Tuesday, October 25, 2016

Home Ownership is a Legitimate Aspiration of Every American Family

 Last week, I pointed out that the declared goal in the Housing Act of 1949 is for every American family to be able to have a decent home in a suitable living environment.  Thus, it is reasonable to infer that the Housing Act of 1949 effectively moved housing needs from employer-employee concern to public-private concern. It would not have been necessary to continue tying housing needs to income levels. However, outside coercion or voluntary participation, commercial interest with income as common denomination is the only communal means to house every family. Commercial institutions had to tie investments to meet housing needs to income and credit worthiness to ensure reasonable contributions and active participation in the communal leveraging efforts. Conceptually, mortgage payments are periodic investments for acquisition of equitable property rights at particular location in line with American philosophy of home ownership as the great equalizer. The owner of the equitable property rights is responsible for managing the development, use, value, and tenure as landed properties. Thus, a decent home in a suitable living environment is a capital asset that the owner could sell or transfer if the living arrangement changed.

It is necessary to further clarify the public policy goal in the Housing Act of 1949 in light of the foregoing conceptual explanation of home ownership mortgage. Reasonably, it could be inferred from the declaration in the Housing Act that public policy in the housing market is to ensure that every household is equitably leveraged. However, the Housing Act was not enacted to reflect that goal. Hence, Hoffman (2000) considered the Housing Act of 1949 a study in contradictions and its programs as failures. To gain access into a local housing market as a matter of social justice requires resolution of many related public policy issues at the local level because of the nature of housing as landed property. Apart from land use and land development planning issues, there are ownership legal and social issues as well as the underlying societal issue of income distribution for ensuring equitable transactions among households.  Also, there are building-code issues for durability, maintenance, and betterment or future improvements as capital assets. Hence, the public policy of housing every American family as soon as possible in the Housing Act was appropriately declared as a general goal rather than specific objective for implementation programs.

Furthermore, due to historical and political evolution in the United States, the social issue of racial discrimination in the local housing market quickly dominated the public policy. Some of the issues had to be addressed by regulations without understanding how the local housing market could be impacted. Although the Fair Housing of 1968 is to ensure social justice, affordability remains an issue. While it is still reasonable to assume that public policy in the housing market is equitable leveraging of every family, there is need for active participation by every family. Every American family should be able to invest to acquire decent housing as capital asset for improved living condition in a local housing market. In other words, irrespective of income level or credit worthiness, every American family should be able to have landed property rights in form of a decent home in a suitable living environment to ensure social justice. Housing is part of community economic development.  Today, homelessness in any community in the United States is an aberration. Housing need has been taken from employer-employee to public-private concern.

However, every local housing market needs social entrepreneurial roles of nonprofit sector institutions to make the market more efficient. Community Housing Market Support Network Inc (CHMSN Inc.) is a nonprofit institution set up for that purpose in Louisville metro Kentucky. Such organization is indispensable because there are many areas of misconception in the housing market that cannot be addressed by rules and regulations as public administrators are often tempted to think. There will be subsequent discussions about such misconceptions.
Hoffman, A. (2000). A study in contradictions: The origins and legacy of the Housing Act of 1949. Housing Policy Debate 11, 2, pp. 299 – 326. 

Tuesday, October 18, 2016

How to Navigate Your Local Housing Market

Housing is the first major need before having access to other supportive services to work and live in any community. Therefore, it is a public-private concern because every family needs shelter. A decent and adequate long-term shelter involves significant landed property investments making it a capital asset for improved living conditions. Every household invariably requires some communal assistance or leverage to meet housing need as capital asset. Early savings and loan associations in the United States evolved from this conceptual understanding and became a strong force through mortgage lending in the twentieth century. This system of housing finance has been reinforced by various governmental interventions in the financial market because it amounts to communally leveraging individual household to acquire housing as capital asset.

To solidify and further reinforce the system of housing finance Fannie Mae was established by the government in 1938. It became the giant player in the secondary mortgage market at the stock exchange. Before then, the Act of 1934 had established the Federal Housing Administration to take up homeowner mortgage insurance scheme to ensure continuity of the housing finance system during the great depression. The declared goal in the Housing Act of 1949 was for every American family to have a decent home in suitable living environment. Freddie Mac was established in 1970 as another giant player in the secondary mortgage market to avoid monopoly by Fannie Mae while both continue to enjoy implicit government backing. Thus, the housing finance systems to meet housing needs in the United States had long become a private-public concern.

However, nonprofit sector institutions are still struggling to identify their unique intermediary roles to complement public policy in their local housing markets in the United States. The American philosophy is that private property rights are derived from the principles of right to life so that every individual could have some measure of freedom and moral authority. That is, everyone deserves some private property rights or some rights to privacy. Although there is no income requirement to become a homeowner, commercial interests have tied income levels to home ownership while this is been reinforced by various forms of public interventions. There are various innovative arrangements that could be explored to lease, rent, or transition into home ownership irrespective of income level. This is the focus of Community Housing Market Support Network Inc (CHMSN Inc.). CHMSN Inc. is a nonprofit residential property management organization in Louisville Kentucky helping to develop or rehabilitate households as they transition into home ownership regardless of income levels or credit history. Approaches can be replicated in other cities.