STEVE ANLIAN: HOME-BUYING VOUCHERS FOR STORM VICTIMS
Providence Journal , RI
Sept 23 2005
YEREVAN, Armenia — AS NEW ORLEANS and other Gulf Coast places weather
devastation by hurricane, home owners with enough insurance face real,
gut-wrenching choices: Leave, stay, build, buy, rehab, or rent? Those
with little or no flood insurance — reportedly as many as 60 percent
— will turn to government for help.
As officials figure out how to respond to under- or uninsured home
owners who are eligible for aid, experience abroad, in developing
countries, argues strongly for multi-state housing-purchase vouchers.
These are a logical follow-on to the Senate’s recent stop-gap measure
providing six-month rental vouchers to Katrina victims.
On Dec. 7, 1988, in Armenia, an earthquake measuring 6.9 on
the Richter scale demolished 100,000 housing units and displaced
500,000 people. With help from the United States, other countries,
and multilateral aid agencies, Armenia worked through the tortuous
economic decisions that now face leaders in Washington and the
storm-tossed American states.
Which districts should be condemned? Which redeveloped, and how? For
which local expenses should people be reimbursed? Should displaced
families be granted an unconditional right of return, regardless of
timing and cost? Should tenants get rights comparable to home owners’?
Working through such questions will take time, which many of the
current hurricane victims don’t have. But for those uninsured home
owners willing to accept a housing-purchase voucher now, as final
compensation, the transition could be far simpler. For them, help
could be on the way in weeks, instead of months or years.
A housing-purchase voucher program reflecting lessons from Armenia
and other natural-disaster-stricken countries would not have to be
complicated. Participation would be voluntary. Proceeds from selling
an existing home to a displaced family would go directly from the
funding agency to the contract seller, through banks.
Funds left over when an eligible housing unit was bought for less than
the voucher price could be pocketed by the program participant for
renovation, living expenses, or moving costs. At the other extreme,
extra funds from loans or buyers’ other assets could be mobilized to
buy a house that costs more than the voucher’s value.
Low-income participants might receive a sliding subsidy to house-hunt,
since the city of their choice might be a plane ride away.
To get a feel for how vouchers might work, imagine that your $100,000
house in New Orleans is half paid for and totally wrecked. Depending
on your insurance coverage, you might qualify for a “top-up” voucher,
which pays for the difference between what your new house costs and
what your insurance company provides for your old house. Or you
might get a 100-percent subsidy, if your insurance doesn’t cover
flood damage. You could use the voucher in any one of the designated
receiving zones, or even in New Orleans, if there is adequate supply.
If you have funds of your own to add, you can even apply your voucher
outside the approved network.
On the receiving end, the metropolitan areas deemed eligible to take
vouchers might be those that have already welcomed evacuees or where
the housing market is stable and housing affordable. Local associations
of real-estate agents could help match housing to beneficiaries.
The voucher’s size would be pegged to local market conditions. That
way, evacuees could choose a city from the list where housing prices
are a bit above those in New Orleans or Biloxi. This approach worked
after the Armenian earthquake, when the U.S. Agency for International
Development tried it. The U.S. Department of Housing and Urban
Development’s Section 8 program for low-income renters also follow
this principle.
Cities that signed up for the program would reap benefits, too. More
homes would be occupied and, therefore, the housing stock and
associated service costs would be more efficient. On balance, there
would be more demand for housing, so real-estate values would rise.
If they rose too much, vouchers could be adjusted accordingly.
If housing-voucher programs have a weakness in today’s real-estate
boom, it’s that affordable housing often means a soft economy, and
dislocated home owners need jobs. Adding more job hunters to a city
can intensify employment problems, so in selecting receiving zones,
planners would have to match skills with labor markets, even as social
scientists ponder political and human adjustments.
Yet an influx of new residents to the right place at the right
time could stimulate lagging local economies, as cash from
government-supported programs and other subsidies started to
recirculate. Home-improvement activities would be another stimulus,
though no substitute for a long-term economic-development strategy
for each city.
While we all hope that the Gulf Coast’s hurricane-ravaged hometowns
will rise again, a national housing-purchase voucher program holds
enormous potential for displaced home owners — even during the interim
period of recovery. Families who leave the area now may decide to
return when their communities have stabilized. The recent real-estate
spike in Baton Rouge bodes well for vouchers, and the Department of
Housing and Urban Development’s deep experience with vouchers could be
tapped to quickly devise and carry out a demand-side shelter strategy.
Vouchers alone aren’t enough. But neither is new construction. And
vouchers are both cheaper and faster-working. Let’s ask some of the
tens of thousands of hurricane-displaced Southerners if they would
like to give vouchers a try.
Steve Anlian, an urban planner and international-development expert,
is the (Washington-based) Urban Institute’s senior associate in
Yerevan, Armenia, where he led an international team collaborating
on the U.S. Agency for International Development’s Armenia Earthquake
Zone Recovery Program.