July 26, 2017

Increasing renter access into private market housing: A personal tale

AHI program Officer Elisa Harrigan at home, in front of her "Latin wall," filled with ceramic home models, a nod to tradition in her home country of El Salvador.

I’m a homeowner.

I was lucky that everything lined up for me to fulfill a dream of owning a home. This was important to me less because homeownership is part of the “American dream,” but because I had experienced the ups and downs of housing stability and access to rentals that came with being a renter.

I have received rent increases with little notice and have felt like I had to choose between food or health care and rent. Once, I delayed going to the doctor for a fractured wrist because I couldn’t afford the health care co-pay and my rent at the same time. I have pleaded with potential landlords to look over my past credit challenges. I have struggled with feelings of unworthiness when I didn’t sound like a rental listing’s ideal renter — sometimes including attributes that were against Fair Housing law. Anytime I moved from one rental to another, I went into debt. It might take me four months to get out of debt or as much as two years, once I factored in the application fees, deposits, moving costs and first and last month’s rent. I spent years chasing ever more affordable rental homes, which helped my immediate financial need but in the long term did not lead to more stability.

Since I became a homeowner six years ago, rents have increased in Portland by 43 percent, while Oregon incomes have only increased by about 6 percent. Rental vacancy rates were around 9 percent when I bought; although the rental market is seeing higher vacancies overall, rental homes that are affordable to lower income tenants have significantly lower vacancies, making it harder to find a home that is affordable to someone with a lower income. Rates for affordable housing now range from 0.5 percent to 4 percent. Today’s rental market of higher rents and low vacancies has been a hard reality especially for low-income renters and often leaves renters vulnerable to poor rental conditions or homelessness.

The importance of naturally occurring affordable housing

There has been a shortage of subsidized rental housing for a long time, but in recent years, there has also been a shortage of affordable private market rental homes. This is important because, in general, the private market has been housing low-income renters in naturally occurring affordable housing, housing that is offered by the market that is more affordable than the general market without subsidies. Since vacancies are extremely low in naturally occurring affordable private market housing, low-income households are experiencing higher housing uncertainty and becoming rent burdened, while the organizations working to help low-income renters find homes are needing to shift to fast-paced market conditions.

As a program officer working on Meyer’s Housing Opportunities portfolio, almost every community and nonprofit I talk to shares heartbreaking stories of families with children living in tents or cars; seniors and people with disabilities on fixed incomes severely rent-burdened; hard-working people not able to find homes in the same town or county where they work; and families doubled up in rental homes to avoid living on the streets.

This is not just a Portland problem. Hood River, Ashland, Roseburg, Salem, Springfield, Vernonia, Bend and more all share similar stories and need. The challenges of securing a rental home and finding a landlord willing to overlook low income has become infinitely harder for renters escaping domestic abuse, with poor credit histories, coming out of homelessness, who are immigrants, who have criminal histories, with past evictions, and from protected classes.

Meyer’s focus on private market rentals

Meyer’s Private Market Units strategy was developed in response to the rapidly changing housing market and nonprofit community partners’ call for Meyer to identify effective and replicable strategies to expand low-income renters’ access to safe, decent, affordable housing through existing private market units in urban, suburban and rural markets.

In past three years, Meyer has funded 14 demonstration projects, focused on trying a variety of approaches ranging from security deposit loans to landlord outreach and education, renter ready-to-rent classes, and placement and retention support. The demonstration projects tested assumptions about private market landlords’ engagement and risk mitigation, low-income renters’ needs and barriers, and traditional placement strategies. Demonstration projects that have generally been most successful engaged landlords early in the development of projects and made changes to their approach based on landlord feedback. Demonstration projects that were less successful often reached out to landlords late in the process after the project was developed and launched. Also, some grantees struggled working in communities that had extremely low vacancy rates with limited housing stocks. This was true for urban, suburban and rural communities.

Lessons learned with private landlords

Demonstration projects that responded to real-time challenges in the market and engaged private market landlords early in the project planning process were the most successful because they could ground-truth their assumptions and adjust their projects early in development. The Housing Authority of Jackson County (HAJC) launched a demonstration project offering security deposit loans to its Section 8 voucher renters (Housing Choice voucher) while its market had less than a 1 percent vacancy rate and skyrocketing rents. HAJC tested their assumption that many of their Section 8 voucher holders were struggling to secure rental homes not because they had a voucher but because they lacked the funds to move in once approved. Section 8 voucher holders who received a 0 percent interest security deposit loan with a 12-month repayment schedule could find and secure a rental home faster with less stress about having to return their voucher or where they would pull together the needed funds for their deposit. Landlords also responded positively to the loan recipients knowing that they could repay a loan. HAJC has since replicated its model in two other communities in coordination with the local public housing authorities.

Northwest Pilot Project (NWPP) partnered with Home Forward and Urban League of Portland to respond to immediate challenges low-income seniors were experiencing with displacement. They tested the assumption that private market landlords wouldn’t be willing to participate and that low-income seniors would not be able to stay in high-priced rapidly gentrifying neighborhoods. Many of the seniors had been living in their rental homes for years and were barely keeping up with rising rents on their fixed incomes. This collaborative developed a demonstration project matching these seniors with Section 8 vouchers. The collaborative partners were able to educate the landlords early in the program about the Section 8 program and the benefits of keeping the renters. As they learned from each landlord experience they adjusted their approach for the next landlord as appropriate. Ultimately, all of the landlords approached through the demonstration project were willing to participate in the project and one-third of the landlords had never participated in the Section 8 program before. On average, seniors had a rent reduction of $663 by participating in this program.

Northwest Housing Alternatives (NHA) partnered with Legal Aid Services of Oregon and Portland Defender to test multiple strategies to increase housing access for low-income renters with barriers including low-level criminal histories. This collaborative tested  assumptions about what barriers private market landlords would be willing to overlook and which ones they viewed as high risk and non-negotiable. Their tenant participants are not only low-income but often also have criminal histories, past landlord debts, past eviction rental histories and poor credit histories and lacked an identification card or a driver’s licence, etc. A number of tenants struggle with multiple housing barriers, making it difficult to identify which barrier is most challenging for a landlord. This collaborative worked to overcome several rental barriers through a variety of strategies, including expunging eligible criminal histories, paying past landlord debts, paying for participants to secure identification cards or a driver’s license, offering a landlord guarantee with participation and having eligible past evictions removed from tenants’ records.

Early in the project, NHA found that the barriers landlords were most averse to were past debts and fear of future debt. NHA’s most effective strategies to successfully house renters through this project have been to pay past landlord debts, offering landlord guarantees and to build a trusting relationship as an agency with the landlords. Many of the the landlords they worked with in this project were willing to overlook past criminal histories, limited incomes and past evictions as long as they felt that they could recover debt if the placement wasn’t successful. In the long run, NHA recognizes that removing the other barriers such as eligible criminal histories will be helpful for future long-term stability, but for now they found they were able to find several landlords willing to offer housing opportunities as long as their main concerns were mitigated. NHA’s ability to build relationships with landlords early in the process to understand their concerns and risks with renting to tenants with several barriers was crucial to success.

HAJC, Northwest Pilot Projects and NHA were successful because they engaged private market landlords early in the process to help inform the development of their demonstration projects and to ground-truth their assumptions. Some of the most impactful lessons Meyer learned through this funding strategy were how crucial it is to have buy-in and input from private market landlords in the project development, the need for grantees to be flexible and responsive to landlords concerns and open to their engagement, and to understand the needs and challenges of the specific renter population each group is working with.

When strategies no longer work in current market conditions

Some of the funded projects that were less successful taught us that strategies that were once effective when vacancy rates were higher are less effective now either because they no longer offered landlords a meaningful incentive in this market or they don’t meet the interests or needs of renters. For example, strategies such as a housing navigator were largely unsuccessful if the navigator was not able to offer immediate incentives to landlords, such as higher deposits or having an immediate rental start date. Also, renter readiness classes often did not seem to match to the needs of renters or landlords and proved less successful in getting placements. Projects that were a closer match to renters’ barriers and immediate needs had higher participation and project compliance.

Through this funding strategy, we noticed that projects were less impacted by geographical conditions than strategy and early buy-in from the local landlord community. In suburban and rural communities especially, engaging landlords early and and building an agency relationship was crucial to success. Landlords in many communities were open and interested in participating in these demonstration projects but were clear about needing to have their real concerns heard and addressed.

For plenty of folks, getting access to stable and affordable housing in the private market is a good step toward stability. Through Meyer’s Private Market Strategy, we have seen solid success for our partners that engage with and learn from landlords and renters, test assumptions and forge a wide circle of partners. And as funders, we can help renters increase housing access and stability by funding groups to test new strategies and being flexible when our partners need to adapt their projects to emerging landlord and renter needs. We are encouraged that private market strategies can help address Oregon’s housing crisis.

Elisa