Abolishing Private Property Ownership and Agenda 21

Apartments Rents Rising in U.S. as Millions of Homes are Going into Foreclosure and $40 Billion Per Year Is Being Spent on Federally-subsidized Rental Housing

According to the U.S. Department of Housing & Urban Development's (HUD) in its dataset "A Picture of Subsidized Households - 2008" released on July 1, 2010:

The Office of Policy Development and Research has updated its comprehensive profile of subsidized housing in the United States. The Picture of Subsidized Households 2008 data set describes the nearly 5 million households living in HUD-subsidized housing. The programs covered — public housing, Housing Choice Vouchers, Section 8 project-based housing, New Construction and Substantial Rehabilitation, and Section 202 and 811 Supportive Housing — provide subsidies that reduce rents for low-income tenants who meet eligibility requirements.

According to the Congressional Budget Office from its November 2009 report titled "An Overview of Federal Support for Housing":

Federal spending programs for rental housing take two forms: payments for households to rent housing in the private market and payments to public housing authorities (PHAs) and private developers to build and operate rental housing.

The largest of those programs is the Housing Choice Voucher program, also known as Section 8, which was funded at about $16 billion in 2009. The voucher program sets the portion of income that a qualifying household pays to a private landlord, with the PHA paying the difference between the tenant’s portion and a market-rate rent determined by HUD.

The second-largest program, funded at about $11 billion in 2009 and also administered by HUD, is the public housing program. That program provides funds for PHAs to operate, renovate, and build publicly owned housing developments.

Finally, HUD also operates the project-based voucher programs ($9 billion), in which HUD agrees to pay the owner of a rental unit the difference between 30 percent of the tenant’s income and the rent of the unit.

Eight additional programs provided between $150 million and $3 billion in support of rental housing in 2009 (see Figure 4). They include, in descending order of support provided, Homeless Assistance Grants, the HOME Investment Partnership, Native American Block Grants, Rental Assistance Subsidy (assistance for low-income, elderly, and disabled renters in rural areas), Housing Programs for the Elderly, Housing Programs for the Disabled, Community Development Block Grants, and Housing for People with AIDS.

In addition, two federal agencies—FHA and USDA—provide direct loans and guarantees to support rental housing. Just as with mortgage-related programs for homeownership, loans and guarantees made by those agencies in 2009 resulted in no significant costs or savings to the government under the method of accounting specified in the Federal Credit Reform Act.

Figure 4.

Federal Support for Rental Housing, 2009

(Billions of dollars)

Sources: Congressional Budget Office (for spending amounts); Joint Committee on Taxation, Estimates of Federal Tax Expenditures for Fiscal Years 2008–2012 (2008) (for tax expenditure amounts).

Note: HOPE = Homeownership and Opportunity for People Everywhere; USDA = U.S. Department of Agriculture.

a. Supports homeownership and rental housing.

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Apartment Rents Set to Rise, Fueling Inflation: NAR

November 29, 2010

AFP – US apartment rents are expected to climb next year as the economy recovers from recession, a rise that may fuel inflation, a real-estate industry group said Monday.

Multifamily real estate will star in an overall modest improvement in commercial property markets in 2011, the National Association of Realtors said in an outlook report. NAR said ailing commercial real-estate markets -- office, industrial, retail and rental housing -- were flattening out after a steep plunge amid the worst recession in decades. Lawrence Yun, NAR chief economist, predicted a rise in demand, as the economy slowly recovers from the downturn that officially ended in June 2009.

The number of people setting up a new home has plummeted amid high unemployment and plunging home values after a housing bubble collapsed more than three years ago.

"Multifamily housing is the one commercial sector that has held on relatively well in the past year, and can expect the best performance in 2011," he said.

Yun predicted apartment rents could rise by one to two percent in 2011, after having fallen in 2009 and showing no growth this year.

"This rent rise therefore could start to force up broader consumer prices as well," he said.

The cost of rent or mortgages is the biggest component in the government's consumer price index, accounting for 32 percent of its total weight, he noted.

Multifamily vacancy rates were forecast to decline from 6.4 percent in the current quarter to 5.8 percent in the fourth quarter of 2011.

Consumer price inflation has remained subdued in recent months despite a rise in energy prices, while the core inflation has trended lower, the Federal Reserve noted last week in the minutes of its last policy-setting meeting.

The central bank used weak inflation as a key justification for its controversial plan to buy an extra 600 billion dollars in Treasury bonds to juice the flagging recovery.

Critics, including several participants in the November 2-3 Federal Open Market Committee meeting, have said the plan risks spurring inflation.

NAR said the outlook for the office and industrial markets had improved, with modestly declining vacancy rates expected in 2011, while the retail sector would essentially hold steady. Vacancy rates stuck in double digits, nevertheless, signal rents would remain under severe pressure.

"High vacancy rates imply falling rents," Yun said.

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More Cities Considering Bulldozing Foreclosed and Abandoned Homes

November 18, 2010

ArticlesBase.com - If you have been following the real estate market at all for the last few years, you know that home prices have plummeted since the market peaked in 2006/7. On average, home values are 25 percent off their peak values. In fact, according to an article from the Boston Globe, we are on pace to eclipse the home price declines that occurred during the Great Depression. Simply put, the situation is not good.

There are many reasons that home prices are declining, but the chief reason is supply and demand. Many parts of this country overbuilt during the bubble years. There is a 10.7 month supply of homes on the market right now (compared to about six months of supply in a normal market). There are also millions more houses in shadow inventory that have yet to come to the market. There is also a paucity of demand for homes, due in part to continued high unemployment, and due in part to the acceleration of home purchases into the spring months as a result of the first time homebuyer tax credit. Economics 101 tells us that when supply outstrips demand, prices will fall accordingly. Price stability will not return to the housing market until the excess supply has been dealt with or until prices fall to match demand.

There is an article today on Bloomberg by Brian Louis that details the efforts of some midwestern cities to raze some of these excess houses. In many ways, these Rust Belt cities face unique challenges not seen in other parts of the country. Part of the problem is the erosion of the manufacturing base in this country, which has caused many of the traditional sources of employment (i.e. auto manufacturing, steel manufacturing, etc) to leave these areas. As a result, unemployment is especially high, and the populations of many of these cities have been steadily shrinking since the 1970-80s.

I touched on this topic back in May when Detroit undertook a plan to bulldoze significant numbers of blighted houses. The city of Detroit has 51,000 homes for sale, a population of 911,000, and unemployment rates that are between 25 and 30 percent. Barring some sort of economic miracle, there is not going to be an influx of people looking to move to Detroit and occupy these homes. In a lot of ways, the only sensible choice is to bulldoze them (whereas places like Phoenix might reasonably anticipate future growth and just sit on excess homes).

Cleveland is another city that is considering destroying blighted homes. Gus Frangos, the President of the Cuyahoga Land Reutilization Corp was quoted in the Bloomberg article as saying:

"You really have to bury the dead right now. You have to remove blight. It's unfortunately on a grand scale".

I wouldn't normally advocate for the destruction of homes except as a last resort. Blight drags down everybody's property values. Boarded-up houses are eyesores, are unsafe, and are often associated with crime. In cities that have no reasonable hope for significant population growth in the near future, bulldozing may be the only option.

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