One of the first, and sometimes overlooked, tasks in developing a comprehensive housing strategy is to clearly articulate the community's goals for its housing strategy. Exactly what housing and related problems is the community seeking to address? In some cases, this mission will be defined broadly -- "develop a comprehensive housing strategy for the community." In other cases, the mission will be defined somewhat more narrowly -- "develop a plan to boost homeownership rates" or "develop a workforce housing strategy."

A well-defined mission can help to focus the information gathering and analysis processes that are critical to the rest of the housing strategy development process. The goal of these processes is to analyze the nature and extent of the community's housing problems. The standard "needs assessment," which looks at the extent to which different population segments are facing housing affordability and quality challenges, is a core component of this analysis, but it is important not to stop there. Other components include: an analysis of expected demographic trends and future demand for housing; an investigation of the root causes of the housing challenges faced by the community, including any obstacles preventing the market from responding to demand; and an inventory of the assets and programs currently available to help the community address these challenges.
A clear understanding of the root causes of your community's housing challenges is essential for helping to set specific policy objectives to guide the policy development process. For example, if your analysis indicates that affordable housing developers find it difficult to find land on which to build, the corresponding policy objective may be to "Expand the availability of land for affordable housing." Similarly, if your analysis indicates that decisions by owners to exit federal subsidy programs are reducing the availability of affordable rental homes, the corresponding policy objective will be to "Preserve affordable rental housing."

Once the problems are better understood and the policy objectives clearly articulated, the final step in the goals-setting process is to develop numerical targets that will allow you to track progress in meeting the identified needs. Each of these components is discussed in more detail below.

The first question for the taskforce or other body developing a housing strategy to consider is what exactly you want to accomplish. In some cases, the mission will be clear from the charge to the taskforce – develop a five-year plan to end homelessness; help existing homeowners avoid foreclosure, etc. In other cases, the mission will be more open-ended: develop a housing policy for the city or county; review and make recommendations to the state on how to strengthen support for affordable housing, etc. Some charges fall in-between, such as the increasingly common mission of developing a workforce housing strategy. This charge is specific in that it focuses on a particular income segment (though one which can be defined in many ways), but open-ended in that it can lead to a wide array of different approaches.

The process described in this Building a Strategy section can be applied to just about any housing-related mission that a community may choose to pursue. So ultimately, this is a question that each state, locality, or taskforce will need to decide for itself. In cases in which the charge is open-ended or capable of being shaped, communities may wish to consider the following points in setting the parameters of their efforts to develop a housing strategy:

1. While it may be harder to develop and implement, a comprehensive housing strategy is more likely to have a major impact than a narrowly focused one. This is because there are many areas where improvements are needed in order to change the fundamental dynamics of the housing market and meaningfully expand the supply of affordable homes. If you just expand the funding for affordable housing without addressing the underlying problems that make it so difficult and expensive to build in the community, you may have only a limited impact. Similarly, if you just expand density near public transit without putting policies in place to encourage or require that a share of that development be affordable to working families, the effect may be to create more luxury opportunities for families seeking a shorter commute, without providing affordable homes where they are most needed.

2. An approach that addresses the full range of housing needs in the community can bring in a wider array of stakeholders. All members of the community share an interest in ensuring that the diverse housing needs of the community’s current and future residents are met. By focusing broadly on the housing needs of teachers, nurses, fire fighters and other working families, in addition to the very poor, the elderly, and people with a disability, communities can bring employers, unions, and other business leaders into a coalition along with more traditional affordable housing advocates.

3. In addition to affordability and quality, communities may wish to consider the location and energy-efficiency of housing. In its study, A Heavy Load: The Combined Housing and Transportation Burdens of Working Families [PDF], the Center for Housing Policy found that working families with incomes between $20,000 and $50,000 spend about as much on transportation costs as they do on housing costs. Furthermore, their expenditures for housing and transportation are linked. As families move further from job centers to afford the costs of housing, their transportation costs increase; in many cases, the increased transportation costs eat up all of the savings on housing. Moreover, they now have long commutes and less time with their children and contribute to traffic congestion. The location of a home relative to jobs and public transit also affects the amount of energy the residents consume through vehicle miles traveled. By improving the coordination of housing and

Mill Creek Apartments, Vancouver OR - Photo courtesy of Washington Mutual

transportation planning to expand affordable housing options near public transit and job centers, and by working carefully to improve the energy-efficiency of existing buildings and new construction (one needs to proceed cautiously so as not to drive up housing costs and make housing less affordable), communities can contribute to the resolution of our energy and environmental challenges and expand the constituency for their affordable housing strategies. Click here to learn more about improving the coordination of housing, transportation and energy policy.

4. In a world of limited resources, it is important to ensure that affordable homes remain affordable over time. The public invests considerable resources creating affordable rental and for-sale homes for working families. Because public resources are limited, communities have a vested interest in ensuring that these homes stay affordable over time. For rental developments, policies to maintain long-term affordability include covenants requiring that new affordable developments remain affordable in perpetuity (or for as long as possible), together with realistic funding structures that make it possible for owners to make good on this promise. It is also important to put policies in place to preserve the affordability of existing affordable rental developments in danger of leaving the affordable inventory. To leave this section and learn more about the preservation of existing affordable rental homes, click here.

For for-sale homes, communities can adopt shared equity homeownership policies, such as community land trusts or shared appreciation mortgages. Shared equity homeownership policies preserve the affordability over time of homes with major public investments, while simultaneously allowing homeowners to build individual wealth. To leave this section and learn more about shared equity homeownership, click here.

5. Define the problems to be addressed in ways that lead to commonality of interest. Because so many actors are needed to develop and implement an effective housing strategy, it is important to work to identify common ground so as large a coalition as possible can be built to support the needed changes. Efforts to find common ground start in how the problem is defined. "Stop gentrification" provides a very clear action agenda, but it is much more likely to divide the coalition than a goal such as "address gentrification concerns." This is particularly important for an issue like gentrification, where concerns about the nature and pace of change in neighborhood composition may serve to slow down the very community improvements that are needed to strengthen the quality of life for neighborhood residents. Gentrification is almost always going to be a contentious issue. But by defining the challenge in a way that all parties can understand and support, it may be possible to put policies into place – such as preservation of affordable rental housing, assistance to help existing residents buy into the neighborhood to benefit from rising home price appreciation, shared equity homeownership, and the establishment of a tax increment financing district with a mandatory affordable housing set-aside – that can help preserve housing affordability and address equity concerns in changing neighborhoods.

There are several types of data and analysis that can be helpful – some would say critical – for informing the development of a comprehensive housing strategy. A clearly defined mission for the housing strategy process can be helpful in focusing this analysis. At the same time, the analysis may lead a taskforce to revise its mission to focus on a broader, narrower, or different set of policy concerns. Some of the needed information is statistical in nature, and thus will be most effectively gathered by a statistician or other researcher, while other critical input can only be provided by practitioners and other stakeholders:

1. Needs assessment. This analysis looks at the extent to which different population segments face housing affordability and quality challenges. Typically, a needs analysis reports on:

• the share of renters and homeowners at different income levels paying more than 30 percent or 50 percent of their income for housing,
  
• the amount and location of substandard housing; and
  
• the housing challenges facing specific population groups, such as the elderly, people with a disability, and minority households.

In considering these data, it is important to remember that the standard measures of housing unaffordability – are families paying more than 30 percent or 50 percent of their income for housing? – are merely rules of thumb that, while easy to understand and often useful for comparing one place to another, may not tell the whole story. Many families that show up as only moderately cost-burdened (30 to 50 percent of income for housing) or not burdened (less than 30 percent of income) in fact may have real difficulties affording their housing costs. A family with an income between $20,000 and $50,000 that spends 26 percent of its income for housing and 31 percent of its income on transportation – these are the actual median figures for families in the Dallas, TX metro area as of the 2000 Census – has very little income remaining to meet other essential expenses such as nutritious food, health care, education, retirement, etc. [1]

2. Analysis of demographic and market trends. Because most of the nation's housing – including most affordable housing – is supplied by the private sector, it is important to understand current and projected market conditions, as well as expected population trends. To the extent that demand for housing is expected to increase due to net in-migration of families from other communities or increased household formation – in some cases, due to smaller household sizes – it is important to examine whether the market is able to respond adequately to this increased demand by producing new housing. It is also important to understand the extent to which housing preferences are changing. For example, interest in downtown living and in housing well-located near transit has grown significantly in recent years. What is the expected future demand for various housing types and locations in your community?

This analysis should also focus on the availability of land for development. To what extent are sites available for new development or redevelopment? Are there enough sites available to meet projected demand at current densities? To what extent could increases in density be used to accommodate increased demand within areas well served by current infrastructure? Where appropriate, it may be useful to include within this analysis an inventory of potential sites for infill development.

Researchers and housing practitioners will sometimes characterize a community's housing market as strong or weak. Strong-market cities tend to have stable or rising demand for housing and a strong economic base. In many of these communities, housing prices have risen rapidly over the past five to ten years. In weak-market cities, housing prices are not rising at all or as fast, in part because of declining demand and/or a weak economic base. In strong-market cities, the major focus of affordable housing strategies is generally on bringing down the price of homes to an affordable level, with housing affordability concerns reaching into the middle class. In weak-market cities, housing affordability may still be an issue for poor- and near-poor families, but housing quality may be a problem of equal weight, as older housing deteriorates and is not replaced or upgraded. Some communities have a mix of neighborhoods with strong and weak housing demand.

In this context, it is important to note that both strong and weak markets are affected by market cycles, such as the nation-wide housing slowdown that began in 2007. Just because housing prices decline for a year or two does not make a strong housing market a weak one. Rather, the housing price declines represent a market correction. In a strong housing market, housing prices will eventually resume their upward growth unless steps are taken to change the underlying causes of housing price growth pressure.

Photo credit: Chris Palladino

3. Input from practitioners and stakeholders. In addition to gathering quantitative (i.e., numerical) data on the nature and extent of a community's housing challenges, it is important to consult with stakeholders and practitioners to learn more about what they perceive the principal housing challenges to be, what obstacles they experience as they seek to address these problems, and what solutions they propose to resolve them. In many cases, developers working to build affordable homes can pinpoint specific problems that delay and drive up the costs of new development, as well as problems with current financing and funding mechanisms. Practitioners and stakeholders also may have ideas for creative solutions to expand the supply of affordable homes. Input from residents and other stakeholders can be particularly useful for better understanding the housing challenges facing working families, which often do not show up clearly in the official

data, but are nevertheless real and worth addressing. For example, workers who move to the edge of the metropolitan area because no affordable housing is available closer to work, may have housing costs that fall below 30 percent of their income, but now have to purchase a second car, spend more on gas, and endure long commutes. In other cases, workers may be looking for different types of housing than are currently available near work – for example, apartment living rather than a single-family home, or vice-versa. Working families also may be experiencing challenges finding communities that combine all of the attributes they are looking for in a single package, including affordable housing, proximity to public transit or the workplace, safety, good schools, etc. As a result, employers may very well be experiencing high rates of turnover among key employees and area residents may be experiencing increased traffic congestion.

4. Analysis of the root causes of the community's housing challenges. While the needs assessment will help communities understand the magnitude of their housing challenges, it will not indicate how those problems arose. A separate analysis is thus needed to identify the root causes of the community’s housing problems so they can be addressed in a comprehensive and strategic fashion. For example, one of the major factors contributing to the shortage of affordable housing is the cumulative impact of the complicated regulatory environment that makes it difficult or expensive to build new homes. Many of these policies are well-intentioned and necessary – for example, to advance environmental objectives; others are designed to deliberately slow development. By making it difficult for the market to produce new supply in response to increased housing demand, however, these barriers drive up the price of housing for everyone.

For example, below is an excerpt from the report of the Washington D.C. comprehensive housing strategy task force that identifies some of the specific problems driving up housing prices:

"Recently graduate students in the School of Public Policy and Public Administration at George Washington University conducted a study of the D.C. Department of Consumer and Regulatory Affairs (DCRA), the office that is responsible for inspecting housing and issuing construction permits, certificates of occupancy, and other licensing services. The study concluded that the DCRA faces serious obstacles in its day-to-day operations. These include understaffing, weak training, an inadequate budget, out-of-date technology, a weak managerial culture, ineffective coordination with other agencies, and poor presentation of information to customers. In addition, the unique relationship between the District government and the federal government and its various agencies adds a layer of complication that is not present in other cities.

As a result of the problems that DCRA faces, the development review process often drags on much longer than it should. The process consists of four phases: historic preservation, zoning, permitting, and inspections. Of these, the longest delays often occur in the permitting phase. Securing an Environmental Impact Statement, if one is deemed necessary (not every development calls for one), can take a year. The permit review, in which DCRA engineers review a project, is supposed to take 30 days, but on average it lasts six months to a year. In comparison, the same process takes an average of one month in Chicago and three weeks in Philadelphia.

It is clear that strengthening the DCRA and DHCD to improve the lending, permitting and inspections processes is essential to producing housing quickly enough to solve the District’s pressing needs."

The following are some of the factors to consider in analyzing the root causes of a community's housing problems:

Constraints on new development and redevelopment that prevent the market from responding efficiently to increased demand for housing Community opposition to new development generally and affordable housing specifically Decisions by owners of affordable rental housing to exit federal subsidy programs Decisions by owners of unsubsidized but affordable rental homes to substantially upgrade or sell their properties to take advantage of higher market rents or property values The deterioration of older homes due to neglect or lack of financing for repairs The loss or diminished buying power of deep subsidies for affordable homeownership that are not required to be repaid or do not keep pace with the market Lack of coordination between housing and transportation planning

Difficulty accessing financing for various expenses, such as to rehabilitate older homes Shortages of land on which to develop Low-density development patterns that constrain supply and make it difficult to build affordable homes Activity by investors to purchase and "flip" properties for a profit A proliferation of predatory loans and/or sub-prime loans that may not be affordable over the long-run Credit problems that make it difficult for families to qualify for a well-priced mortgage Challenges faced by existing homeowners affording their housing costs Insufficient funding for affordable housing Low wages

5. Inventories of current assets and programs. Gaining a better understanding of the assets and programs currently available to a community to meet its housing challenges can be helpful in identifying both the promise and the limitations of the current lineup. The community's assets include its existing stock of affordable homes – both affordable rental homes and for-sale homes subject to ongoing affordability requirements; the nonprofit and for-profit developers focused on building and preserving affordable homes; the staff of the government agencies that administer housing programs; affordable housing lenders and funders; and the stakeholders – employers, community groups and others – willing to advocate for stronger housing programs and policies. By closely examining these assets, taskforce members can gain an understanding of the extent to which there is underutlilized capacity among existing assets – for example, a willingness by banks or local foundations to expand financing for affordable homes or the ability of existing developers to ramp up their production – and/or a need to build capacity in particular areas – for example, stronger capacity among nonprofit developers to build more homes through multi-year operating funding tied to clear development milestones; lenders willing to make particular types of loans, such as loans to rehabilitate smaller rental properties, etc.

An inventory of existing housing programs and policies is also important. By matching up this inventory with the specific housing challenges identified by taskforce members, the taskforce may be able to assess whether existing programs are adequate to meet each of these needs, and potentially, which gaps in policy or funding are the most pressing.

The identification of the root causes of the community's housing problems will lead naturally and directly to a list of specific policy objectives to be addressed through the community's housing strategy. For example, to the extent that "community opposition to new development" is identified as a principal underlying cause of the community's housing challenges, the corresponding policy objective of "building community support for affordable homes" can be identified as a key objective for the community's housing strategy. Similarly, to the extent that "shortages of land on which to develop" are contributing to higher housing prices, one may wish to identify "Expand the availability of land for development" as a core policy objective for the community's housing strategy.

Other key policy objectives may include: "preserve affordable rental housing," "help existing homeowners avoid foreclosure," "preserve the buying power of homeownership subsidies in the face of rising home prices," etc. The choice of which of these or other policy objectives to select for your community's comprehensive housing strategy will depend to a large extent on which root causes the taskforce identifies as major factors contributing to your housing challenges. Other policy objectives – such as "expand capacity of nonprofit housing developers" or "expand funding to acquire properties for redevelopment" – may grow out of the inventory of assets and programs.

While a comprehensive approach is desirable for addressing the many factors contributing to a community's housing challenges, communities may find it useful to prioritize their policy objectives based on the relative severity of the problem they address. For example, a community with a large stock of older deteriorating homes may prioritize the policy objective of "facilitate the rehabilitation of older homes," whereas a community that has very little multifamily housing but recognizes a growing demand for it may prioritize "facilitate the development of new multifamily rental homes."

Setting and monitoring progress toward numerical goals can help keep the implementation of a housing strategy on track and enhance accountability and transparency. Cities like Boston and Chicago, which have both implemented consecutive multi-year housing initiatives, issue interim and final detailed achievement reports comparing actual activity with commitments made in their plans.

Many numerical goals focus on the number of affordable housing units that will be developed or preserved at varying levels of affordability over a specified period of time. In some communities, the goals may focus on the overall number of new housing units -- including market-rate units -- that are developed; the number of rental units that are developed; the number of existing homeowners helped to avoid foreclosure; or the number of renters helped to become homeowners.

There is no magical formula for setting appropriate numerical goals. Rather, the numerical goals will depend on the specific objectives of a community's housing strategy, the amount of resources devoted to implementing the strategy, and the background market conditions and trends.



[1] A Heavy Load: The Combined Housing and Transportation Burdens of Working Families. [PDF] 2006. Washington, DC: Center for Housing Policy.