Eric Muschler: Traditional housing approaches won’t cut it, need to adapt and innovate

About six years ago, McKnight’s board established an evaluation framework to help the foundation understand the role our investments make in the context of the affordable housing system, as well as the larger forces that impact our grantees and partners. Having a shared analysis can help foster mutual accountability and directions necessary to maintain the desired outcomes of our Homes for All work. After developing baselines and outcome measures with key partners and data experts, we concentrated on determining how best to document progress while providing useful information for the affordable housing field.

The Ware family, who helped find a home thanks to a McKnight housing grantee.

The Ware family, who found a home thanks to help from grantee Urban Homeworks.

Within our ongoing reporting, McKnight has commissioned grantee HousingLink to track progress over time toward short- and long-term outcomes in several areas. Now in its fifth annual iteration, HousingLink’s 2012 Minnesota Housing Baseline Measures report consolidates six years of data related to trends in federal and state funding, foreclosures, and innovative strategies to maximize Minnesota’s return on investment in affordable housing.

Please check out (and share!) the full 2012 Housing Measures report, for a data-rich overview of Minnesota’s affordable housing landscape, against a backdrop of shifting economies, politics, and demographics. To get you started, some excerpts from the report’s introduction:

 


 

In 2007, The McKnight Foundation and HousingLink started collaboration on the Minnesota Baseline Housing Measures report. The intent of the report was to track activity, through a series of specific measurements, within the affordable housing community in Minnesota. Benchmarks were identified to trace developments in the field and further policy discussion on system trends and performance, with an end-goal to most efficiently meet the need for affordable housing and ultimately align efforts toward The McKnight Foundation’s housing vision to increase family stability and link families to greater opportunity in our communities.

In the years following the Great Recession, the affordable housing industry in Minnesota has responded to numerous threats, from the foreclosure crisis to falling federal spending on housing and the growing ranks of the homeless. It is now challenged to adapt to a new context, “a new normal,” that is only now becoming apparent. Amid economic turmoil and socioeconomic shifts, the political and systems contexts have changed for the field. Minnesota has one of the most sophisticated affordable housing systems in the country, and must now use its tremendous capacity to adapt to new realities — not maintain the status quo.

A chart excerpted from the 2012 Housing Baseline Measures report.

A chart excerpted from the 2012 Housing Baseline Measures report.

A future with less funding. With the exception of the Recovery Act year of 2009, the federal government’s annual spending on housing in Minnesota has dropped each year since 2008, with an actual FY 2012 total of $241 million coming in 56% below the FY 2008 total of $568 million. Operating in the congressional climate that brought about the Budget Control Act of 2011 and 2013’s budget sequestration suggests an austerity trend that is not likely to reverse in the near future. Major federal block grants for housing are down significantly from the early 2000s, and with them a lot of flexibility local agencies had previously for addressing needs at a community level. (More in the full report.)

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Demographic and Market Realities. In addition to shifting economic and political realities shaping the marketplace, the demographics and demand for housing types, location, and tenure are also changing — challenging many baseline assumptions that drove past development. Consider:

  • 28% of U.S. households now consist of a single person, the highest level in history.
  • Retiring seniors, often downsizing as they consider the disposition of their homes, are increasingly recognizing a need for transit accessibility and walkable communities.
  • The current generation of young adults, Generation Y, is creating huge market demand for urban and transportation-rich locations, and not ownership but rental housing to fit their lifestyles, with 77 percent planning to live in an urban core.
  • Minnesota’s immigrant population, with larger families than its U.S.-born population and increasingly with suburban residency, requires housing with more bedrooms and in closer proximity to education, community, and amenities to meet cultural needs.
  • Twin Cities’ “suburbanization of poverty” is occurring such that, for the first time, more people are living below the poverty line in the suburbs than in the central cities of Minneapolis and St. Paul.

(More in the full report.)

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Chart excerpted from the 2012 Housing Baselines Measures report.

Chart excerpted from the 2012 Housing Baselines Measures report.

Lowering the Cost to Develop Affordable Housing. The National Housing Trust estimates that the practice of preservation results in a 40% savings per unit, as compared to producing new units. A HousingLink analysis of total development cost in Minnesota Housing’s projects in 2010 corroborated that figure, finding a per-unit savings of 42%. Yet the percentage of preserved units as a percentage of overall development is stagnant, even trending slightly downward in the Twin Cities metro. Why? Certainly, very low rental vacancy rates have driven developers to build new units to add to the base. But within the affordable end of the market, there is a great and imminent need to preserve affordable contracts where they currently exist. (More in the full report.)

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Creative Alternatives and Leverage of Private Capital. The road to meeting our community’s affordable housing needs cannot be navigated with strictly traditional investment approaches. With federal housing contracts expiring while funding for new units is being cut, this is the time to zero in on maximizing the benefits of shelter in combination with other aligned resources that lead to greater self-sufficiency and family stability. Cost-effective investments can provide long-term benefits and build bridges for more families to live in affordable, healthy, and sustainable housing markets.

We believe Minnesota has the best affordable housing system in the country, with a rare level of stable, longtime partnerships among engaged, creative, and capable entities throughout governmental and nonprofit sectors. For future success, these committed partners will need to adapt and innovate in a shifting affordable housing field, reaching beyond the status quo.

 

Read the full report:
2012 Minnesota Baseline Housing Measures
(PDF, 1.5 MB)

 

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Related Links:

 


EDM_mk0287_c Eric Muschler
Region & Communities Program Officer
@emuschler

 

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