#119 Sep/Oct 2001 — Evaluation

A Housing Trust Fund Would Boost the Economy

Job seekers, home buyers, low- and moderate-income families, and the economy as a whole will benefit from creation of a National Housing Trust Fund, according to analysis in Home Sweet […]

Job seekers, home buyers, low- and moderate-income families, and the economy as a whole will benefit from creation of a National Housing Trust Fund, according to analysis in Home Sweet Home: Why America Needs a National Housing Trust Fund. The study was drafted by the Center for Community Change (CCC), which has provided technical assistance to most local and state trust funds in the country and helped create many of them.

“Everyone loves a government program that works,” said CCC Director Andrew Mott to reporters, legislative staffers, and others at the study’s release on September 6. A national fund is the best response to the disappearing federal dollars and increasing nationwide need for affordable housing. It will also provide the entire economy with a shot in the arm, one that is particularly needed in the current economic climate.”

Home Sweet Home was released in part to bolster legislative action on Capitol Hill. Bills to create a national housing trust fund, sponsored by Sen. John Kerry (D-MA) and U.S. Rep. Bernie Sanders (Ind-VT), were introduced this summer with the official support of nearly 1,300 local, state, and national organizations, elected officials, and others. For background on the trust fund campaign, see Igluub #113.

The bills, S. 1248 and H.R. 2349, would draw on surplus funds in two housing-related federal programs, the Ginnie Mae Fund and the Federal Housing Administration’s Mutual Mortgage Insurance (MMI) Fund. Surplus is defined as the amount over what government financial managers deem necessary to insure the safety and soundness of the funds. An accounting firm hired by the Federal Housing Administration (FHA) to monitor the MMI Fund pegged its value at $17 billion at the end of fiscal year 2000. This represents about 3.5 percent of the Fund’s insurance-in-force – well above the Congressionally required minimum of 2 percent. Both funds ensure that the government can pay obligations related to foreclosures on guaranteed loans. Currently, surpluses in these funds subsidize other operations of the federal government.

The proposed National Housing Trust Fund would stimulate the economy in two ways: 1) residential construction generates jobs, wages, and tax revenues directly, and 2) the increase in construction activity indirectly increases the demand for goods and services. Housing development has an economic “ripple effect”: more housing creates more jobs. Those new wage earners spend their income, in turn creating additional jobs and economic stimulus.

Thirty-six states and more than 100 cities and counties have established housing trust funds which have built more than 200,000 units of affordable housing over the past 20 years. These local funds leverage an average of $9 for every $1 they spend. A $5 billion National Housing Trust Fund will directly generate 184,300 construction jobs paying approximately $4.9 billion in wages and will leverage an additional 1.6 million jobs paying an additional $44.6 billion in new wages. The Home Sweet Home analysis used a Department of Commerce– sanctioned statistical analysis method, RIMS II, and it assumed that 25 percent of a $5 billion investment would help construct single-family homes, 65 percent would help construct multiple-family homes, and 10 percent would fund maintenance and repairs.

The report also provides estimates of the economic impact of investing in housing for 20 individual states. For example, the study finds that 68 percent of people in Alabama can’t afford to own a home, and 35 percent can’t afford to rent. But every $10 million invested in the state’s housing industry would create over 3000 new jobs and almost $73 million in new wages. In Connecticut, 60 percent are unable to own, 40 percent unable to rent, and each $10 million investment in the housing industry would mean almost 2000 new jobs and $60.5 million in new wages. The pictures look similar for other states.

Along with the economic and housing benefits, the study identified several potential social benefits of a National Housing Trust Fund. Children make up a third of those in substandard housing and are more likely to suffer its ill effects such as asthma and lead poisoning. Providing new, affordable housing for them would alleviate many of these problems. New research also points to the benefits a stable home brings to young people’s education. A report from the Family Housing Fund in 1999 found that the more times children move, the more their reading scores suffer.
For free copies of the report, email [email protected] or call 202-342-0567 and ask for Marcia. For more information about the National Housing Trust Fund Campaign, call or email Laura Barrett, CCC field coordinator at 314-645-5915, [email protected] or Kim Schaffer, National Low Income Housing Coalition field director at 202-662-1530. x223, [email protected]. The campaign’s web site is www.nhtf.org.


  • The New World

    October 31, 2001

    The world did seem to change on September 11. America’s prosperity, its geographic isolation, and its persistent optimism led us to believe we were immune to the violence of the […]

  • The Evaluation Imperative

    January 1, 2001

    In the aftermath of September 11th, many of us felt the initial shock and sadness turn to a deeper quest to connect with those things that matter most: family, friends, […]

  • A Look In The Mirror

    January 1, 2001

    My first experience with organizational evaluation came early. I was a secretary at my local neighborhood center – known by its constituents as “the Center” – sitting in the tiny […]