by Eva Wingren, Mercy Housing Policy Associate

From the proposed short-funding of Project Based Section 8 to the fiscal cliff, it’s been a scary year for affordable housing. There were some 11^th hour victories, such as the extension of the New Markets Tax Credit and the 9% fixed rate for the Housing Credit. However, I think the legacy left by 2012 is one of local communities enacting some common sense changes to improve affordable housing opportunities for their neighbors.

1.  Funding for affordable housing trust funds

As federal funds become tighter, it is encouraging to know that voters still value affordable housing in their own communities. Seven Massachusetts communities adopted the Community Preservation Act, which provides funding for affordable housing, open space preservation, historic preservation, and outdoor recreation. Nearly half of the state’s municipalities have adopted the CPA, which allows them to pass up to a 3% property tax surcharge for the Act’s purposes. Voters also approved housing trust funds, by comfortable margins, in Bellingham, WA, Rhode Island, and Houston, TX.

2012 wasn’t a good year for affordable housing in California, with unsuccessful legal and grassroots campaigns to stop the de-funding of the redevelopment agencies. However, voters recognized the continued need for affordable housing. Proposition C, which established a trust fund for the city, won with 65% of the vote. Given San Francisco’s high cost of housing and high rates of homelessness, we can only hope that this will become a model for other hot markets.

2.  Small homes gained acceptance

In another nod to the market realities that are driving more people to big coastal cities, San Francisco and New York reopened debates about minimum apartment sizes. Smaller units tend to be more affordable, though these units will probably be marketed toward young single professionals. Smaller units will also allow for more supply in popular, transit-accessible neighborhoods. San Francisco lowered their minimum size to 220 square feet, though they fielded proposals as low as 150. New York City approved a 60-unit pilot project containing apartments as small as 275 square feet.

3.  Homelessness dropped as chronically homeless veterans received permanent housing

The Veterans Affairs Supportive Housing (VASH) program, a collaboration that provides rental assistance vouchers coupled with VA case management and health services, is making inroads to end veteran homelessness. As of January there were 7.2% fewer homeless vets, particularly Vietnam-era vets for whom long periods on the street have led to multiple health problems. Through the VASH program, the affordable housing industry has learned a lot about veterans’ specific needs. 2012 was supposed to be the last year of new appropriations, but with 60,000 veterans still on the street and broad support in Congress, more resources are likely to be available. In the wider population, the number of unsheltered homeless has dropped 5.7% since 2007. HUD is still hard at work on its goal to end homelessness. They are allowing more flexible use of homeless services grants, since rapid re-housing and permanent housing have been shown to improve family stability and outcomes. They also launched a pilot to target federal resources towards chronically homeless people by giving others the supports to stay stably housed in less deeply subsidized housing. Though HUD has to make hard choices with limited resources, 2012 definitely saw expanded thinking on the problem of homelessness.

4.  Affordable Care Act recognizes housing as a health issue

Though the Affordable Care Act has been law for 3 years, it faced a long road to implementation and conservative opposition. President Obama’s reelection was widely seen as a vote of confidence for his signature legislation. It enhances several programs to keep seniors and people with disabilities out of expensive, service-intensive institutional settings, and rather provide the services they need to live independently in community settings. In 2012, the Department of Health and Human Services created the Administration on Community Living, which combines the efforts and resources of the Administration on Aging, the Office on Disability and the Administration on Intellectual and Developmental Disabilities to comprehensively respond to the full spectrum of community living needs for the aging and disabled.

The ACA’s “Health Homes” program also gives homeless people with complex health needs access to case management and referrals to permanent supportive housing. Ultimately, though mountains of data show that permanent supportive housing saves money for the Medicaid program, the ACA does not go so far as to provide resources for housing. For permanent supportive housing providers like Mercy Housing, it will be one of our main priorities in 2013 to make sure Congress understands the potential to save money and improve the health of our most vulnerable neighbors.

5.  Home prices finally stabilize

As we saw over the past few years, losses in the homeownership market didn’t necessarily mean more affordable housing for those with the lowest incomes. Quite the opposite, in fact – people pushed out of their homes by foreclosures drove up demand for rentals, and the construction and retail jobs created by new household formation dried up. That’s why 2012’s good news for the housing market is good news for affordable housing as well. Though not every statistical measure points to a housing recovery, the National Association of Realtors reported that sales of existing homes have been higher than the previous year for eight straight months. New construction is also on the rise as builders regain their confidence. Median selling prices have also risen for a similar period of time. With low fixed interest rates, first time buyers are finding new reasons to buy: not that endlessly rising prices can fuel their retirements, but that it can be cheaper per month than renting, and offer stability and a chance to put down roots. May 2013 be the year that we climb out of the recession once and for all.