Futility and perpetuity

The long and winding road

Photo by ÉMILE SÉGUIN ✳️✳️✳️ on Unsplash

We broke ground on two new homes last week. Two homes is less than a raindrop in the ocean of affordable housing needed here, and frankly everywhere. But, as the saying goes, a journey starts with a single step…or in this case, two.

These homes will be affordable: our partner families will pay no more than 30 percent of their household income for their house payment. That 30% level is the accepted threshold for what is considered affordable. Contrary to popular belief, Habitat does not “give” homes away. We deeply subsidize their sale price so that lower income families can afford them. It’s a hand up, not a hand out.

The homes cost way much more to build than the price we sell them for. The gap between what it costs to build and the mortgage our families qualify for is our subsidy…what we, as a not-for-profit, must raise or fund internally to fulfill our mission. Economically it is challenging. Bigly.

And in high-cost areas like the Hudson Valley, increasingly our economics don’t work.

This is why Habitat operations are closing all over the country. In New York, we have shrunk from 50-something to 30-something HFH affiliates over the past decade. Smaller operations…serving smaller rural areas and staffed mostly by volunteers have been the main victims. Costs, compliance and demographics are all working against how we do what we do. Or at least how we used to do what we did.

Increasingly it’s go big or no homes. We have to scale up or sayonara.

But…you can’t operate at a substantial per unit loss and make it up on volume. It’s a Catch-22. If Habitat is the only affordable housing developer that focuses mainly on homeownership (it is) and we are increasingly challenged to build more because of the economics (we are), what’s the solution to increasing our housing production?

I’m waiting….

By policy, we select families first on their need for better housing. In practice, to afford the home, they need to earn at least half or so of our area median income, about $45000 or more. To some that sounds like a lot of income, but in NY the average wage needed to afford a two-bedroom rental is $37 per hour or $77,000 per year.

Things are out of control. Our area median income (AMI) keeps rising because of the inflow of those who work elsewhere for much higher wages than are available in our county. For 2023, AMI in Columbia County jumped $14,000, to $103,000. Our local wage growth has not kept pace, with the average salary across the county’s top industries less than half of AMI.

Adding to this is that construction of affordable starter homes has been virtually nil over the last several decades. There simply are none to buy that the average local wage earner can afford. (Hint: There’s no money in it for the developer.) Over the past 15 years, less than 1/2 a house of any type has been built for every job created in the Hudson Valley. The houses that have built are vastly larger and more expensive than those that were built by previous generations. And this is despite the vast millions of dollars poured into “affordable housing” programs by NY State alone.

The system clearly isn’t working. Subsidies funded by taxpayer dollars are not getting into the production of the type housing that builds communities and supports families: the starter home. And Joe and Josephine Taxpayer knows it. Why should they support putting their tax dollars into something that doesn’t work and those who benefit largely don’t support? (For very valid reasons that those in power still refuse to hear.)

Author and activist James Baldwin asked this question decades ago. We still have not answered it truthfully: It’s by design.

There are answers. They’re not easy or palatable ones. But they may be the right ones. And this may be the right time for them.

“Those who say it can’t be done are usually interrupted by others doing it.” - James Baldwin

More on that next time.

Enjoy your hot dogs.