Jul 8, 2022 · 36 min read

Listen: How Access to Safe, Affordable Housing Improves Outcomes for Everyone

Ruby Bolaria Shifrin, CZI’s head of community, joins the Our America With Julián Castro podcast to discuss housing affordability.

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Ruby Bolaria Shifrin, the Head of Housing Affordability at the Chan Zuckerberg Initiative (CZI), joined the Our America podcast for a conversation about California’s housing system and the future of homeownership. Hosted by Julian Castro, who served as the 16th U.S. Secretary of Housing and Urban Development, and his co-host Sawyer Hawkett, the conversation also touched on solutions to housing affordability crisis — and the pandemic’s impact on housing and homelessness. 

Listen to the full episode or read the full transcript.

Julian Castro: Hey there, I’m Julian Castro

Sawyer Hackett: And I’m Sawyer Hackett.

Julian Castro: And welcome to Our America. This week, we’re dedicating the episode to talking in depth about our nation’s housing crisis by speaking to two folks who are at the frontlines of this issue. I’ll also note that this particular episode is in partnership with the Chan Zuckerberg Initiative, which is committed to building a more inclusive, just, and healthy future for everyone. 

First of all, we’re really excited to chat with Ruby Bolaria Shifrin. Ruby is the head of the Chan Zuckerberg Initiative’s housing affordability project. And before that, Ruby worked in real estate development as a project manager for multifamily mixed income development projects in San Francisco. She also worked internationally at the housing department in Johannesburg, South Africa. Ruby, thanks so much for joining us on Our America.

Ruby Bolaria Shifrin: Thank you so much for having me.

Julian Castro: So, you have had quite a career already, having worked in Johannesburg and in San Francisco. Certainly in San Francisco, you’ve had a front row seat to some of the biggest housing challenges that America knows. I just wanted to start off by asking you how you got interested in this journey of advocacy on housing?

Ruby Bolaria Shifrin: Yeah, absolutely. So, I started my career in organizing, actually. I was working in social justice and public health, on food justice rights and environmental rights, mostly. And I’ve also never owned a car, so I’ve always taken public transit and kind of experienced cities through that lens. And so when I was organizing, talking to folks about these issues, it became really clear the link housing had and the impact on people’s lives. It was hard to talk to people about, you know, eating healthy foods, or kind of water systems, or whatever it was, when they don’t have access to any of these goods when they’re far away from jobs, health care, education, right, all of these things. 

So, it felt like housing was this linchpin issue, and I didn’t know enough about it. I ended up going back to school. I went to grad school for urban planning and focused on housing, and I really see it as this kind of tide that can lift all boats because housing is both an end goal, right — we want safe, accessible, equitable housing for everyone — but it’s also a means to an end in terms of helping to alleviate poverty, increasing economic mobility, supporting better health outcomes for communities of color and low income, thinking about mitigating climate change, right? All of these things lead to greater shared prosperity.

Sawyer Hackett: Ruby, can you talk a little bit about what the Chan Zuckerberg Initiative’s housing affordability project does? What are some of the sort of top line goals? What do you think you all can bring to this housing affordability crisis? You know, how can we meet this moment? What sort of resources are you bringing to the table?

Ruby Bolaria Shifrin: The Chan Zuckerberg Initiative’s housing team is dedicated to building a more equitable, affordable housing system in California, so that everyone, regardless of their background, or income level, or country of origin has a safe, reliable place to call home. And as a philanthropy, our primary goal is to strengthen and unite groups on the grounds — frontline organizations that are helping to elevate the solutions that we already know. And also to ensure that flexible capital and resources are available to the field. Our approach is anchored in the three P’s. We need to produce more housing across income levels, we need to protect residents from displacement, and we need to preserve existing housing.

Julian Castro Alright, and how do you grade California right now on each of those three P’s?

Ruby Bolaria Shifrin: California has often been noted in a lot of headlines as being the epicenter of our housing crisis. But it’s definitely not something that is exclusive to California. If anything, the pandemic has shown us how widespread housing insecurity is and the impact that can have on other issues, including public health. And when I think about how we got here, not just in California, but nationwide, it didn’t happen overnight. Decades of disinvestment in affordable housing, the government shrinking its role, underbuilding despite increasing demand, rising building costs, and a deep-rooted history in systemic discrimination, combined with the lack of public and political will for reform has kind of created this perfect storm. 

I think a potential silver lining is that COVID exacerbated all of these underlying inequalities and has created a problem so big that it’s hard to ignore. And so there is actually a lot of political will to make reforms. I think it’s about actually doing them now and executing and having the resources to do them is where we’re at today.

Sawyer Hackett: Ruby, I would love to talk a little bit about California’s homelessness problem, because I know that the pandemic really sort of exploded the number of unhoused people living in California and that unhoused population was especially subjected to, you know, risk of COVID, dying from COVID, and all the things that comes with not being housed. Can you tell us a little bit about what the Chan Zuckerberg Initiative’s focus on folks who are homeless, and what you’re seeing, in the numbers right now and what that dynamic looks like?

Ruby Bolaria Shifrin: In California, we have, I think, about 50% of the unsheltered homelessness population of the country. So we are overrepresented in that. Absolutely. But I also think that represents the tip of the iceberg in terms of who’s facing the impacts of housing insecurity — because homelessness also doesn’t just look like unsheltered populations. Homelessness is a condition that people can come in and out of. So it’s that job loss, where you’re in between jobs and staying on someone’s couch, or sleeping in your car, or kind of maybe on the streets for a couple nights, but able to get into shelters. And so that can be so hard sometimes to both quantify — and also, the face of homelessness, I think is really changing.

I think when folks think about homelessness, they think about that chronic homeless individual that has been on the streets for a year or longer, suffers maybe some kind of mental health or substance abuse. But the reality is that over 70%, in California, over 70% of the homeless population is economically induced, meaning that it’s not actually mental health, or, you know, addiction issues that are driving this pandemic, it’s economic insecurity. So in California, you’re seeing that even more so with, you know, we’re the sixth largest economy in the world, yet we have extremely high rates of poverty. We have this two-tailed recovery almost where some folks have done really well during this last couple of years — and others have really slipped deeper and deeper into poverty. 

And you know, when you hear about the solutions to homelessness, one thing you don’t hear as often as you should is housing. We need more housing, right? And I think, oftentimes, people point to the lack of production as a major reason why we’re having affordability issues, which is absolutely true. But production alone is not enough. More supply can definitely ease the demand, but for today’s affordability and homelessness crisis, we also need to prioritize preservation and protection. By not expanding the conversation beyond production to include protection and preservation, we’re ignoring the real truth that many families are already facing displacement and can’t hold on and wait the five to seven years for that new home to be built. And so we need to be thinking about things like rent caps, Just Cause Eviction, emergency rental assistance, to help stem the tide and stop the bleeding — instead of waiting until people are already unsheltered and on the streets.

Julian Castro: You know, I kind of alluded to this a few minutes ago, but there in San Francisco, you see it all, right? Including a lot of displacement among, you know, people who lived in San Francisco for a long time and especially communities of color. Black San Franciscans have been driven out now for decades, the Black population in that city has dwindled, just like in Austin, Texas, just up the road from me. How do you all, as a nonprofit and a funder, how do you all think about trying to address that dynamic? Because it’s not an easy one to address as much as you know, as much as it seems straightforward.

Ruby Bolaria Shifrin: It’s not easy at all. And I think this is an issue that a lot of places are facing — the disproportionate impact especially on Black communities of affordability issues. You know, one thing in particular that’s been interesting for us is one of the programs that we helped launch called Keys to Equity. It’s an ADU program, an accessory dwelling unit program, that helps Oakland homeowners. So it’s actually not based in San Francisco, but it’s based in Oakland. It helps Oakland homeowners build an ADU on their property. And just for reference, an ADU is either an attached kind of garage conversion or detached kind of standalone housing unit that shares your property — also called a granny flat. 

These have now been legalized in our state — but unless you have enough equity built up in your home or enough income, you can’t really get financing for it. So we partnered with the City of Oakland to help build this product, specifically with Black homeowners in mind as ones that have faced housing instability — even homeowners, right, Black homeowners face more housing instability than white homeowners in Oakland. Being able to have a source of revenue, to help them stay in place, provide more housing supply, and add to density since these units also tend to rent out below market — we see as kind of a win-win. But one of the biggest things to that, you know, across the Bay and across the state really, is that this has been decades in the making. And so it’s really hard to have a quick fix on how to now stop the ramifications of that.

Sawyer Hackett: Julian mentioned at the top of the show that you worked internationally on housing issues in Johannesburg, South Africa. Can you talk a little bit about how that may have informed your understanding of housing policy and what you sort of take away from that experience?

Ruby Bolaria Shifrin: It really showed me that everybody’s dealing with the same issues globally. In Johannesburg and South Africa, it’s interesting, because housing is a human right, which is something that advocates are fighting for here in the United States as well. But the human right to housing doesn’t necessarily mean you don’t have a marketplace for housing as well. It’s all income based, right. If you make under a certain amount, I think it was like 300 Rand, then you get access to government supported housing, otherwise, you kind of can go into the market. So there’s a missing middle, just like here in the U.S., right, of folks who earn too much to qualify for government housing, but yet not enough to make it into private housing. And so then they end up kind of squatting in vacant buildings, or living in really uninhabitable dangerous places, or getting displaced completely. Moving to other places far away from jobs and resources in order to afford a place to live. 

It’s a very similar situation in the U.S. For the folks who were eligible for government housing, where the government built that housing, is often far from resources, right, high opportunity areas. When you got access to that housing (in South Africa), a lot of folks chose to continue living in the slums and rent out that housing. And in a way they could earn income from that, which was great. But the government started cracking down and saying, no, it needs to be owner occupied. These were interesting dilemmas of, you know, what are the outcomes we’re trying to achieve? It’s about economic mobility. It’s about self-sufficiency, right? All of these things, and maybe the more prescriptive ways of how you should get there aren’t necessarily the best ways to go versus thinking more of an outcome-based metric. 

That was really interesting. The other thing that was kind of similar or helped inform my way of thinking now was working on a pilot upgrading project. We were working with some dwellers to upgrade their existing slums, which are considered the waiting room for your housing unit in South Africa. And the residents themselves would build them, so there’d be some sweat equity in that. And the materials were provided by both the nonprofit and government kind of coming in together. You see models similar to that, like in the Central Valley with farmworkers who come together and pull resources to buy materials and build housing collectively. I think some of that innovation actually comes from the resiliency of having to make what you can out of what you got.

Julian Castro: How do you all think about the interconnectedness of housing and economic development and transit, and you said, you worked on issues of food justice. How do you all connect the dots in the work that you’re doing and the partnerships that you’ve struck up for the benefit of the people that y’all are trying to serve?

Ruby Bolaria Shifrin: You know, as I mentioned earlier, right, the pandemic has only magnified existing racial and economic inequities within our housing system. They’ve disproportionately impacted communities of color across the country for decades. But we’ve also reaffirmed that our housing system is so precarious now, and things have gotten so bad, that regardless of your background and job status, you could experience housing instability. 

This means that this is not just a low-income, people of color issue. It’s something that’s impacting the middle class and making it harder to make it not just in California, but across the country. Here in California, we saw that the key groups leaving are in their 30s to early 50s and tend to make about $100,000 to $200,000 a year. And multiple studies show that housing costs are a key driver for this. So they’re leaving despite having good paying jobs, because you know, they’re paying 40% or more of their income on housing costs, and they’re figuring it’s just not worth it. Inflation also, right — housing costs drive inflation, because the consumer price index (CPI), about 40% of CPI, is driven by rent. And so as we see rent costs increasing throughout the country, it’s also having a negative impact on everybody’s cost of living. This forced choice really is having a ripple effect — not just in things like the cost of living, but also in creating intergenerational displacement and pulling people away from areas of high opportunity, where we know through studies like those from Raj Chetty, that place matters for economic mobility. 

And this is personal for me. I’m from the Bay Area, and my family — my cousins and I — are all talking about this, like, how we can’t afford to live in the Bay Area anymore and have families. Even though we all grew up together and wanted our kids to grow up together, folks are either moving further and further out into the periphery of the Bay Area or leaving the state altogether. It just breaks my heart, because we’re not able to have that familial tie. But also, the economic outcomes of our children’s generation are really determined by place. Where you move will have an impact on that, too. Our approach is looking both at place-based investments, so the answer isn’t just to always move, right, to an area of high opportunity — but how do we also improve every community so that no matter where you live, you can have access to the same opportunities, whether it’s transit, jobs, education, healthcare.

Sawyer Hackett: So, Ruby, on the philanthropy side of housing, I think you probably have better access to some of the emerging trends or big ideas in housing and homeownership. What are you, I guess, hopeful for or excited about on the housing front that you guys are looking at these days?

Ruby Bolaria Shifrin: The field is really rethinking homeownership in a big way, and is homeownership the answer? And I think that the reality is that homeownership, unlike being a renter, provides you economic stability, political power, more of a voice. Until we can solve for that, until we can think about shifting some power so that renters have the same rights, frankly, that homeowners do, I think that more of the conversation is how do we ensure that renters have economic, social, and political power in the same way that homeowners do? And then it becomes less of a stigma. Because it does feel like a stigma for renters, right? It’s like, oh, you’re still renting. 

You know, people talk about it like that, versus being a homeowner is like you’ve made it. And I mean, my mom still tells me that too. I’m a renter, my partner and I are renting, and she thinks that I haven’t made it in life, because I’m not a homeowner. It’s also part of this immigrant dream, and you know. But I think that the conversations we’re hearing now from advocates and philanthropy is rethinking this idea of homeownership — which I think is really revolutionary in some ways. And then another big idea or kind of concept that a lot of folks are talking about are shared ownership models. If we re-think homeownership, but we still want to have the kind of stability and the economic mobility that homeownership can give you, how do we get that in a different way? Community land trusts are a big thing that folks are talking about, which had been around since the ’60s, right, started by Black sharecroppers in the south, but have kind of taken on new life, especially in California, as folks are thinking about taking land off the speculative market, and ensuring that it can stay affordable in perpetuity.

Julian Castro: As you think about the state that you’re in, California, and the multiple investments that are being made at the state level, also, at the local level, from Los Angeles to the Bay Area to some smaller communities — what is your assessment of when California might be able to start making progress to meeting its affordability issues? Because I mean, it seems like it’s been the same story, and it’s frustrating, frankly, because, in many ways, California has gotten a lot of things right. For instance, you know, we talked about economic justice, on workers’ rights, on wages, on trying to be progressive, whether it’s with housing policy or other types of policies, and yet, it has this huge challenge on homelessness and housing affordability. When do you think that the state is going to start making significant progress?

Ruby Bolaria Shifrin: You know, I actually am incredibly proud of the last few years of policy changes that have happened statewide to help grease the wheels for those big impacts and changes. As you all know, this takes time — but we’ve been able to pass Just Cause Eviction, rent caps for the state, zoning reform to allow for multiple lots on a single use. There’s more effort where that came from, too. I think zoning reform is a hot topic generally when it comes to policy change. And groups are starting to work together more in the field to connect the dots on housing being a climate issue, being an anti-poverty issue, being a public health issue. And so that type of coalition building, I think, also is power building to get the change that we need. 

The biggest barrier in terms of actualizing some of those goals, I think, are going to be moving voters’ hearts and minds, to believe housing is a human right, and to say yes to building all kinds of housing — not just low-income housing but kind of rethinking the single-family home white picket fence model, because that model is unsustainable. Your children will not be able to stay in the same community that you grew up in if we continue down this path. I think one of the things that we’re supporting is groups working on narrative change across the state — so that when we do all of this great work of passing all of these policies, implementation can be just as seamless and folks can accept the changes that need to be made.

Julian Castro: Thank you so much, Ruby, for joining us. And thank you for your advocacy.

Ruby Bolaria Shifrin: Thank you.

Sawyer Hackett: Thanks, Ruby.

Julian Castro: Welcome back to Our America. Laurie Goodman is Vice President for Housing Finance Policy and the founder of the Housing Finance Policy Center at the Urban Institute. The center provides policymakers with data driven analyses of housing finance policy issues that they can depend on for relevance, for accuracy, and also importantly, for independence. Before joining Urban, Laurie spent 30 years as an analyst and research department manager at several Wall Street firms. She has also published more than 200 journal articles, and has co-authored and co-edited five books. And we’re happy to have her here on the show today to talk about what in the world is going on when it comes to housing in this country. You’ve been at this a lot of years, Laurie — I was joking with Sawyer beforehand a second ago that you know, there’s a thing or two that you could teach us on this stuff. A lot of people are hurting right now. And maybe, before we delve into some of the particulars, how do you see where we’re at with housing in America today and what’s at stake?

Laurie Goodman: We have an acute housing supply shortage, so total supply of housing is probably about 4 million units short of total demand for housing. That shortage is particularly acute for those who are at the lowest income level. So we have an acute supply demand imbalance, we simply haven’t built enough housing over the last 15 years or so to keep up with the growth in household formation.

Julian Castro: When we think about this housing shortage, what has the pandemic done to that over these last couple of years, I mean, how have these last two years of the pandemic affected housing?

Laurie Goodman: So the pandemic has actually aggravated it, because people are no longer content to double up, they were never happy about it, but they were willing to do it. So what the pandemic has done is it’s increased home prices tremendously. It’s also increased rents tremendously because of a greater demand for homes, be they, homes that you own or homes that you rent.

Sawyer Hackett: So, Laurie, how much of the housing unaffordability problem can be attributed to NIMBYism and just sentiments about building new multifamily properties? How can we sort of remove that stigma of NIMBYism from politics, from politicians? How do we remove them from the process so that we can restart some of this housing construction that we so desperately need?

Laurie Goodman: So I think the lack of housing supply has a lot of issues and certainly zoning restrictions are one of them, and not in my backyard is a huge reason for that, where basically higher density is rarely allowed. I think that is beginning to shift a little bit. And you’re seeing it probably with the permission of allowing accessory dwelling units, so two states, California and Oregon and a number of cities, including Minneapolis, Seattle, Austin, allow accessory dwelling units as a matter of right, that is it sort of considered politically acceptable higher density. But you’re right — zoning is certainly a key reason for the housing supply shortage. But it’s not the only reason. You also have very, very high construction costs. Regulation adds 25% to the cost of a home, according to the National Association of Homebuilders, and financing issues aren’t easy either. So it’s not just zoning, although zoning is a key contributor.

Sawyer Hackett: I wanted to ask you about the generational breakdown in homeownership. As a millennial myself, housing ownership has not been within reach just yet, I’m worried that my generation will just see the inequality exacerbated to a level where homeownership will only just be available to the very wealthiest few. Does Urban Institute do research into how homeownership breaks down by generations? And what do you think that looks like, 10–15 years from now?

Laurie Goodman: So we have looked at how homeownership breaks down by generation, and what you find is that every generation has a slightly lower homeownership rate than the last. If you break it down both by generation and by race, ethnicity, what you find is, there’s a huge difference. The largest difference is actually in the Black community, where every generation has a much, much lower homeownership rate than the last. But yes, you definitely see a pattern where you know, our projection is that the homeownership rate goes down over the next 20 years, despite the aging of the population, because each generation has a lower homeownership rate than the last.

Julian Castro; When we think about innovative ways to solve this problem at the national level, the state level, and also the local level, what are some local communities or states or federal policies that give you hope, that we might be able to tackle this in the years to come?

Laurie Goodman: There are certain communities that realize how detrimental their kids not being able to buy a home is to the community. And so the yes in my backyard movement is beginning to gain a little bit of strength. On the single-family side, I think the approval of accessory dwelling units could be a huge contributor to increase supply. I actually think preservation could be very, very important. You know the average home in this country was built in 1978, and a lot of the homes need renovation, and I’m hopeful that maybe renovation financing can improve, you’ve seen some signs of that. And then finally, you know, increased use of manufactured housing. Manufactured housing prior to the passage of the HUD code in 1976 could be anything. At this point, it’s a very good quality product and, because of zoning restrictions, is not used to the extent it should be, but it is the most affordable type of housing. I’m also hopeful for higher density, particularly higher density near transit zones. You also will have a lower rate of household formation going forward, most likely. So with increased supply and less demand. Hopefully the problem corrects itself over time. But it will take time, because we are so short of housing units right now.

Julian Castro: Well, at the beginning of the Build Back Better push, the initial legislation, I think there was something like $113 billion of different types of investment in housing affordability. Of course, Build Back Better is not going to happen. What do you see as the most likely investment that the federal government will make in affordable housing?

Laurie Goodman: The really scary thing about housing for lower income individuals is that three out of four people who qualify for federal housing assistance actually don’t receive it at all. There’s just simply not enough funding. So I was hoping that there would be some expansion of housing choice vouchers and that sort of thing, sort of an expansion of the Low-Income Housing Tax Credit. I know that the government has been trying to figure out how they can improve financing for renovation for accessory dwelling units. And I think financing could play a role as well. But again, because there’s no single cause, there’s no silver bullet either.

Julian Castro: Yeah. And Sawyer’s telling me I got my number wrong. I think it was close to $300 billion, or something.

Laurie Goodman: Somewhere between 250 and 300 in the initial iteration, but yeah, unfortunately, that’s not going to happen.

Sawyer Hackett: Laurie, can you talk a little bit about the relationship between mortgage rates and housing prices right now? I feel like a lot of people are looking at this housing market, they’re seeing this meteoric rise, and they can’t seem to catch up. And now mortgage rates are starting to head up at a rate that they haven’t seen in a while with inflation, as well. Can you talk a little bit about that relationship and what that looks like?

Laurie Goodman: Sure. I mean, historically, what you’ve seen is you’d think, well, higher interest rates, shouldn’t that mean housing is less affordable, and therefore home prices fall? In fact, when you look at the relationship, historically, you don’t see that at all. What you see is that higher interest rates are generally associated with inflation, with a stronger economy, with wages rising. And so in general, the relationship between home price appreciation and the changes in interest rates are actually positive. That is, higher interest rates are correlated with higher home price appreciation. We broke that down a little bit further, looking for periods where interest rates had risen more than 150 basis points, and looked at what happened to home price appreciation during those periods. And during those periods, what you find is that home price appreciation slowed, but never went negative.

Sawyer Hackett: So now that you know the housing prices have sort of skyrocketed ahead of mortgage rates increasing, do you expect that that rise is only going to continue with homeownership with housing prices, or …?

Laurie Goodman: I expect home price appreciation to slow dramatically, but I don’t expect home prices to decline. They may decline in certain areas of the country that have had huge, huge run offs, but I certainly don’t expect them to decline nationwide. And even in those, I think those areas of the country are going to be very, very few. I expect a dramatic slowing in home price appreciation with rates here.

Julian Castro: Well, and Laurie, I mean, where do you think we are now on the idea, the push for homeownership? You know, when I became HUD secretary in 2014, we we were at the tail end of that great recession and all of the issues we had with housing that were part of it. And one of the points that I made clearly was that we had to end the stigma of promoting homeownership, in other words, that homeownership has a role to play, that can be strong and good. A lot of people were shy about saying that at the time, where do you feel like we are now in terms of a push for homeownership?

Laurie Goodman: I feel like people view homeownership as the single best way to build wealth, and they aspire to it. But aspiration is not necessarily the same as achievement, and certainly the pandemic, I think, made people want to put down roots and wanted a place that, you know, was large enough for their family that they could call home. I think where we are now is sort of a middle ground. I think people realize the importance of homeownership. They realize how important it is to building wealth. And I think one of the things that came out of the crisis was there were a lot of young people who said, “Well, gee, I watched my parents’ home lose value. I watched them lose everything they put into it. I’m not sure I want homeownership.” I think the home price appreciation over the last few years has changed that mindset with more people saying, “Gee, I want a stable place to live, gee, home prices seem to be doing pretty well. And what’s even better is, I am locking the single largest component of my housing costs, which is my mortgage. My rents are going up year after year, but once I get that 30-year fixed rate mortgage, I’ve locked those costs.” On the other hand, aspiration for homeownership is not the same as achieving homeownership. And I think there are a lot more people that aspire to homeownership who haven’t been able to achieve it, because home prices have risen so much.

Sawyer Hackett: Have you studied the relationship between student debt and homeownership for younger Americans? I, you know, especially right now as the country debates whether President Biden will cancel student loan debt, whether that’s a barrier to homeownership for young people, have you all studied that relationship at all?

Laurie Goodman: We have studied it a little bit, but it’s actually a very complicated relationship, because people who have student loan debt oftentimes, you know, the question is, what’s the counterfactual? You can’t compare someone who has student loan debt to someone who doesn’t, because someone who doesn’t have student loan debt has parents who are affluent enough to do that intergenerational wealth transfer. And then the other complication is there’s a huge difference between those who have a lot of student loan debt because they’ve gone to law school or medical school, who generally are homeowners. So you find that those that have suffered the most are those who took on student loan debt and then didn’t finish college.

Julian Castro: Laurie, I want to go back to something that you mentioned earlier, which is preservation. And I wondered if you could talk about — and we’re gonna use one of the terms that we use in the housing world — “naturally occurring affordable housing,” just for folks that are not steeped in this housing issue. What is that? And how do we ensure that we preserve it?

Laurie Goodman: Yeah, so naturally occurring affordable housing generally refers to rental properties that are affordable but unsubsidized by any federal program. So the rents on these properties are relatively low as compared with other properties in the local housing market. The need for naturally occurring affordable housing is very, very large, and preservation is just so important, because these units that are lower price, it’s because they’re generally older, they’re generally in less good shape. And they’re an increasingly scarce supply. We’re losing about 100,000 of these units each and every year.

Julian Castro: I want to lay out an argument that, that some policymakers make, which is, as you know, in city after city out there, one of the things that’s happened over the last decade, maybe even longer, is that there have been a lot of luxury apartments, right, like higher-end multifamily dwellings built out. And I guess, to some extent, you know, higher-end single family housing as well. One argument that folks have made is that well, it’s okay to focus on that end of the market, because everything under it then eventually becomes more affordable to folks. What do we make of that argument? And is it sufficient to rely on that?

Laurie Goodman: So, you know, the answer is, I think every unit of housing built, no matter how luxurious, is an additional unit of supply, which is a good thing. Luxury housing should receive no subsidy, but if someone chooses to build it and can rent it out, yes, there is a filtering process, that filtering process definitely takes time. But I don’t view luxury housing as taking anything away from naturally occurring affordable housing, it seems to add, it just simply adds to the stock and the housing that was then luxury sort of filters down. But again, that filtering process takes a long time.

Sawyer Hackett:So, Laurie, how has the pandemic affected mobility for potential homeowners? Obviously, people have moved to online work, remote work in much more serious numbers, they’ve moved away from big cities in droves and into suburban communities and rural communities. Has that changed the homeownership landscape across the country?

Laurie Goodman: So the question is, does this stick and how does this stick? A lot of people, for example, who have moved from big cities have actually purchased second homes and kept their home in the big city. You know, I live in New York, and there are a bunch of people who rent in New York and then have purchased a home in upstate New York, but they haven’t relinquished their rental property. And in fact, second home sales have just boomed. So to the extent that it’s a sale of a second home, it does absolutely nothing. If anything, it hurts supply, and I think we have to see how this all settles out. You know, to the extent that you get people moving away from big cities, where the homeownership rate is generally lower and houses are less affordable, to more rural areas, to exurbs, that could actually raise the homeownership rate. But I think it’s way, way too early to tell how all this sort of falls out at the end of the day.

Julian Castro: Related to that, a lot of attention has been cast on investors who are buying up properties in communities across the country, and then also folks who Airbnb out units that they own. Have y’all delved into the impact that either of those players are having on the housing market?

Laurie Goodman: We haven’t delved into Airbnb at all. But we have looked at the single-family rental side. You know, I still demand a unit of housing whether I’m an owner or whether I’m a renter, so it doesn’t change the demand side, and it hasn’t changed the supply side. It’s changed my ability to build wealth for someone else if I rent that property from a single-family landlord, but I think we’re asking the wrong questions with single-family rentals. So what we’re saying is, “Oh my God, look at the single-family rental operators, particularly the institutional guys, they’re taking properties away from first time homebuyers.” And I think the reality is that the single-family investors are putting an average of, according to Invitation Homes’ 10-K, about $30,000 into each property they buy to renovate it. 

Renovation financing for an individual, assuming I had the know-how to do it, is very, very cumbersome. It’s time consuming. The denial rates are extraordinarily high on renovation financing. So, rather than saying bad institutional landlord, what we’re supposed to be saying is, is there a way we can improve renovation financing for individuals who choose to do it? I think we’re asking the wrong set of questions. And I think there’s a lot of room to improve the current renovation financing structure so that it’s much more friendly to individuals who choose to do that renovation, because those are the homes that institutional guys are buying, they’re not buying a home where I walk in and say, “Oh, my God, I can see my, all I need is my curtains on the window.”

Sawyer Hackett: Laurie, we’re coming up on the end of our time here, but I was wondering, if you had your way, what would be the top legislative or executive actions that you would take right now to boost homeownership and lower the barriers to housing affordability for folks in this country?

Laurie Goodman: I think it’s two separate issues. I think we need more housing supply, we need to break down the zoning codes, we need to tie increased density, too — “You want this government money for transit? Fine, you’re gonna take increased density as a result.” So we have to do everything we can to increase the density. We also, I think, at the margin, have to make mortgage credit a little bit more available. Obviously, mortgage credit was way, way too loose in 2006–2007, but it has since gotten way too tight. I mean, if you look back, we’re talking about a third of the credit risk we were taking in 2001 to 2003, a period of reasonable credit standards; less than a third of the credit risk we were taking in 2006–2007, a period where credit standards were way too loose. And I think we have to both improve our ability to determine who should get a mortgage by incorporating things like alternative credit, but more importantly, we have to marginally expand the probability of default that we will tolerate in order to give more people the opportunity to build wealth.

Julian Castro: Laurie Goodman. Thanks so much for joining us on Our America.

Laurie Goodman: Thank you very much for having me. Really appreciate it. Take care.

Sawyer Hackett: Thanks again to our sponsor for this episode, the Chan Zuckerberg Initiative, which remains focused on housing affordability. As always, folks can leave us a voicemail sharing the stories you care most about at 833-453-6662 and subscribe to Lemonada Premium on Apple podcasts.

Julian Castro: Catch you next week.

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About the Chan Zuckerberg Initiative

The Chan Zuckerberg Initiative was founded in 2015 to help solve some of society’s toughest challenges — from eradicating disease and improving education, to addressing the needs of our local communities. Our mission is to build a more inclusive, just, and healthy future for everyone. For more information, please visit www.chanzuckerberg.com.

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