Homeless Rate in U.S. Down 13 Percent Since 2010 Market Crash


Rent Affordability Now a Growing Concern in Many U.S. Cities
Zillow is reporting this week that rising residential rents across the U.S. are burdening financially limited renters, and contributing to higher rates of homelessness in many of the nation’s least affordable housing markets. The U.S. Department of Housing and Urban Development (HUD) estimates that 553,752 people nationwide experienced homelessness in 2017, based on a point-in-time count in January. Since 2010, the counted homeless population has fallen by about 13 percent.

However, prior research shows these counts are imprecise, and likely do not include the entire homeless population in the country. The actual number of people who were homeless is estimated to be closer to 661,000, or 21 percent higher than the officially reported population.

New research from Zillow, in collaboration with researchers at the University of New Hampshire, Boston University School of Social Work and University of Pennsylvania, shows that the homelessness rate accelerates much more quickly when the rent burden climbs above 32 percent. The research also identified distinct groups of communities respond similarly to changing rents and poverty levels, among other latent factors – all of this information can help policymakers and social-service organizations in otherwise disparate areas hone in on the most effective mitigation efforts by learning from the experiences of other areas in their peer group. This new research expands on Zillow research last year that examined the relationship between rising rents and homelessness.

Zillow Report Highlights Include:

  • If the rent burden increases by 2 percentage points, an additional 1,500 Americans will become homeless
  • An estimated 661,000 people were homeless in 2017, more than 100,000 more than were officially reported.
  • The expected homelessness rate in a community increases at an accelerated pace after rents reach 32 percent of the local median income.
  • The rent burden exceeds this 32 percent tipping point in about one-quarter of the regions analyzed.

Zillow further reports about 1,500 more people nationwide can be expected to experience homelessness when the rent burden increases by 2 percentage points. The effects of a larger rent burden are more extreme in already unaffordable areas where rent burdens are beyond the 32 percent tipping point. In Los Angeles, that 2-percentage point increase could force an additional 4,227 people into homelessness. In other communities, homelessness is predicted to decline despite increasing rent burdens.

Nationwide, a renter earning the median U.S. income and looking to rent the median-priced apartment should expect to spend about 28 percent of their income on rent, up from historic norms closer to 26 percent. But across the country, the rent burden already exceeds the 32 percent threshold in 100 of the 386 Continuums of Care included in this analysis, led by Monroe County in Florida, where the median market rate rent consumes 62.9 percent of the area’s median household income. Also on this list are Los Angeles (49 percent), Portland, Oregon (36.7 percent), and Seattle (34.2 percent), all of which have declared a homelessness “state of emergency.”

All of these areas fall into the same group of communities defined by high rates of homelessness, unaffordable housing and high rates of extreme poverty. This cluster is home to 15.1 percent of the total U.S. population, but 47.3 percent of the nation’s homeless population as officially reported by the 2017 HUD point-in-time count.

Conversely, a separate cluster, which includes areas like Pittsburgh and Cook County, Illinois, is characterized by a low homelessness rate, affordable housing, and the lowest rates of extreme property. This does not mean homelessness doesn’t exist in these areas, only that housing costs and low income play a smaller part in defining the challenge in these communities, and unobserved factors may be playing a bigger role.

“It’s undoubtedly good news that the overall level of homelessness has fallen nationwide, even as housing costs have increased. But that zoomed-out view obscures some very real, local tensions between housing affordability and homelessness, and ignores the reality that success in tackling homelessness in one community doesn’t necessarily have the same effect in another,” said Skylar Olsen, Zillow Director of Economic Research and Outreach. “This first-of-its-kind research both quantifies the true scale of the problem and reinforces the idea that every community has its own unique challenges. But there are similarities that can be identified, even among communities of wildly varying sizes and locations, and learning to be shared. The homelessness challenge itself is hugely multifaceted and nuanced from community to community, and requires local and national solutions that are equally flexible, nuanced and informed.”
Source: Michael Gerrity

Should homeless people be expected to live in a box?

Single people in need of a home are the least likely to be prioritised by local authorities. But could one-person micro-homes be an answer – or is expecting people to live in a box, and be grateful about it, a step too far?

Nearly a quarter of a million single people have experienced homelessness in the past 12 months.

These include the most visible sector of homeless people, the rough sleepers; as well as those living in temporary accommodation, like shelters or hostels, provided by the voluntary homelessness sector. Then we have the “hidden homeless” who stay on the floor of friends and family, the “sofa surfers” and the squatters.

Perhaps communities of micro-homes such as one recently granted planning permission in Worcester – where each unit has a floor space of just 17.25 sq metres – could offer a solution.

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According to the British Property Federation, micro-homes can be defined as “not conforming to current minimum space standards”.

But the charity Homeless Link says “the main aspiration of people who are homeless is to have a home of their own”.

So should we start to think inside the box?

Accommodating single people in small spaces is not new – shipping containers have been used to house homeless people for decades. But shipping containers are not purpose-built, are often cold, poorly ventilated and – crucially – are storage crates, not homes.

Benjamin Clayton, head of strategy at Homes England, the government’s “housing accelerator” and formerly a fellow at Harvard University, says micro-homes are “clearly not the solution to the housing crisis, but they might be a handy resource in the meantime.

“Tiny houses could be particularly helpful in getting homeless people into safety. Housing charity Crisis estimates that the cost of a single homeless person sleeping rough in the UK is £20,128 per year, which is depressing money down the drain.”

It makes financial sense to help homeless people, or, ideally, prevent their plight in the first place.

In an illustrative report At what cost? commissioned by Crisis, that annual price tag of £20,128 includes interaction with the criminal justice system (about £7,000), visits to A&E and stays in hospital (about £8,000), and support from homelessness agencies.

And that’s before the human cost. Lacking a settled home can cause or increase social isolation, create barriers to education, training and paid work and undermine mental and physical health.

Mr Clayton suggests Britain should experiment along the lines of some communities in the US, where charitable groups have supplied micro-homes to help homeless people.

“Around 8,000 people slept rough on the streets of London in 2016-17, a number which has doubled since 2010,” Mr Clayton says.

“Surely units in homelessness hotspots in London, Manchester, Birmingham and elsewhere could provide a real, albeit temporary, alternative.

“Of course Britain needs more and better real houses. In the meantime, though, we should take tiny houses seriously, especially for those who have no house at all.”

Not everybody is happy with the idea though.

One of the newest developments to receive planning permission is a set of 16 iKozie units, which will be erected in Worcester some time next year. The original plans for the site were more ambitious, but vigorous opposition from residents worried about infrastructure, parking and antisocial behaviour led to the proposal for 30 units being trimmed down to 16.

Objections lodged with the council ranged from allegations that the iKozie residents would not be in paid employment and therefore a drain on the public purse, to concerns about space for charging points for hypothetical electric cars in the future.

Of the 16 units, five will be in the control of the city council’s housing department, and it would be up to the council to decide who on the housing list should be allocated a unit.

Single adults with no children or specific vulnerabilities tend to fall between the cracks when it comes to finding them somewhere to live. There will always be someone considered a higher priority.

But these homes for one, loosely based on the cabin of a luxury yacht, could fill a gap.

Each £40,000 home will be 17.25 sq metres and have a fully-equipped bedroom, shower room, living area and kitchen. The floor space of the units is half that set out in government guidance, but the company behind iKozie argues that the design, and the fact the units are not meant to be long-term homes, means their size is not a problem.

“A lot of affordable homes don’t come with a cooker or flooring, and lots of people aren’t brilliant at interior design,” says the director of iKozie, Kieran O’Donnell, who is also a trustee of the housing charity The Homeless Foundation.

“With the iKozie, everything is fitted in. There are distinct ‘zones’ for living, eating and sleeping, and there is no wasted space.”

Mr O’Donnell says the units would not be used to house the “street homeless”, but would be for those moving on from supported living or “trapped in an HMO [home of multiple occupation]”. The iKozie would provide transition accommodation for someone before they moved into the open market.

“It’s not meant to be a long-term fix. I see the timeframe for people living there to be about two years-ish – perhaps giving people time to save for a deposit or even a mortgage,” he says.

“At the same time, they’re building up a track record of paying rent and for utilities, which can be shown to housing associations or whoever when they move on to the next stage.”

The businessman is open about the fact that this project is likely to prove a financial success for his company – and he’s currently looking for more sites on which to put more iKozies.

“We also think these will be in high demand for students or maybe older people who are downsizing.”

The five affordable units would be rented at the local housing allowance rate – about £99 a week – while the remaining ones would be available for rent at the market rate of about £125 a week.

People living there would be subject to a strict set of conditions, Mr O’Donnell says. The units would be for single occupancy only and iKozie would monitor the site.

This in turn could free up space in a hostel or supported living accommodation.

So in concrete terms of helping the homeless, the effect will be modest – but could pave the way for further projects.

Stephen Robertson, CEO of the Big Issue Foundation, says spiralling private rent has led to “a rough sleeping crisis, a humanitarian crisis” and even small initiatives like the iKozie development are valuable because of the lessons of the experience.

“There has been a massive increase in tented accommodation – people simply have nowhere to go,” he says.

The iKozies are small but they look fairly well designed and nobody is forced to live in one. They’re not in themselves the answer – social housing is.

“If you look at the scale of the problem, this is just a drop in the ocean. But it is self-sufficient living, not being abandoned in a shed. Taking action where the environment is hostile is important – especially the learning that comes from it.

“We can find out from the development whether the project is scalable and replicable. I see it as an innovation; not more than that, but it is an innovation.

“It will be an improvement on many people’s current situation.

“It is an alternative for people who don’t have an alternative.”

Source: Bethan Bell

REDAN SETS TO HOLD FUND RAISING FOR AMBITIOUS BUILDING PROJECT

In its quest to have a befitting National Secretariat to carry out its operations, the Real Estate Developers Association of Nigeria (REDAN), is set to hold a fundraising and launching, for the building project.

The fundraising and launching, codenamed REDAN House, will take place on 11 December 2018 at Sandralia Hotel, Solomon Lar Way, Jabi – Abuja.

Speaking on the launching and fundraising event, President of the Real Estate Developers Association of Nigeria, (REDAN), Reverend Ugochukwu Chime, said

“On the 11th of December 2018, by 11am at Sandralia Hotel Abuja, we will be having a REDAN House launching, where we will invite REDAN members, developers and partners for us to sit down together, see how far we have come and see the necessity for us to be able to have a house for ourselves, a house whereby we can have a library, where you can go to for information and data, we are looking forward to raising over 300 Million Naira to have the total package of the house and the infrastructure we need”. The REDAN helmsman said.

 

The Association is collaborating with its members, other developers, critical stakeholders and development partners in the housing and construction industry to achieve the goals of the project. The historic endeavour between REDAN and the critical stakeholders aims to build and deliver a decent, prestigious and quality office space for the Association before February 2021.

Rev Chime, added that he will ensure the building is ready before the end of his tenure, and will also honour donors who are making this project a reality, he said,

‘’I intend to have this house completed so that my successor to the office of REDAN president will not have to use a rented apartment as we are doing now. “We have also made provision for us to have a memorable plaque in front of the building for donors, and the six highest donors will have halls named after them, so that generations to come will know that these great men at a time when there was a clarion call for those who will rise and do the needful and build a house for REDAN, these ones responded.”

The launching of the REDAN House Building Project will take place under the Distinguished Chairmanship of Mallam Ibrahim Aliyu, Chairman of Urban Shelter Limited while the Special Guest of Honour will be Surveyor Suleman Hassan, the Honourable Minister of State for Power, Works and Housing.

The Guests of Honour for the event include Architect Ahmed Musa Dangiwa, Managing Director and Chief Executive Officer of Federal Mortgage Bank of Nigeria (FMBN), Mr. Femi Adewole, Managing Director and Chief Executive Officer of Family Homes Fund and Mr. Kehinde Ogundimu, Managing Director and Chief Executive Officer of Nigeria Mortgage Refinance Company (NMRC).

 The Real Estate Developers Association of Nigeria (REDAN) is the principal agency and umbrella body of the organized private sector (public and private) responsible for housing development in Nigeria, having been conferred with official recognition by the Federal Government of Nigeria since November 2002.Membership of REDAN is open to: Limited Liability Companies, Registered (Co-operative) Societies, partnership, and parastatals of State or Federal Governments who engage in real estate development.

Source:Affa Dickson Acho

A new study says an overwhelming majority of millennials want to be homeowners, but student loans are holding them back

For many millennials, the idea of homeownership is still a big picture dream, with a new study saying 89 percent plan to purchase a home in the future — but simply can’t because of student debt.

According to a recent study released by Apartment List, 6,400 millennial renters nationwide were surveyed in regards to their plan for owning a home. Despite the majority of young people wanting to migrate away from renting, 48 percent have nothing saved for a down payment.

One of the leading reasons, according to Apartment List, is because of the staggering amount of student loan debt many millennials carry.

“Student debt is keeping homeownership out of reach for many millennials,” the authors of the study wrote. “We estimate that 23 percent of college graduates without student debt can save enough for a down payment within the next five years, compared to just 12 percent of college graduates who are currently paying off student loans.”

For millennials without a college degree, the odds of having enough money to purchase a home are even lower. Just six percent say they’re able to save enough for a down payment in five years, the study revealed.

Apartment List’s findings echoed separate studies illustrating how the student debt overhang is reverberating across the economy. A study released last year by the Federal Reserve Bank of New York showed that over the past decade, student loan debt in the U.S. has increased by 170 percent. Today, the average borrower has $34,000 in loans.

The Fed study also estimated that the average monthly payment on a student loan increased from $227 in 2005 to $393 in 2016. This means that with the rising cost of education, more young people are having an increasingly harder time saving for a traditional 20 percent down payment on a home.

As a solution, 19.4 percent of millennials surveyed said they are relying on financial assistance from a family member in order to make home ownership more attainable. However, the amount of assistance that a young person receives varies greatly based on income.

For millennials who make $100,000 or more, Apartment List found they expect to receive over $50,000 in financial assistance from a family member, which is more than the down payment needed for an average U.S. condo that costs $224,100. This number is also more than twice the amount of assistance individuals who make between $50,000 and $75,000 expect to receive from family — and it’s over 10 times the assistance that individuals who make less than $25,000 expect to receive.

Source: Courtney Coonley

What Nigerian Presidential Aspirant Says About Solving The Housing Crisis

We keep repeating that Nigeria suffers a 17-million units housing deficit. That is simply untrue. The guys who push that rhetoric probably know what they are doing because the figure alarms every government and pushes them into certain suboptimal decisions. The simple way to look at it is that in Nigeria up to 10 human beings (old and young) can live in a house; even in a three bedroom flat, and they’ll not be said to be ‘homeless’. We are not yet that kind of society where a man and woman live with only their children, even though we are getting there.

So, 17 million units of houses could easily translate to us housing a fresh 170 million people, which is our entire population. Are we then saying all Nigerians are presently homeless? Some people have even taken potshots at our population figures and other statistics. Seems like we may not be as many as we say we are. Politics got the better of us as we inflated away in order to get a bigger share of the national cake. Late Professor Ali Mazrui once mocked us for not being able to count ourselves despite being the ‘Giant of Africa’.

And so, in response to this alarming housing deficit, government is pushed into embarking on different schemes on a yearly basis, just as they try and support some builders. The Federal Mortgage Bank has supported many housing schemes around the country. But the reality is that Nigeria has been taking all the wrong decisions and the efforts so far have not had any salutary effect on society. We have been providing what our people don’t need and what they cannot afford. To that extent, in every state capital in Nigeria today are many housing units which are unoccupied, with no hope in sight that they will be any time soon. Yet the housing deficit, which we may now review downwards drastically, remains alarming.

Click here to watch weekly episodes of our Housing Development Programme on AIT

What countries do is to be honest with themselves in things like this. The housing needs of a country are tied to its education system, it’s pace of development and its culture at large. Countries think of when young children will become adults and start to cater for themselves. They then channel efforts into providing tiny little accommodations that fit the needs of these youngsters who their parents usually show the way out when they are around 18 years old. The general reality is that nations will continue to urbanise as they develop. In many countries around the world, it is not a big deal to attend universities, and youngsters usually become useful to society by learning a trade, skill or craft right after secondary school. Therefore, a youth attending some technical school or training should be able to rent or start the process of owning a tiny studio house. Later on, that same youth may come into his own and decide to get married or just get something bigger and better. Then he wants to move into a one-bedroom or two-bedroom house. And it goes on like that. At the tail end, old people move into smaller units and leave the big duplexes for those in their prime.

Also, rural homes are kept for as long as they can be. Many rural homes have been standing for 300 years, but that is because they were properly constructed and they are not fundamentally compromised. Basic hygiene factors have been reckoned into their construction, such that today they remain functional and help to reduce the housing deficit. Some have even become tourist attractions, earning money for the country.

In Nigeria the system is broken.

Not only do we now all want to attend universities – except in some parts where millions of little children are not even encouraged to attend anything at all (which is a terrible problem when looked at from the perspective above, because unschooled children with no skills are not provided for anywhere in the world). As we crowd into universities, no one gets the much-needed skills around which society revolves. We therefore import plumbers, bricklayers and whatnots from Togo, Ghana and Cote D’Ivoire, where they have been properly trained. Add to this, the great problem of corruption which ensures that our national financial capital is grossly and shamelessly misappropriated and ends up in the hands of an insanely greedy few, instead of being invested in the people as they do elsewhere, and we are set up for a big disaster in the near future.

Rural homes? Sorry. Most of them are falling where they stand today, having been almost totally eroded and corroded over time. There were no standards set when these houses were being built – mostly around the early 20th Century and in response to the stimulus of the colonial influence. The trend of building houses with bad ventilation and, of course, no provision for hygiene issues, has continued till date in the rural areas. These are houses that easily succumb to the element – thunder strikes (they will say it’s their enemies), heavy downpours and floods, as well as simple erosion. Could the government have helped standardise the mud houses to make them more durable? Yes they could. But they didn’t. So instead of having tourist centres, we have building collapse to deal with. It’s not as if we understand the value of these things. The old Brazilian House in the Tinubu area of Lagos Island was recently demolished to make way for a shopping plaza. Who cares?

Navigating the Psychology

Let us also look at our psychology as a people. As folks who expect magic in everything, we no longer do things gradually. There’s npw nothing like climbing the step rung by rung – from a studio apartment to one bedroom house to two, three and then if lucky, a duplex. We believe God has ordained for us to ‘dominate’ the world, and so, from squatting with people, we want to build our own house. Our culture also holds that anyone who cannot boast of a house of his own is a failure. We also believe the bigger your house, the bigger your success. Many Nigerians live for the image they portray outside.

 

At least I know a bit about a place like the UK and also Singapore. In the UK, you get registered with your local council and apply for a place to live in. They have several arrangements where you can get a fairly easy rent as you wait for your own allocation. Everybody is eventually on a mortgage, so you are not expected to pay fully for a house, where you are lucky to get one. A five percent or 10 percent down payment is enough and the rest is spread over 25 or so years. In Singapore, the challenge they had was with space. And so they knew that they had to develop vertically. Almost every Singaporean today lives in those skyscrapers and nobody feels like a failure for living among other people in housing provided by the government or private developers.

The Core Issues

One, the private developers in Nigeria, and even the government, have tried to focus on mortgage lately. Sorry, ko le werk. We have not organised ourselves for the mortgage idea. Too many people are out of work and the educational system has been deliberately broken by you-know-whom. Too many are eking a living by being street-traders, ‘hustling’ or owning some small business with irregular cash flow. We have no pool of artisans and ‘handwork’ is seen as failure! No deliberate policy has been targeted at actively reorganising society in this regard. So how do we support a mortgage system when people have no steady salary? Mortgage is based on predictability. Our lack of organisation is also the reason why a secondary market for housing – or anything else – is hardly existent, compared with, say, in the UK, where Capital Gains Tax on properties sold yearly for profit, nets at least 5 billion pounds sterling (N2.5trillion), mostly from London. When you gross it up (since CGT is around 28 percent in the UK), that means over 25 billion pounds sterling worth of property is sold yearly in the UK. That is like $33 billion or twice Nigeria’s annual budget.

Two, Nigeria has wasted trillions upon trillions on luxury housing, most of which are sitting and collapsing where they stand today. Housing business is sweet. It is great and exhilarating to transform spaces, to transform jungles into neat luxury estates and all that. The problem is that usually developers go for the kill. They price their houses at perhaps five times the cost of putting up their units. That is 400 percent profit. Again, only a few can afford those kinds of houses. Not up to 100,000 are employed in Nigeria’s financial sector, for example (including banks, stockbroking firms, insurance firms, central bank, regulators etc), and the figure is dwindling with all sorts of layoffs these days. Less than half of that is employed in Nigeria’s oil sector – private and public sector. The entire population of middle and upper-classers in Nigeria is not up to 800,000 (including their spouses, children, brothers and sisters). This is 800,000 (a generous figure) out of 170 million or whichever figure we decide to believe in. Only 1 in 20 Nigerians can be said to be truly comfortable, such as to afford a house built by private developers. 1 in 20 could even be too generous.

Even if it is 800,000, these are people that also know there are opportunities for them to buy their own land and build, rather than buy from a expensive developer. Many are not wired to depend on developers at all. This is why there is no traction from that sector on which many developers depended. Many of these middle and upper classers have, however, already bought quite a number of these hyper-expensive properties with the hope of renting (I recall cringing as a pal from the oil sector bought two three-bedroom flats for N55 million each in some obscure place in Abuja about four years ago! I couldn’t convince him otherwise). A downturn in the economy ensured that they are the people sitting on those properties today. Where they get tenants, the hassle of obtaining their yearly rents is another thing. We didn’t learn from the subprime mortgage crash in the USA to know that it is untrue that house prices never fall. They do fall. Though if you refuse to reduce prices because you want to hold on to a myth, the houses just dilapidate in your hands. More than 300,000 housing units lie fallow all over Abuja as I write. Most of them are ‘luxury’. And they are pitiably falling apart. If you see their states today, you will weep.

 

Three. It is the role of government to take a lead on this. They have to set the direction. They may not be able to influence developers in setting prices, but they should care about prototypes. What types of buildings should we be focusing on? Which demographic do we have a problem with? Over 70 percent of Nigerians presently crawl out of stinky ghettos with zero infrastructure every morning – including those with some sort of corporate jobs. As a people, we haven’t yet set the standards and outlawed some kind of despicable living. Perhaps that is where to start. The last real attempt at mass housing ended with Lateef Jakande in 1983. There is no plan for the lowest among us. If Singapore built up, we also need to determine how we will house our large population. The USA also built the Projects in the 80s. What plans do we have for our youth and not-so-young? Why have we left our poorest to live in conditions that will irritate even the beasts of the wild? The world is watching us, mouth agape. We need to positively outlaw the spread of urban ghetto sprawls.

The Ghetto Squad Have Won

But the truth on ground is that the ghetto squads have won! In a place like Abuja, Mallam El-Rufai, when he was a minister, announced on national TV that anyone earning less than N50,000 monthly should leave Abuja and go back to their villages. That was around 2003. He demolished many shanty houses and rendered 500,000 homeless (according to UN Refugee Commission figures then). His successors, Adamu Aliero and Bala Mohammed also demolished their own tens of thousands. The new gentleman there says he will not demolish though. True, demolition is not the solution, but what plans do we have?

And so we are back to an era where the mentality of our people have solidified. In Abuja, the Federal Capital, just as it is in many other towns across the country, the poor have taken position and are now unshakeable. They have seen it all and are ready to dare the government. They aren’t going anywhere. They continue to buy land from dodgy unofficial quarters and ghetto houses are springing up by the thousands everywhere; badly built, and defacing the layout of the land. The sprawls are expanding. The government is absent. And this is year 2017, where other countries are thinking but Nigeria is asleep.

It occurred to me to write this when I visited an abandoned housing estate around Aleyita in Abuja. Aleyita is one of Abuja’s 100s of ghetto settlements. It must have been demolished a few times. But it stands. And today, it’s thriving. The corporate guys who thought they could use the power of big money to crowd out the ghetto without making any alternative plans for the millions who dwell therein are tired and defeated. It seems they no longer have access to cheap money or cheap loans to continue their luxury estates. And so, the people of Aleyita today freely use the middle of the abandoned, half-complete luxury estate of about 200 duplexes as thoroughfare. All over Abuja, the slums and shanties are growing. From Apo, to Asokoro to Maitama. From Utako, to Jabi, Wuse and all over Garki; not to talk of Mpape, Dawaki, Gwarimpa and into Suleija, Gwagwalada, Nyanya and Mararaba, millions of our people are eking some sort of survival since their country doesn’t give a hoot and their leaders are on vacation. They actually don’t expect anything from their leaders. Ignorance is bliss. Somehow, the super big men who planned Abuja, and who superintend over our other big cities never gave a thought to where those little men who serve them as drivers, cleaners, cooks, chaperons and so on, should live. They just never cared. Yet the true measure of development is to get these less privileged people to live properly and appreciate the good life. It’s pretty basic stuff. Instead we are consolidating the gains of income inequality by expanding luxury estates on one hand, and vast urban slums on the other. We are setting ourselves up for disaster.

Still one day, some crazy minister will embark on new demolitions in Abuja, without alternative plans. On that day, I shudder at what will happen since the people are now totally disconnected and patriotism has since departed from us. All is fair in love and war.

Source:Premium Times

How to solve the housing deficit in Abuja

HOUSING crisis is a huge issue for the poor and the working people in Abuja with more than half of the population living in precarious houses.  We have 1.7 million housing deficit. Given the fact that it is both fundamental and constitutional requirement, the Nigerian government had formulated a National Housing Policy in 1991 to ease the provision of adequate, accessible and low-cost housing for the poor and the working people.

Yet, millions are homeless, while others live in homes that have been precariously built in terrible places that have life threatening environment in the Federal Capital Territory, no thanks to the capitalist government. The FCT Minister, Muhammad Bello had announced at the 12th Abuja Housing Show in Abuja on July 16, 2018 that the National Housing Policy which made provisions for adequate, accessible and affordable housing have been amended in 2004. He claimed that a more market-oriented approach had been adopted which limit the role of public sector and allow more private sector to participate in direct housing provision.

Click here to watch weekly episodes of our Housing Development Programme on AIT

What that implies is the fact that getting decent and affordable housing by the poor and the working people has been shattered. Thus, the poor and the working people have continued to expend more than 60 percent of their disposable income on house rent as a direct consequence of a huge housing deficit in Abuja. Equally, most people live on the streets, in the slum area(s), and in far away communities where they can get cheap and but precarious houses. About 88 per cent of those working in the Abuja Municipal Area Council, AMAC, do not live within the major towns in AMAC, and the reason for this is unaffordability of the rent and associated high cost of living.

In a place like Wuse2, two bedroom flat ranges from N2million to N2.5million and more, while in Maitama it could go as high as N10million to N11million as compared to similar two bedrooms flat in Jikwoyi which is around N180 thousand to N200 thousand and in Karu N250thousand to N400 thousand, etc. Today, what is visible is rising rent, vacant houses and homeless people in every part of the Federal Capital Territory, Abuja. Many of the houses in communities and streets are owned by top-ranking elements among the ruling class and most of these houses are not occupied.

The government unleashed attacks on them through the so-called Environmental Sweeps which chase after homeless people every day and night. We also have cases where poor people have been literally thrown out because they can not pay the high-rising rent. Meanwhile, many houses lack even basic facilities such as water, sewage, electricity, while other are substandard, tiny and overcrowded. According to the current AMAC Chairman, Mr. Abdulahi Candido, in a budget report which was reported by Premium Times on January 11, 2018, the amount budgeted to the works and housing department was N1.8 billion. Despite being the highest, this in the real sense does not reflect in the supervision or provision of any critical infrastructure which can make life easy for the working people and the poor.

For instance, aside major roads in Abuja, there are no other motorable roads. This does not only cause fatal accident to the populace in most villages and communities in Abuja, but also have negative effects on the movement of agricultural or farm produce to the city. This is due to lack of accessible roads which create economic losses for the farmers, and continues to impoverish such farmers. Ironically, this is happening in the Federal Capital Territory, FCT, Abuja where N6.92 billion was budgeted for 2018 fiscal year. As a socialist, I believe this is not accidental, it is due to long term and continuous implementation of neo-liberal policies by the Nigeria governments which have grossly underfunded the housing sectors as well as promote private interest at the expense of the housing needs of all.

The Socialist Party of Nigeria, SPN, will if is elected, therefore, massively invest in housing and regulation of house rents in the heart of Abuja. The party will create jobs for people that have technical skills. SPN members are contesting on the salaries of workers. It is the belief of the party that if privileges enjoyed by political class are reduced, along with cancellation of security votes, and end to fraudulent contract system, these will be invested massively on affordable housing. The party also plans to implement free and quality education, free and quality health services at all levels, and also employ Nigerians with at least N30,000 as minimum wage without retrenchment.

Source:vanguard

HOUSING AND EMPLOYMENT IN NIGERIA

If there is any problem the nation is facing today, it is how to gainfully employ her youth population; which are in the millions. The problem of unemployment, which has led to increase in social vices, is becoming monstrous. It is like sitting on a keg of gun powder. Unemployment was the root cause of Arab spring. When Mr President was asked a few weeks ago when his government will start the implementation of the promised N5,000.00 for unemployed graduates, he simply told them that, this was not his government priority; that he planned to concentrate on Power, Agriculture, Infrastructure development and Solid mineral. These areas had always been the area of concentration of successive governments at the expense of housing. There is urgent need for thinking outside the box. The democracy day garden meeting with the learned Vice-President and the road map for economic recovery and development he presented were not pragmatic enough considering the enormity of our challenges.

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Most governments for lack of understanding always put Housing at the end of their shopping list. They tend to believe that it can always be attended to after other needs had been met or when the state can afford it. What a big mistake! Housing is the “gbogbonse” of a depressed economy. A catalyst for growth! When housing is made a priority, other things will fall in line. It is the engine of economic growth. It is the surest basis for the nation’s industrial take off.

No other sector can generate massive employment as housing. An average 3 bedroom flat acquires 10 windows and 10 doors. 10,000 housing units will therefore require 100,000 windows, 100,000 doors and about 50 million blocks. Can anyone imagine the labour requirement to mould 50 million blocks and fabricate these doors and window, including painting, roofing and furnishing? No wonder David Cameron promised to build UK out of recession in 2010. He planned to embark on 270,000 housing units across UK per annum. Milton Keynes – a new town near London; is a living testimony of this radical approach. When there are many construction projects going on, local resources from near and far are mobilised and wealth is created: Infrastructural development will follow automatically. Men and women are busy, poverty and crime are alleviated.

Housing cannot and should not wait. It is now! It should therefore be part of the priority areas in the current budget. The projected 7 (seven) thousand units to be developed this year is very inadequate but a step in a right direction. Please ensure its delivery. It should not be empty promises or business as usual. At the end of this budget year, Government should tell us where these houses were built. Try these and we will begin to witness true recovery. I will equally encourage the Honorable Minister of Works, Power & Housing – Mr Babatunde Fashola to revisit the policy that our team put in place for the nation in 2007; when former President Obasanjo appointed seven of us into the Technical Board of Federal Housing Authority.

A continued neglect of housing sector is already manifesting in the emergence of the militant groups across the country. Nigeria should know that unemployment and poverty were the origin of the Arab Spring.

Source: Professor Timothy Nubi

23 Different Green Building Materials

The aim of using green building materials is to construct energy-efficient structures and to build those structures one should be aware of different green building materials, their properties and how they contribute into saving energy.

Green Building Materials used in Construction

Following is the list of Green building materials used in construction :

  1. Earthen Materials
  2. Wood
  3. Bamboo
  4. SIPs
  5. Insulated Concrete Forms
  6. Cordwood
  7. Straw Bale
  8. Earth Bags
  9. Slate/ Stone Roofing
  10. Steel
  11. Thatch
  12. Composites
  13. Natural Fiber
  14. Polyurethane
  15. Fiber Glass
  16. Cellulose
  17. Cork
  18. Polystyrene and isocyanurate
  19. Natural Clay
  20. Non- VOC paints
  21. Natural Fiber Floor
  22. Fiber Cement
  23. Stone

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1. Earthen Materials

  • Earthen materials like adobe, cob, and rammed earth are being used for construction purposes since yore.
  • For good strength and durability- chopped straw, grass and other fibrous materials etc. are added to earth.
  • Even today, structures built with adobe or cob can be seen in some remote areas.
Adobe made Structure
Fig 1: Adobe made Structure

2. Engineered Wood

  • Wood is one of the most famous building materials used around the world.
  • But in the process of conversion of raw timber to wood boards and planks, most percentage of wood may get wasted.
  • This wastage can also be used to make structural parts like walls, boards, doors etc. in the form of engineered wood.
  • Unlike solid wood, engineered wood contains different layers of wood, usually the middle layers are made of wood scraps, softwoods, wood fibers etc.
Engineered Wood Board
Fig 2: Engineered Wood Board over Solid Wood Board

3. Bamboo

  • Bamboo is one of the most used multipurpose and durable materials used in construction.
  • These trees grow faster irrespective of climatic conditions. So, it makes it economical as well.
  • They can be used to construct frames or supports, walls, floors etc.
  • They provide a good appearance to the structures.
Bamboo Structure
Fig 3: Bamboo Structure

4. SIPs

  • Structural insulated panels (SIPs) consist of two sheets of oriented strand boards or flake board with a foam layer between them.
  • They are generally available in larger sizes and are used as walls for the structure.
  • Because of their large size, they need heavy equipment to install however, they provide good insulation.
Structural Insulated Panel (SIP)
Fig 4: Structural Insulated Panel (SIP)

5. Insulated Concrete Forms

  • Insulated concrete forms contain two insulation layers with some space in between them. This space contains some arrangement for holding reinforcement bars, after placing reinforcement, concrete is poured into this space.
  • They are light in weight, fire resistant, low dense and have good thermal and sound insulation properties.
Insulated Concrete Forms
Fig 5: Insulated Concrete Forms

6. Cordwood

  • If wood is abundantly available and easily accessible to the site of construction, cordwood construction is recommended.
  • It requires short and round pieces of wood which are laid one above the other, width wise, and are bonded together by special mortar mix.
  • They are strong, environmental friendly and also give good appearance to the structure.
Cordwood Wall
Fig 6: Cordwood Wall

7. Straw Bale

  • Straw bale is another green building material which can be used as framing material for building because of good insulating properties. They can also act as soundproof materials.
  • Non-load bearing walls of straw bale can be used as fill material in between columns and, in beams framework is recommended.
  • Since air cannot pass through them, straw bales also have some resistance to fire.
Straw Bale Wall
Fig 7: Straw Bale Wall

8. Earth Bags

  • Earth bags or sand bags are also used to construct walls of a structure.
  • These types of structures can be seen in military bases, near banks of water resources etc.
  • Generally, bags made of burlap are recommended but they may rot very easily and hence, polypropylene bags are used nowadays.
Earth Bag Walls
Fig 8: Earth Bag Walls

9. Slate Roofing

  • Slate is naturally formed rock which is used to make tiles.
  • Slate tiles have high durability and they are used as roofing materials.
  • Slate roofing is preferred when it is locally or cheaply available.
Slate Roofing
Fig 9: Slate Roofing

10. Steel

  • Steel roof panels and shingles are highly durable and they can be recycled again and again. So, these are the best choices for green roofing materials.
Steel Roofing
Fig 10: Steel Roofing

11. Thatch

  • Thatch is nothing but dry straw, dry water reed, dried rushes etc. These are the oldest roofing materials which are still in use in some remote locations of the world and even in cities for aesthetic attractions.
  • It is cheaply available for roofing and a good insulator too.
Thatch Roofing
Fig 11: Thatch Roofing

12. Composites

  • Roof panels made of composite materials such as foam or cellulose layer sandwiched between two metal sheets or two plastic sheets also come under green building materials.
  • They are light in weight, inexpensive and provide good insulation for the structure and save energy.
Composite Roof Panels
Fig 12: Composite Roof Panels

13. Natural Fiber

  • Natural fibers like cotton, wool can also be used as insulation materials.
  • Recycled cotton fibers or wool fibers are converted into a batt and installed in preformed wooden frame sections.
Cotton Insulation
Fig 13: Cotton Insulation

14. Polyurethane

  • Polyurethane foam is available in the form of spray bottles. They are directly sprayed onto the surface or wall or to which part insulation is required.
  • After spraying it expands and forms a thick layer which hardens later on.
  • They offer excellent insulation and prevent leakage of air.
Polyurethane Foam Spray
Fig 14: Polyurethane Foam Spray

15. Fiberglass

  • Fiberglass is also used for insulation purposes in the form of fiberglass batts.
  • Even though it contains some toxic binding agents, because of its super insulation property at low cost it can be considered as a green building material.
Fibergalss batt
Fig 15: Fibreglass batt

16. Cellulose

  • Cellulose is a recycled product of paper waste and it is widely used around the world for insulation purposes in structure.
  • It acts as good sound insulator and available for cheap prices in the market.
Cellulose Insulation
Fig 16: Installing Cellulose Insulation

17. Cork

  • Cork is also a good insulator. Boards or panels made of cork are available in markets.
  • A great amount of electrical energy can be saved by corkboard insulation in winter.
  • These cork boards are also good for sound insulation.
Installing Cork Boards
Fig 17: Installing Cork Boards

18. Polystyrene and isocyanurate

  • Polystyrene and isocyanurate foam sheets are another type of insulation materials which are available in the form of boards or sheets.
  • These are generally provided as insulators on exterior sides of a structure, below the grade etc.
Polystyrene Foam Sheets
Fig 18: Installation of Polystyrene Foam Sheets

19. Natural Clay

  • Plastering of walls can be done using natural clay rather than other gypsum-based plasters.
  • Natural clay plaster with proper workmanship gives a beautiful appearance to the interior.
Natural Clay Plastered Walls
Fig 19: Natural Clay Plastered Wall

20. Non-VOC paints

  • Non-VOC paint or green paint is recommended over VOC containing paints.
  • Presence of Volatile Organic Compounds (VOC) in paint reacts with sunlight and nitrogen oxide resulting in the formation of ozone which can cause severe health problems for the occupants.
  • If non-VOC paint is not available then try the paint with very low-VOC content in it.
Non-VOC Paint
Fig 20: Non-VOC Paint

21. Natural Fiber Floor

  • Naturally occurring materials like bamboo, wool and cotton fiber carpets, cork etc. can be used for flooring purposes.
Natural Fiber Flooring Rugs
Fig 21: Natural Fiber Flooring Rugs

22. Fiber Cement

  • Fiber cement boards are made of cement, sand and wood fibers.
  • For exterior siding, fiber cement boards are good choice because of their cheap price, good durability and good resistance against fire.
Fiber Cement Boards
Fig 22: Exterior Siding with Fiber Cement Boards

23. Stone

  • Stone is a naturally occurring and a long-lasting building material. Some Stone structures built hundreds of years ago are still in existence without much abrasion.
  • Stones are good against weathering hence they can be used to construct exterior walls, steps, exterior flooring etc.
Natural Stone Wall

Source: theconstructor.org

The Major Challenge of Inadequate US Housing Supply

In the last 10 years, since the Great Recession, the economy has expanded greatly, but the housing market still has not recovered. Since 2011, residential housing construction has increased, but only gradually – and not enough to meet demand.

Consider this: from 1968 to 2008, a span of 40 years, there was only one year in which fewer new housing units were built than in 2017 (Exhibit 1)—and this despite rising demand in a growing economy.

In a recent Insight, we examined the demand side of the housing market, focusing particularly on the experiences of young adults. Our research shows that housing costs have been the most significant factor preventing young adults from forming their own households as well as buying a house. Robust demand but weak supply has driven up housing prices rapidly, which in turn is acting as a force to balance demand against supply. Facing higher home prices and rents, many young people are doubling up in shared living arrangements or living at home with their parents.

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In our earlier Forecast, we discussed two main reasons for the lower levels of housing production (relative to population): increase in development costs and shortage of skilled labor.

Home building costs encompass the cost of land and regulatory costs. Since 2010, the cost of land has averaged about 23 percent of total home building expenses.1 But in some markets like San Jose, Santa Ana, Oakland, and Los Angeles, land can cost upward of 70 percent of the cost of building a home. Laws and regulations such as local zoning restrictions on lot sizes and building height and open space designations also increase the cost of building a home, in turn reducing the supply of new homes. Regulatory costs increased 29 percent between 2011 and 2016, the National Association of Home Builders (NAHB) estimates.

On the labor side, the U.S. construction industry is suffering from a shortage of skilled workers. The count of unfilled jobs in the construction industry reached post-Great Recession highs in 2018, the NAHB reports. (See our previous Forecast).

However, other factors are constraining the supply of housing, as well. Opposition to new developments near homes and communities by residents—so-called NIMBYism (Not In My Back Yard)—is restricting new construction in some locales. With young adults flocking to urban areas from suburban or rural areas, housing demand in urban areas is growing, but it takes time to construct housing to accommodate the growing demand

After nearly a decade of low levels of building, housing stock is well short of what the United States needs. In this Insight, we focus on the consequences, rather than the causes. Our analysis shows that 370,000 fewer units were built in 2017 than needed to satisfy demand. Overall, the shortfall ranges from a low of 0.9 million to a high of 4.0 million housing units, as of the second quarter of 2018, depending on the assumptions (see discussion later in this Insight). If supply continues to fall short of demand, home prices and rents are likely to outpace income and household formation will fail to reach potential. The inadequate level of U.S. housing supply is a major challenge facing the housing market in 2018 and likely for years to come.

The current pace of building is not enough to meet demand

In 2017, the United States added 1.25 million additional housing units, which includes homes, apartments, and manufactured homes. But the country needs far more units to meet demand. Adding up all the gross additions to the housing supply and comparing that to the replacement of depreciating stock and the fundamentals of housing demand reveals a large and persistent shortfall in recent years. We estimate that the current rate of demand is approximately 1.62 million housing units per year—370,000 units more per year than the current rate of supply.

Three factors drive the need for housing construction: growing demand from a growing population; the need to replenish existing stock; and the need for vacant units in a well-functioning market. We examine each factor in turn next.

A growing population boosts housing demand

The U.S. population of first-time homebuyers has become younger in recent years. Nearly 90 million residents were between 15 and 34 years old in the United States in 2016, 6 million more than those aged 35 to 54, the U.S. Census Bureau reports. With the age of the median first-time home buyer now at 31 years, these young adults comprise a large share of the first-time home buyer population and therefore drive demand higher.

The result of young adults returning home to live with parents or roommates is pent-up demand for housing. Our research shows that despite demographic shifts and other long-run trends that may reduce household formation rates for the young adult population, the key factors suppressing household formation are associated with housing costs and the labor market. If the economy remains strong and housing costs moderate, then household formation for young adults could significantly increase. We estimated that over the next decade young adults (those aged 15 to 34 in 2016) will add about 20 million households. And those households will need a place to live.

Conceivably, young adults could buy homes vacated by older Americans, but as our February 2017 Insight explains, seniors aged 55+ overwhelmingly prefer to age in place. Better health and education has boosted and extended housing demand from seniors, who are now much slower to transition out of homeownership than prior generations.2 Altogether, we estimate that U.S. net household growth needs to average around 1.1 million households over the next few years to meet the needs of a growing population. Eventually as the Boomers age out of the housing market and young adults are replaced by the smaller Generation Z, the growth in households will moderate somewhat, though the date for that moderation is well into the next decade.

Depreciating stock must be replenished

Over time, housing stock gradually depreciates and therefore must be replaced. The U.S. Census Bureau3 computes the loss rate for U.S. houses, apartments, and manufactured homes based on the age and location of the unit. Estimates from the Census Bureau indicate that the U.S. housing market needs to add approximately 350,000 units per year to replace lost units.4

A well-functioning market needs vacant units

In addition to catering to the growing population and replacing lost units, a well-functioning housing market requires some vacant properties for sale and for rent (classified as “year-round vacant” by the U.S. Census Bureau). Vacant homes increase liquidity in the market, enable prospective buyers to find a match, and give prospective sellers confidence to list their home for sale. Vacancy rates are an important indicator of housing market vitality. Too high of a vacancy rate reflects a moribund

market, while too low of a rate reduces the efficiency of the marketplace. Exhibit 2 shows trends in the vacancy rate for U.S. housing stock. The vacancy rate has declined sharply since 2010, mostly due to lack of inventory.

Growing seasonally vacant units

Many vacant homes in the United States are seasonal units, or vacation homes. About 3 percent of the U.S. housing stock is seasonally vacant. As the housing stock expands, so will the demand for second homes. Second home demand adds up to approximately 100,000 units per year. The National Association of Home Builders has estimated that the stock of second homes increased by 120,000 units per year from 2009 to 2014. With the overall economy continuing to grow and wealthier households doing especially well, we anticipate the demand for second homes to continue at a similar pace in years to come.

Growing year-round vacant units

The trend of year-round vacant properties that are not on the market for sale or rent has also been growing. Part of the reason why year-round vacancies have risen is due to geographic variations in housing demand. Structures are long-lived and can outlast their demand. As the population of the United States has drifted south and west, the populations of many legacy cities in the Midwest and Northeast that once boasted large populations have now declined sharply. If the overall year-round vacancy rate was to remain constant at around 10 percent, then for each 1 million additional households, 111,000 vacant units would need to be added to keep the vacancy rate fixed.

Annual U.S. housing need

Altogether, we estimate that 1.62 million units are needed annually to meet the housing demand: 1.1 million to accommodate household growth; 300,000 units to replace depreciated existing stock; 100,000 to meet the demand for second homes; and 120,000 units to provide enough vacant homes to maintain an efficient marketplace. This estimate is our baseline. Exhibit 3 also presents estimates based on low and high scenarios. There is considerable uncertainty around each assumption and each estimate. Thus, the true level of long-run housing demand is uncertain. However, even the low estimate (1.30 million units per year) exceeds the current rate of housing construction (1.25 million units in 2017)—meaning even under a low estimate, at least 50,000 American households each year can’t buy or rent a home because it hasn’t been built.

How many housing units are needed to match long-term demand?

The preceding analysis accounts for a one-year shortfall, but as noted, residential construction in the United States has been historically weak for almost a decade. If we compare trends over this century, how does the current housing supply compare to our estimates of housing demand? As of the second quarter of 2018, we estimate that the U.S. economy is about 2.5 million housing units below what is needed to match long-term demand.

The U.S. economy is about 2.5 million housing units below what is needed to match long-term demand.

First, we need an estimate of the long-term housing vacancy rate. Based on the previous discussion, we estimate that this vacancy rate should be around 13 percent. The vacancy rate for the United States is 12.3 percent, according to the latest U.S. Census Bureau Housing Vacancy Survey (HVS) (second quarter of 2018). Given a target vacancy rate of 13 percent, it may appear that the housing market is roughly balanced, or perhaps only a little undersupplied. However, this analysis only considers current market conditions and does not account for pent-up housing demand.

The number of U.S. households as of the second quarter of 2018 is about 121 million, according to the Housing Vacancy Survey. To understand the target/ideal numbers of households,5 we need to identify the factors that affect the formation of households (See previous Insight). As discussed in our previous Insight, the following factors impact household formation: housing costs, income, employment, education, marriage and children, race, and geography. Of these factors, our study identified housing costs to be the biggest impediment to household formation, followed by labor market outcomes. The target number of households would be the number of households when we assume there are no constraints from housing costs, or income, or employment. The unconstrained number of households could range between 122.5 million in the baseline scenario and 123.8 million in the high scenario.6

To accommodate a larger number of households and keep the vacancy rate at 13 percent, the housing supply would need to increase by 2.5 million units, expanding from 138.3 million units to 140.8 million units in our baseline, or increase as much as 4.0 million units to 142.3 million units in our high scenario (Exhibit 4). In our low scenario, vacancy rates fall to 12 percent as year-round vacancies fall by 1 percentage point and the housing supply only needs to expand by 900,000 units to 139.2 million units.

To bridge the gap between the current housing supply and future demand, housing construction will need to accelerate. First, the annual gap of 370,000 units currently being undersupplied relative to long-term demand must be filled. Then, the housing market will need to supply excess units for some time to bring the housing stock up to its target level.

Part of the reason the U.S. housing market is so undersupplied is because the areas of the country where employment has grown robustly are also areas where the housing stock is only inelastically supplied (See previous Insight). Even in areas with strong employment growth and long-run elastic housing supply—Texas, for example—shortfalls in skilled construction workers and available lots have prevented the housing supply from expanding rapidly enough in the short run to meet demand. Even in traditionally elastic housing markets, home prices are rising well above long-run averages.

In other parts of the country, particularly in the Midwest and Northeast where population has declined, hypervacancy rates have soared (Mallach 2018; Molloy 2014) and year-round vacancy rates exceed 20 percent.7 These struggling communities have little prospect of an immediate turnaround and contribute to our nation’s long-lasting upward shift in year-round vacancy rates.

Over time, the housing supply in high-growth but elastically supplied areas will expand, but in the interim, housing cost pressures may result in movement toward areas with lower housing costs. If housing demand shifts toward lower-cost housing markets that currently have available housing supply, the long-term vacancy rate could also begin to decline.

Conclusion

The United States is not building enough housing to meet demand. The current annual rate of construction is about 370,000 units below the level required by long-term housing demand. And after years of low levels of building, a significant shortfall has developed, with between 0.9 and 4.0 million too few housing units to accommodate long-term housing demand.

In our latest Forecast, we forecast housing construction to pick up gradually. However, it will still be a year or more before the level of building matches incremental annual long-term housing demand. To bridge the shortfall of total units, the U.S. housing market may need to supply more than 1.6 million units per year.

Until construction ramps up, housing costs will likely continue rising above income, constricting household formation and preventing homeownership for millions of potential households.

Appendix A.1 Calculating the target household level

We estimate the target number of households based on population and headship rates (the number of head of households/total households) using the following equation (eq. A.1.1):

where i = 5-year population age groups from 15-19 to 65+

and hri* = target headship rate of age group i.

We obtain the headship rates for 1994−2018 from the Current Population Survey–Annual Social and Economic Supplement (CPS-ASEC) using the Integrated Public Use Microdata Series (IPUMS) (Flood et al. 2017).

To estimate the target households, we need the target headship rate. We then adjust this headship rate( hr * ) based on the following factors: housing costs, income, and employment (Household Formation Insight). To obtain the contribution of these factors to household formation, we run the Oaxaca-Blinder decomposition on the factors affecting household formation. Based on the contribution of the factors, we add back the factors related to economic conditions such as income, employment, and housing costs because these factors can be considered temporary. Factors associated with sociological changes such as increase in life expectancy, delay in marriage age, and change in educational attainment are considered permanent. Therefore, we exclude them from the calculation of the target headship rate.

Factors associated with sociological changes such as increase in life expectancy, delay in marriage age, and change in educational attainment are considered permanent. Therefore, we exclude them from the calculation of the target headship rate.

For the baseline scenario, we add back housing costs assuming that housing costs become more favorable for household formation. The target headship rate would then be (eq. A.1.2)

where αhousingcost, i is the contribution of housing costs to the total headship rate.

For the high scenario, we assume that housing costs and labor market outcomes both become more favorable and that would improve the prospects of household formation (eq. A.1.3)

where αincome and employment, i is the contribution of labor market outcomes to the total headship rate.

Using the new headship rate, we compute the target households based on the population using eq. A.1.1, arriving at a CPS-ASEC based target household number for the second quarter of 2018.

However, household estimates vary considerably based on the source. Because we use the Housing Vacancy Survey for our analysis of housing supply, we must convert households based on the CPS-ASEC to a series consistent with the estimates from the HVS. To do so, we compute the gap in households between the target and the latest estimate from the CPS-ASEC. Then we apply a multiplier to this gap that is proportional to the gap between the CPS-ASEC and HVS household counts. The CPS-ASEC household estimate for March 2018 was 127.6 million. The HVS estimate for that month was 120.7 million. We deflate our target households by a factor equal to 120.7/127.6, or 0.95.

Based on the target households and the target vacancy rate of 13 percent, we estimate the target housing stock (k*) needed as (eq. A.1.4)

The difference between the current housing stock and the target housing stock k and k* gives us an estimate of the shortfall in terms of housing units to match long-term demand.

Source: FreddieMac

How Kenyan women are changing their lives with a new way to buy homes


Mary Muthengi is preparing to host her extended family for Christmas. She has four siblings and her husband has three. Together they also have three children. “There will be so many people, we’ll even sleep on mattresses on the floor,” she said at her new nine-room home in Machakos County, 40 miles south-east of the Kenyan capital Nairobi. “There will be new shoes, new clothes, goat and chicken to eat. The children are so very excited.” Mrs Muthengi, who is 32, will be hosting Christmas this year for the first time thanks to a housing loan from KWFT, a Kenyan microfinance bank.

With the support of international housing charity Habitat for Humanity, the bank is revolutionising the way women on low incomes can access funds to build and improve their homes in rural areas of the country. Founded in 1981, KWFT initially focused on women, to give access to banking services they were excluded from. Over time it found women to be extremely reliable customers.

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Kenya has a population of around 50m but, according to the central bank, fewer than 30,000 mortgage accounts. Informal land ownership, particularly in rural communities, means lenders cannot use property as security, and prospective borrowers, like Mrs Muthengi, usually have few other assets to use as collateral.

In response KWFT has taken a different approach to lending. The bank saw that women were often using its small business loans to build or repair their houses. So while women could not afford to buy homes, they could afford to build them, slowly, if they had access to credit. Habitat for Humanity, the FT’s Seasonal Appeal partner, provided the research and training to help to develop a new type of loan called “Nyumba Smart” — meaning beautiful home — using a $6.4m donation from the Mastercard Foundation. KWFT delivered the staff, the network and the clients.

“Housing is something we were always going to be ultimately involved with, but Habitat was a very important catalyst to make sure we have the right product,” Mwangi Githaiga, managing director, said in an interview at the KWFT headquarters in Nairobi. The loans, launched in December 2014, provide women with up to Ks1m ($10,000), repayable over a maximum of three years, for the construction of all or part of a house. Mrs Muthengi, who earns about $40 a day trading second-hand clothes, borrowed Ks100,000 — about $1,000 — earlier this year to complete the construction of her home. It is the first time she and her family have lived in a house they own.

A women’s group discusses loans under the guidance of a KWFT officer in Kyangala, Kenya “I have dreamt about having a home, but not a home like this,” she said of the unfinished building, which has a dazzling blue tin roof. To avoid issues of limited collateral, women like Mrs Muthengi, who have an income but no assets, are organised into groups that function as unique borrowing associations. When a woman wants to borrow funds for her home, affordability is assessed by the KWFT loan officer, but the decision is taken by the group. If the borrower fails to keep up with repayments, all other lending to the group ceases until the shortfall is met, often by the other members. “We use social collateral rather than hard collateral,” Mr Githaiga said. “Because we are village-based we know our customers and other women are willing to say, ‘give her the money and if she doesn’t pay we will take responsibility’.” ‘Surpassing expectations’ On a bright November morning in the village of Kyangala, 10 miles south-east of Machakos town, a group is deciding whether to lend Ks200,000 to Wayua Redemter Kisilu, so she can put a roof on her half-built home. Mrs Kisilu is sent to the shade of a nearby tree as the group confers. Heated discussion ensues: Mrs Kisilu has not been active in the group, often missing meetings. They decide to approve the loan only if she agrees to attend more regularly.

Wayua Redemter Kisilu waits as the group decides to loan her money to finish her roof, but only if she attends more meetings KWFT has 245 branch offices in 45 of Kenya’s 47 counties, and has developed deep networks in the communities it serves, building client relationships based on mutual trust and understanding. The unique community-based banking model has been extremely successful. When KWFT and Habitat embarked on the project five years ago, the target was 17,000 loans. Today the initiative — which is also active in Uganda via Centenary Bank — has issued more than 60,000, mobilising in excess of $60m and helping at least 300,000 households. On average KWFT makes 1,600 Nyumba Smart loans a month. “We have surpassed our target and our expectations completely,” said Kevin Chetty, a director at Habitat who helped to develop the product. “Not only are you providing shelter, not only are you changing lives of households and children, but you are also shaping financial inclusion.” The Kiani women’s group is one of KWFT’s longest-running borrowing circles. Its chair is Monicah Mbeke Mbuvi, a formidable 67-year-old former teacher-turned-small-town-business-mogul.

Founded in 2009, her group has 36 women each with a variety of housing, business and appliance loans — KWFT also provides borrowing facilities for household items such as solar panels and clean energy cooking stoves. FT Seasonal Appeal 2018 FT Appeal for Habitat for Humanity Please click here to donate. This story is part of the FT’s Seasonal Appeal for Habitat for Humanity, a charity that is dedicated entirely to housing and issues related to it, working in more than 70 countries Mrs Mbuvi’s blue and white home is lined with trees, perched on a plot of land high above the village. Since Nyumba Smart was launched, she has borrowed Ks320,000 (about $3,100) in four different loans, paying them off each time. She is about to request Ks150,000 to construct gates at her entrance. “I used to fear taking loans as I heard people saying that if you borrowed money you could lose everything,” Mrs Mbuvi said. “Now when I sit here in my home and look around, I am so very proud. I am just so happy.”

Source: Tom Wilson

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