We are now a week and a half into the 2012 Virginia General Assembly session in which state Republicans control House, Senate and the Governorship for the first time in a decade. After some opening fireworks surrounding the reorganization in the Senate, our Delegates and Senators started the serious work of debating legislation. They will see many bills this year on affordable housing, foreclosure reform and homelessness. Jeff Schapiro, Richmond Times Dispatch’s long time political observer and analyst, posted a column late last week that summarized some of the political positioning as the session began.
One thing that is definitely true as committees begin to work their way through very heavy legislative loads (1,515 bills in the House and 780 bills in the Senate) is that there is a large class of freshmen who are new to the process and interested in learning the issues. This is an excellent opportunity for those of us involved in housing to tell them how important it is to get serious about affordable housing. There are 15 new Delegates in the House (14 R’s and one D) as well as six new Senators (4 R’s and 2 D’s). If you are represented by one of these first year lawmakers, you have a unique opportunity to educate them about housing and build a relationship.
It is important to connect with our new legislators and let them know that affordable housing is one important key to economic recovery and job growth in Virginia. The Virginia Housing Coalition commissioned a study last fall on the economic impact that a Housing Trust Fund would have in the State. Assuming a $10 million per year allocation to the Fund, the economic benefit to the state would exceed $1 billion after 10 years. Your legislators need to know these facts and how you feel about the need for more housing opportunity in your community.
For an excellent overview on the state of the housing market in the US and the world, see the review in The Economist from late last year showing how much more precipitous the US decline was – and making the observation that there is much more to come:
since American homes now look cheap, are prices set to rebound? Average house prices are 8% undervalued relative to rents, and 22% undervalued relative to income. Prices may have reached a floor, but this is no guarantee of an imminent bounce. In Britain and Sweden in the mid-1990s, prices undershot fair value by around 35%. Prices in Britain did not really start to rise for almost four years after they bottomed. Some 4m foreclosed homes could come onto America’s market, which may hold down prices.
The Federal Reserve also released a white paper in early January urging Congress to get more serious with a fix to the nation’s housing market. The underlying theme was that without a housing fix, the economy would continue to be hampered in its ability to move toward a more robust recovery.
With economic growth and economic development efforts at the top of the Governor’s agenda, one topic getting a lot of attention is the impact of declining federal funding and the impact it will have on Virginia’s economy. In both the December and January issues, Virginia Business highlighted this challenge facing the Commonwealth.
What’s often lost in these analyses (that focus more on defense and transportation cuts) is that federal housing programs have been slashed as well – with profound impacts in Virginia in the years ahead. HOME funding, the principal source of “gap” financing for affordable housing, is down 40% from two years ago. Funding for public housing continues to be squeezed putting the state’s supply of housing for our lowest income families at risk.
Every analyst, economist and pundit repeatedly talks about housing as the drag on our economy. Virginia’s legislators should make housing a top priority this 2012 session.
This is a guest post by Bob Adams. Bob Adams is the President of HDAadvisors, a consulting firm that specializes in housing and community development. Bob was the Executive Vice President and Chief Operating Officer of Community Housing Partners Corporation, President of the National Low Income Housing Coalition in DC and Deputy Director for Housing at the Virginia Department of Housing and Community Development. Bob is a graduate of Yale University and holds a Master’s degree in Urban and Regional Planning from VCU.