Housing affordability isn’t at the top of the agenda for candidates seeking the presidency, but one group wants to change that.
The J. Ronald Terwilliger Foundation, a new nonprofit comprising some top names in the housing industry, is aiming to get presidential candidates to commit to solutions to the affordable housing “crisis” afflicting the country, which it sees getting far worse as the nation’s demographics change.
“If you look at the demographics, minority household formation will be dominant for the foreseeable future and they tend to be renters first, and renters make half of what homeowners make,” said Pam Patenaude, the group’s president, indicating that this demand will drive up rents, and make rentals less available. “This is just the beginning of a crisis that we can’t build our way out of.”
Patenaude is trying to get candidates talking about it. Her group has spoken with 14 of the 17 GOP candidates, she said, and with Democratic hopeful Martin O’Malley three times.
They’ve been successful in getting former Arkansas governor Mike Huckabee and former Hewlett-Packard CEO Carly Fiorina to mention the stress high rents put on families in their stump speeches.
The group was founded by Ron Terwilliger, former head of Dallas-based Trammell Crow Residential, one of the biggest apartment developers in the country. It boasts some heavy hitters among its backers and advisers.
Those include former Massachusetts Sen. Scott Brown, former New York Rep. Rick Lazio, and Clinton HUD Director Henry Cisneros, along with a number of other former housing officials.
Patenaude believes that housing is a winning issue for candidates.
“It cracks me up, because immigration is not a big issue in New Hampshire, and they’re all talking about immigration,” she said, referring to the flock of candidates who have been spending time in the first primary state. “The last time a Canadian alien crossed the border — you know, I don’t think it’s at the the top of mind of voters. I know for a fact housing is.”
The group will push the issue throughout the primaries, and then again with a summit at the Bush Library before the general election. While they’re not making specific prescriptions now, they are leaving open the possibility of doing so later.
Patenaude is not the only analyst to reach the conclusion that the U.S. housing market is in crisis.
Earlier this year, Housing and Urban Development Secretary Julian Castro declared that the “entire nation is in the midst of an affordable housing crisis.”
The J. Ronald Terwilliger Foundation laid out the facts in a recent paper: More than a third of U.S. households, almost 41 million in total, pay more than 30 percent of their income on housing. The government sees anything at 30 percent or lower as affordable.
Three factors will conspire to drive up demand for rental housing in the years ahead: New household formation by millennials, immigration and the aging of the baby boom generation.
The Urban Institute estimates that nearly two-thirds of new housing demand over this decade will be for rental properties. Many of those would-be renters will be minorities and immigrants with lower earning power. But when it comes to building the needed rental units, Patenaude said, “the economics of it don’t work” without subsidies.
Part of the blame, according to Patenaude, goes to the government’s response to the financial crisis. First, regulators have made banks wary to make home loans for fear of government lawsuits or penalties if those loans go bad. Second, the 2010 Dodd-Frank law put new regulations on lending while also failing to overhaul the mortgage-backers Fannie Mae and Freddie Mac. The result has been an uninterrupted decline in the homeownership rate.
