This continuing trend of irresponsible banking for the purpose of pocket stuffing speaks volumes to the importance of financial counseling and housing counseling, as well as the requirement of fixed-rate mortgages when someone is using a home purchase assistance loan. Even national organizations and agencies have begun to notice the importance preventative education has. In addition to homebuyer education courses provided by local organizations like Manna, Inc., Latino Economic Development Corporation, Housing Counseling Services and University Legal Serrvices, The Department of Housing and Urban Development announced that later this year it will begin testing out pilot programs that pair the home buying process with home buyer education, providing financial incentives for those who complete the courses.

Like the Wall Street Journal points out, when originating ARMs, the bank is betting against you that interest rates will go up. And if we learned anything from the financial crisis it’s that when banks gamble, they usually win. Do yourself a favor – sound home buyer education is one of the few things you can do to tip the scales in your favor.

A Population On The Rise

As the cold winter weather continues to drag on here in the District, the city’s homeless population continues to explode.  This explosion in the city’s homeless population is a direct response to the lack of affordable housing options in the city, which is a compounding problem because the city’s lack of affordability keeps families in shelters, while adding more families at the same time. There is a need for a strong continuum of affordable housing, starting with housing and services for homeless families and supporting families as they are able to move along that continuum to more stability and growth. Currently, Mayor Vincent Gray has unveiled the plan “500 families in 100 days” – this plan seeks to place 500 homeless families into rapid rehousing or permanent supportive housing between now and June; there are also long-term plans in the works for ending chronic homelessness. At the end of the continuum is homeownership, and some DC residents have traversed and continue to traverse that path from homelessness to homeownership.

Historically, homeownership has been one of the very few tools the majority of Americans have had access to for asset building and wealth generation, but in a city with very few affordable homeownership options, this tool is increasingly becoming a thing of the past. Advocates from all over the city agree that affordable homeownership options need to increase through actual production and home purchase assistance loans, but the focus of the production option is where the vote is split. The two diverging foci are the preservation of the unit or the transformation of the family. Because demand is so high, and stock is so low, some advocates have become enamored with preserving affordable ownership units at all cost. A valiant effort, but one that fails to take into consideration the purpose of the tool in the first place.

Homeownership, supported by good loans, is meant to bring fundamental change to a family, creating future generations of homeowners. The commitment to neighborhood and community, as well as the potential opportunity for wealth generation from market appreciation are just a few of the benefits that come along with homeownership, as well as a host of responsibilities. But when unit preservation is the focus, you tend to strip individuals of the benefits of homeownership (access to market appreciation and flexibility to deal with life changing circumstances and emergencies) while leaving them with all of the responsibilities. Preservation is key across the majority of the continuum of housing, but for a smaller percentage of affordable homeownership units, the families’ opportunity for fundamental change is essential.

A recycle/ recapture method allows fundamental change for a family by allowing access to equity within a reasonable time frame, but also recapturing pre-existing equity and subsidies in a development to produce more opportunities for families all across the city. It wouldn’t be productive to purchase a pair of tennis shoes for training purposes, and become so enamored with them that you would refuse to train in them. The same can be said about affordable homeownership. If the purpose of providing affordable homeownership opportunities to city residents is to help low-to-moderate income individuals generate wealth and bring fundamental change to families, simply focusing on preserving the tool would essentially defeat the purpose of the tool.

Wage Warriors

The District’s economy is recovering, but only for a select few.  In an enlightening report entitled “Falling Short: The District’s Economic Recovery Is Leaving Several Groups Behind” Jenny Reed and Jasmin Griffin of the DC Fiscal Policy institute  take a hard look at the realities facing our city. To the surprise of no one, wages have been stagnant or falling since 2008 for the District’s low-wage workers, those without a college degree, African-American, and Hispanic residents. Unemployment also remains very high for these groups and has not fallen below pre-recession numbers. One telling piece of information from this study is the disparity between those with college degrees and those without. Unemployment rates have fully or nearly recovered to pre-recession levels for residents with a college degree and white, non-Hispanic residents. And wages for middle- and high-wage workers have increased significantly. These are telling signs of the growing level of inequality between workers.

One tool that has consistently countered the effects of inequality has been homeownership. Homeownership has been proven to have a significant role in the affordability of higher education as well, by equipping low to moderate income individuals with the resources needed to pursue economic mobility. Homeownership has been known to provide stability and a long lasting sense of community, but it has also been linked to student confidence in choosing a place of higher education. A study done by PEW Charitable Trust’s Economic Mobility Project states: Low-and middle-income students whose families experienced increases in housing wealth just before reaching college age were more likely to attend college, more likely to attend higher-quality universities, and more likely to graduate. This is why supporting sound affordable homeownership opportunities are essential for the sustained growth of the city. Homeownership is much more than a roof over someone head, it is potential access to equity that can be used to send children to college or even start a business. As the District’s high skilled job market and real estate markets continue to grow, affordable homeownership opportunities will continue to be an ally of equality.

 

Additional Statistics

-The unemployment rate for residents with a high school diploma stood at nearly 20 percent in 2012, far higher than the 12 percent unemployment rate in 2008.

-Some 21 percent of residents without a high school diploma were unemployed in 2012, compared with 16 percent in 2008.

-Even residents with some college education (but no complete bachelor’s degree) have faced stubborn unemployment increases since the recession. Some 14 percent of these residents were
unemployed in 2012 and the unemployment rate has not seen any drop since the end of the recession.

-Residents with college degrees were not as greatly affected. Unemployment for these residents increased to just 4 percent in 2012, compared with 3 percent in 2008.

Part 1: The Next Housing Crisis

Americans, barely recovered from the financial crisis of 2008, may be heading down the same path once again. In an article written by Ben Hallman and Jillian Berman of the Huffington Post, housing and consumer advocates warn that Wall Street has created another potentially devastating financial product that threatens to crash the housing market once again. This concern is not without merit. Many companies have begun to show interest in issuing bonds backed by rental agreements, a financial product that eerily resembles the mortgage-backed securities that fueled the housing crash of 2008. As disturbing as this specific problem may be, there are equally disturbing dynamics at play within this situation that could make this potential bubble far more devastating.

First, due to the financial crisis of 2008, lenders have become extremely conservative, making it difficult for many credit worthy borrowers to get loans and thus allowing all cash investors to come in and accumulate a large number of properties that they rent out. Pre-crisis, lenders were giving loans to anyone with a pulse, which drove home prices up; now it is the complete opposite, so much so that we are seeing the same effects. Because lending has tightened, but demand is high, home prices again are rising at an unsustainable pace (as well as rental prices).

Allowing cash investors to swoop into housing markets has created a false recovery. The housing market hasn’t actually recovered – it’s more so investors purchasing properties at an alarming rate, which will cause its own set of problems. Some of these problems include construction quality issues as many investors focus more on the cosmetics of their properties and fail to address structural issues like mold and plumbing.

Lastly, these new bonds would be backed by rental incomes. So, similar to the housing collapse of 2008, if consumers are unable to pay their rents, including for reasons associated with the product itself, another bubble that is just now being created will burst.

We need to cut this new bubble off at its knees… (To be continued with a post on March 6).