by Anitra D. Brown
New Orleans has a housing problem.
It isn’t a new one. But it’s multi-faceted and troublesome.
And it’s been stated in many ways. Some examinations of the city’s housing crisis have focused on housing wages—the amount of money a person needs to earn in order to afford a decent place to live in their community.
In 2017, a report released by the National Low Income Housing Coalition and the Greater New Orleans Fair Housing Action Center titled “Out of Reach: The High Cost of Housing”, detailed that in order to afford a modest, two-bedroom apartment in New Orleans, renters need to earn $18. 54 per hour. Of course, a significant portion of New Orleanians are not earning that. In fact, 12 percent of full-time, year-round workers earn less than $17,500 a year, which is roughly $8. 41 per hour; and more than 64,000 working women earned less than $17,500 through in part-time or full-time work in a 12-month period, according to U. S. Census data.
Meanwhile, the minimum wage in Louisiana is still set at the federal base wage of $7. 25 an hour. According to the report, a minimum wage earner would have to work 84 hours per week to afford a modest one-bedroom unit in New Orleans. And while a reported 71 percent of workers in the New Orleans area earn an average of about $35,000 a year, even that breaks down to an hourly wage of roughly $16. 82—about $1. 72 short of the hourly wage the report says is needed to afford a decent two-bedroom housing unit. Meanwhile, rents are up about 50 percent more than pre-Katrina; New Orleans has only 47 affordable rental units for every 100 low income residents; and 36 percent of the city’s residents are paying more than 50 percent of their income on housing.
Other assessments of the housing problem look at how much residents are paying for housing and the manner in which those costs drain their resources, making it hard to meet other cost of living necessities. According to HousingNOLA’s 2017 State of Housing Report, 61 percent of local renters are cost burdened; and 35 percent are severely cost burdened.
The Department of Housing and Urban Development defines cost-burdened renters as those “who pay more than 30 percent of their income for housing and face difficulty affording necessities such as food, clothing, transportation, and medical care. ” Severe rent burden is defined as paying more than 50 percent of one’s income on rent.
The numbers are better for homeowners, but nothing to celebrate. About 32 percent of homeowners are cost-burdened; and 14 percent are severely cost burdened. Meanwhile, the median home value has risen more than 12. 5 percent, increasing from $192,000 in 2014 to $219,700 in 2016. And while homeowners are not nearly as cost-burdened as renters, rising home prices can make down payments and property tax bills soar—keeping homeownership out of reach for many.
The simple reality is that there is not enough quality, affordable housing to accommodate the residents that need it. Or is there?
Housing NOLA Executive Director Adreanecia Morris says Orleans Parish has an alarming vacancy rate.
“There is plenty of vacancy across the city,” says Morris. “A 20 percent vacancy rate is an alarming statistic. You talk to any real estate expert and they will tell you that a double-digit vacancy rate is characteristic of an unhealthy, disturbing market. That means that a market is soft…it’s weak. And that’s not what we’re seeing here. We’re seeing prices that are wildly inconsistent with what people actually make.
The reasons for housing costs that are out of touch with what many New Orleanians can actually afford are varied. Morris says, “It could be greed, predatory, stupidity,” she quips. Some point to the demolition of traditional public housing, which certainly impacted residents who relied on the subsidized units.
Short-Term Rentals Not the Culprit
Lately, many have pointed fingers at the short-term rental market, with opponents of the vacation rental homes claiming that not only is their existence causing property values to rise and pricing out locals but destroying the character of neighborhoods.
Short-term rental proponents, however, are quick to point out that many of the homeowners benefiting from the ability to earn income on their property are locals—people who live in the city and are now able to better maintain their property, pay taxes and contribute to the economy because of short-term rentals.
They are also concerned that STRs are being used as an easy target in lieu of more valid reasons that New Orleans is experiencing housing cost woes, such as unchecked construction, gentrification and the demolition of traditional public housing.
Proponents say they welcome regulations that provide safeguards and guidelines for the industry, especially the sort that would limit the amount of STR units owned and operated by out-of-town corporations, but they are vehemently opposed to being told how they can or cannot use their property.
At least part of the problem is rooted in Hurricane Katrina and the subsequent rise in construction costs and insurance rates that have fueled rising values and higher property tax assessments that are “wildly inconsistent with what people are making,” Morris says. “We still have not seen wage increase. Despite all of the construction jobs, wages have remained flat for the last 20 years.”
And while New Orleans has seen its public housing landscape drastically changed in the 13 years since Hurricane Katrina, Morris says that the public and subsidized housing stock has increased since the storm. While the total number of public housing units has decreased to about 2100, the number of Section 8 vouchers in use has doubled.
One might argue, however, that one of the chief reasons the number of section 8 vouchers has increased is because many former traditional public housing residents could not or would not return to the redeveloped communities, opting instead for housing vouchers.
Public and subsidized housing is not without its problems.
“Many of those vouchers are going to apartments and houses that are more expensive and farther from jobs sometimes. You have a lot of voucher holders that despite the fact they are getting assistance they are still paying more than they can afford because of the local housing market.”
Morris also points out that while plenty of building and development have taken place, it has not been aimed at addressing affordable housing. That is why the work of the group to assess needs, define goals and work with partners to focus on the issue is critical.
“At HousingNOLA, we recognized that we needed deliberate intervention. This could not be we hope . . . we could not wish, and we couldn’t build our way out of it, because we have built a lot. Over 100,000 homes and units across the housing market have come online since Katrina. And some people will say ‘well that was after a disaster, that was insurance money and Katrina money. ’ And while that’s true what it does demonstrate is that we have the capacity. The point of that is that we can.”
She continues, “We only need half of that to solve this problem. We’re talking about making everyone who is here right now housing secure. What we’re talking about is not just subsidized housing, but housing that is affordable for everyone. There are people in this market right now that don’t qualify for subsidized housing and they are struggling. Their utilities are too high, their property taxes are out of control, the insurance—making it impossible for them to eke out a living here. So we need to intervene for them as well.”
The HousingNOLA initiative was launched in 2015 with a 10-year plan to address the crisis. HousingNOLA is the city’s community-led housing plan that aims to address affordable housing needs of New Orleans over the next ten years by developing 3,000 affordable homes by 2018 and a total of 5,000 by 2021 with the use of local, state and federal money, through public policy and by working with private developers and nonprofits.
HousingNOLA released its first report card on the state of housing in the city in late September 2016, with an event that included a round table discussion with community members, guests and city officials will follow. In that report card, the organization gave itself a B for its efforts to help a coalition of community, government and private leaders meet the goals.
This year, the grade was a C.
The organization has laid out five goals as a part of its Policy Priorities. They are to preserve existing supply and expand new supply of affordable rental and homeownership opportunities, prevent future displacement through development activities and continues study and policy review; enforce and promote fair housing policies through the city; encourage sustainable design and infrastructure; and increase accessibility for all, especially residents with special needs.
But Morris laments that reaching the goals have become increasingly difficult with clear-cut policy that is adhered to by local lawmakers. One specific example is the decision last February by the New Orleans City Council to allow developers in the Riverfront Overlay District to build taller, denser construction without requiring them to include 10 percent affordable housing in their large-scale developments as originally planned.
Morris decried the move then, saying that in order for the city to meet the affordable housing needs, community has to come before developers.
Right now, New Orleans has a need for 33,600 housing units by 2025, according to HousingNOLA’s projections. And public entities like the Housing Authority of New Orleans and the New Orleans Redevelopment Authority cannot do it all, Morris says.
“The public partners cannot address that whole 33,000,” she says. “It would nice if they could, but they came up with the numbers that they can do.
Policy leaders and the private sector have to do their part, and they can start by making and sticking to sound policy.
“What’s in the HousingNOLA plan is something everybody agreed on,” Morris recently told The Tribune, “which is why it’s so aggravating when we don’t get things passed or elected officials undermine things. ”
Without strong policy, along with the efforts of public and private leaders in housing and development, New Orleans cannot reach its goal. In fact, it has already likely fallen short for 2018. HousingNOLA had estimated that 2500 affordable housing units would be created by September 2018. That number is now expected to be 750, according to a HousingNOLA report. In its most recent report card, HousingNOLA released a new set of recommendations for a Smart Housing Mix policy that will help New Orleans reach its goals. Those recommendations include:
• Require new development, reuse and rehabilitation projects to make 12 percent of their housing units affordable.
• Offer a standard unified package of incentives to accompany Smart Housing Mix requirements
• Require a 99-year term of affordability.
