Renting versus owning: how homeowners come out ahead

I’m doing more digging into the 2011 American Housing Survey, as a follow up to this weekend’s post about the age of American housing.

The survey breaks down “owner occupied” versus “renter occupied” units, and the differences between them are compelling. In particular, the survey hints at public-health downsides to renting, though these results are likely tied more to poverty than to the fact a person is renting as the data does not account for socioeconomic status. Nonetheless, here are some interesting statistics.

1. Renters share bedrooms more often.

chart_1

As you can see, around 50% of households in either category have .51 to 1 person per bedroom. But for households with 1.51 or more people per bedroom, the renter category jumps to more than 20%, while only 6.7% of owner-occupied households are that crowded.

2. Renters are more likely to have unsafe drinking water.

Frankly, it’s amazing to me that nearly 10% of people in the United States are without safe drinking water, but it’s worse for renters than for homeowners.

3. Renters have more problems with pests, bad wiring, and holes in floors and walls.

chart_4

As you can see, homeowners have more mice problems, but that’s about it. Renters have more problems with rats and much more problems with open cracks or holes, exposed wiring, and cockroaches. I’ve experienced that last one while renting in the Deep South, and it’s terrible.

4. Renters are less healthy.

Maybe it’s because of all the other things mentioned, but renters report being in “very good” health less often than homeowners. Although both categories of people have the same number of people who reported “excellent” health, renters also report “poor” health more than homeowners.

chart_5

Let me know your thoughts on the comments below.

The age of housing in the United States

The Census Bureau recently released the results of the 2011 American Housing Survey. One noteworthy point for me was how old housing is in the U.S. The data basically shows a rough bell curve peaking between 1950 and 1979. The median year was 1974, 34 years ago. This number has crept up since 1985, when the median house age was only 23, according to the National Association of Home Builders.

age of houses in the united states

For more analysis on this issue, check out this oldhouseweb.com article from a few years ago. It shows which states had the highest concentration of old housing at that time. A surprising amount of it is in the Midwest, with Michigan, Illinois, Wisconsin, Indiana, and Ohio all in the top ten.

The Daily Show on MERS

Jon Stewart took on MERS on Tuesday night’s episode of the Daily Show; watch it below. As I’ve noted in earlier posts, there is a good deal of recent ongoing litigation against MERS, and it’s not only in the mortgage-registration business; it also markets tools to local governments for vacant property registration.

The Daily Show with Jon Stewart Mon – Thurs 11p / 10c
Residential Evil
www.thedailyshow.com
Daily Show Full Episodes Indecision Political Humor The Daily Show on Facebook

 

 

Featured Website: LOVELAND Technologies

loveland technologiesLOVELAND Technologies is a neat project out of Detroit, Michigan, that is selling micro-lots of land in “microhoods” for $1 per square inch that people can track online. They focus on making these microhoods exciting by generating artsy urban-renewal projects. According to their website, they “aim to provide a fun, game-like ownership experience while creating entertainment fundraising, community collaboration, and social mapping tools that work at any scale.” They got started a few years ago through Kickstarter.

They have a few other projects. There’s online mapping projects (in collaboration with Data Driven Detroit) and a “LoveTax” system, a creative way for people to fund projects. They also have a cool online app called “Why Don’t We Own This?” that tracks more than 40,000 vacant properties owned by the city, state, or county. The Huffington Post recently reported that this year’s Code for America fellows in Detroit will be building off the momentum that project has created. Overall, a great Detroit project to check out.

For more info, the founders gave a presentation at a TEDx conference in Detroit in 2010 that I’ve embedded after the jump.

Continue reading “Featured Website: LOVELAND Technologies”

Zoning for City 2.0

chicago-city-plan1
Chicago Plan Commission, 1946

As I’ve written previously, city governments get their power from the state. Yet states almost always give cities authority to enact zoning laws, a legal device used to limit land use. (Interestingly, many states authorized zoning by adopting standard zoning-enabling legislation drafted by the U.S. Department of Commerce. So zoning, like wireless-infrastructure funding, is another pro-city development advanced by the federal government.)

Zoning comes in many different forms. The Supreme Court first upheld the constitutionality of zoning in 1926, when approving an ordinance in Euclid, Ohio, that limited land use by geographic region and development type (i.e. industrial v. residential). That ruling spawned an increase in that type of zoning, but others exist: Some cities set a base of limitations and then give incentives for land developers to restrict land use in additional ways (this is called incentive zoning), and other cities worry less about whether the property is industrial or residential and more about the “form” of the buildings, i.e., their size or amount of street access (this is called formed-based zoning).

Obviously, the importance of this device in city planning can’t be emphasized enough: It would be hard to plan a city without it; even Houston, the largest U.S. city without zoning, has other land-use regulations that serve as a sort of equivalent.

As an example, I want to highlight how NYC is using zoning in innovative ways. The city now views zoning as not only a land-use tool, but as a tool for encouraging beneficial social change. As Julie Iovine recently wrote in the Wall Street Journal, NYC is using zoning “to curb obesity by offering incentives for fresh-food markets in low-income neighborhoods; buck up the mom-and-pop store; and promote an astonishing range of other quality-of-life benefits.” Additionally, the city now wants to use zoning to influence small details of city design: according to Iovine, NYC Planning Commissioner Amanda Burden introduced on January 3 “a zoning amendment that will preserve small shops on avenues with a residential character and force new banks on the Upper West Side to shift most of their services from extended street fronts to second-floor locations.”

Of course not everyone will be excited about these innovations. And zoning (like any government function) has the potential to be co-opted by business interests, to the detriment of the public. But regardless, aggressive zoning for the public good remains an vital tool in the belt of 21st-century city planners who want to turn hoards of data into real-world progressive.

Which states have the most Section 8 housing per person?

I recently used open data from HUD about public-housing inventory and Census population data to examine which states had the most Section 8 housing units per person in 2010. (Section 8 is a federally subsidized program for low-income renters.) Here’s the top 6 and bottom 6:

which states have the most section 8 housing

I’m not surprised that DC is number one, since it has the nation’s highest poverty rate. Nor am I surprised that NYC, with its relatively well-organized housing initiatives, is number two. But what about Massachusetts and North Dakota? Any ideas? Here’s a visualization of this data:

Section 8 Housing per State Map

 

Could Chicago raise an additional $13m off of vacant properties?

vacant property chartI recently created this chart showing how many buildings, reported as vacant to Chicago 311 (and actually found to be vacant) were either open or boarded. The number of open properties (around 13,600) far outpaces the number of boarded ones (1,544). This info is interesting because Chicago’s vacant-property ordinance requires registration and boarding (and eventually more-intense security measures) for properties left vacant more than 30 days.

There is, then, a bunch of buildings in Chicago that are short-term vacancies or a bunch that are violating city code. My guess is that it’s the latter. The fee for registering a property is $250 (every 6 months), and the property owner is required to buy liability insurance and keep the property maintained. So most people are probably trying to fly under the radar until they get caught. And since city officials typically don’t have any way of telling how long a property has been sitting vacant, the 30-day grace period only starts running from the date they find the property vacant.

So how much money  could the city make?

Continue reading “Could Chicago raise an additional $13m off of vacant properties?”

Should cities use MERS for vacant-property registration?

Nails, Gifts and MortgagesOne convenient way for a city to start a Vacant Property Registration (VPR) program is to require homeowners or mortgagees to register with the Mortgage Electronic Registration Service (MERS). MERS was created by the mortgage industry to track mortgages as they were bought and sold, but once VPR ordinances started sprouting up, MERS made its database accessible to local governments to use in conjunction with their VPR programs (this is called the MERS Initiative). Using this service lets cities track who owns loans on what properties— increasing their chances of figuring out who is actually responsible for maintaining a property. And better yet, the service is offered to cities for free.

So what’s the catch? At first glance, not much; hundreds of cities are signed on, and for each registered property MERS gives them online access to the title holder, servicer, and property preservation company (a local company hired by the mortgage company to maintain a property). But my warning is this: MERS is very closely associated with the mortgage industry—which is generally opposed to VPR—and, in the past, the company’s sloppy recordkeeping has worked to shield the mortgage industry from liability. It’s unfortunate that the most viable electronic database isn’t maintained by a neutral third-party, but essentially the mortgage industry itself.

I see three alternatives (please feel free to add more). First, cities could develop their own electronic database (or encourage private citizens to develop one for them). This approach has a glaring downside: If each city creates its own database, then compliance is more difficult for the mortgage companies, who usually must maintain vacant property across the country. Second, cities could go with another company, the Federal Property Registration Corporation, which is a private company like MERS, though less criticized at this point. The third alternative is for a non-profit or government entity to create a uniform platform that local cities could adopt as their own, essentially a freeware database. This approach has the benefit of giving local communities control over the database, while maintaining uniformity, which is essential to mortgage industry compliance. I have previously proposed that the federal government create such a platform, but now realize that any developer could do it—including folks from Code for America or using Socrata—and promote it nationally.

I discuss some of these ideas in an academic paper you can download here.

As always, ideas or comments are welcome.

What is vacant property registration?

file0001472960139As the country continues to suffer the repercussions of the mortgage crisis, one consequence to many cities is a growing number of vacant properties (other cities, like my hometown of Flint, have been dealing with large numbers of vacant buildings for years—the county where Flint is located has set up a renowned landbank to help address the problem).

Vacant Property Registration (VPR) ordinances have become an important tool in combating this rise in vacancies (and the resulting increase in costs as city governments battle blight and vandalism). The basic idea is that a local government enacts a law that requires landowners to pay a fee for registering vacant property and to maintain the property to certain standards. The fee pays for staff to monitor and enforce the maintenance of the property.

Beyond the basics, there are many differences in VPR ordinances nationwide. One distinction is when registration is required: Many cities require registration after a property has been vacant for a certain amount of time; others require registration only after a foreclosure; still others use both approaches. The foreclosure approach is aimed at mortgage lenders, who typically control a property’s maintenance when the property is in the foreclosure process (and often, the theory goes, let maintenance slip). Registration encourages them to hire local companies to maintain the property or risk incurring penalties for noncompliance.

Another way VPR laws vary is in the fine imposed. Some cities impose escalating fees for every year a property is vacant. This type of law focuses on getting rid of vacant buildings altogether. Many of these cities require property owners to submit plans to renovate or demolish buildings on the property. Other cities require a small or even no fee for registration but impose steep penalties for noncompliance with maintenance rules. The purpose of these laws is aimed more at keeping a city clean while it waits for economic recovery. Maintenance rules can be extensive, including guidelines for pools, securing a building, and the exterior of the building (even including paint colors).

The bottom line is that a city looking to manage vacant properties should consider enacting a VPR ordinance (or encouraging the county or even the state to do so), but must also figure out what the primary problems are that it wants to address:

  • For city officials facing a swell of foreclosures but confident that homeowners will return, a foreclosure-initiated ordinance (like that enacted in Chula Vista, California), may be the best bet. Those types of programs imposes strict maintenance requirements on mortgage companies when a property goes into foreclosure.
  • For cities facing long-term vacancies (like many Midwestern cities facing loss of industry) the best solution might be an aggressive program like that in Wilmington, Delaware, which imposes severely escalating fines for every year a property remains vacant.
  • Even better, many cities are adopting a combination of these approaches—targeting both longterm properties and those recently in foreclosure.

Of course, once any law is passed, the key to success is aggressive enforcement.

For a database of VPR ordinances, check out Safeguard Properties or Mortgage Contracting Services. But be aware that both these websites are associated with the mortgage industry, which is generally opposed to vacant property registration (calling the requirements unreasonable).

I will do a future post on electronic registries, such as the Federal Property Registration Corporation and Mortgage Electronic Registration Systems (MERS), and their potential pitfalls (especially MERS). For now, I wanted to lay out the basics. To see more, check out my article Vacant Property Registration Ordinances, 39 Real Est. L.J. 6 (2010), or go to the resource page for vacant property registration.