The Fed, The Housing Crises and How to Fund Sustainable Housing

What is Sustainable Housing? 

There are two components: physically sustainable and financially sustainable. Physically sustainable means our housing stock renewal is in line with resource renewal and that it is energy-efficient.

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The materials part can be achieved by reducing, re-using and recycling building materials and using materials obtained from renewable sources.  The energy part can be achieved by retro-fitting existing buildings to meet much higher energy-efficiency standards and by ensuring that all new buildings are built to the highest energy-efficiency standards.  The Leadership in Energy and Environmental Design (LEED) systems developed by the U.S. Green Building Council (USGBC) are an example of what can be done.

green energy playground

Financially sustainable means our housing is affordable and that housing options are available to suit everyone’s budget, on an ongoing basis.

Real-US-home-prices-1890-20142

There are two basic ways this can be achieved:

1) Decrease the price of housing; 2) Increase people’s incomes.

1) and 2) can be done at the same time.  Housing prices can be decreased by decreasing housing costs.  This can be achieved by various means, including reducing housing costs to homeowners by modifying mortgages, making sure that these savings are passed on to renters in the form of lower rents, and directly providing more affordable public, social and community housing options to keep downward pressure on overall housing market costs.

To solve the housing crises we need to make sure everyone has a good living environment and can afford to live in it.  An obvious first step is to make sure that people can stay in the homes they’re in, and those that have been foreclosed on can get back into good homes.  This requires resolving the mortgages crisis.  The National Emergency Employment Defense (NEED) Act provides for investment priorities in Title V, including for resolving the mortgage crisis in Section 509:

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SEC. 509. RESOLVING THE MORTGAGE CRISIS. 

The Congress shall be aware that funding through this Act is available for Congressional enactments for resolving aspects of the mortgage crisis.”

In addition, the NEED Act provides debt-free grants and interest-free loans to State and local governments which can go toward funding sustainable housing infrastructure and affordable housing solutions in local communities:

SEC. 504. MONETARY GRANTS TO STATES. 

(a) IN GENERAL.—Each year, the Monetary Authority shall instruct the Secretary to disperse grants over a 12-month period to the States equal to 25 percent of the money created under this title in the prior year. In the first year the amount of such grants shall be 25 percent of the anticipated money creation in that first year.

(b) USE OF GRANTS FOR BROAD-BASED PURPOSES.—The States may use such funds in broadly designated areas of public infrastructure, education, health care and rehabilitation, pensions, and paying for unfunded Federal mandates.”

SEC. 510. INTEREST FREE LENDING TO LOCAL GOVERNMENTAL BODIES. 

Before the end of the 180-day period beginning on the date of the enactment of this Act, the Secretary shall provide recommendations to the Congress for a program of interest-free lending of United States Money to State and local governmental entities, including school boards and emergency fire services for infrastructure improvements under their control and within their jurisdictions, based on per capita amounts and other criteria to assure equity as determined by the Monetary Authority.”

Because different communities have different circumstances, State and local governments are better placed to address the specific housing needs of the communities they serve.

US Housing Misery Index
US Housing Misery Index

The NEED Act provides us with the means to provide the funding sources needed to achieve the sustainable housing we need now and need even more moving forward into the future.  See here for more background and explanation.

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