2010 Homes and the Economy

Introduction
Some people are calling it the “Great Recession.” Without a doubt, most of us will look back on the past 2-3 years as some of our most challenging times. Surging unemployment, a rising tide of foreclosures, recent flood-waters and declining state and local revenues have left our families and communities struggling to make ends meet. And while some economists predict that we are finally on a gradual slope to recovery, many Rhode Islanders – most of whom have been impacted by these crises – will continue to need help through what will undoubtedly be a long recovery process.

Rhode Island has been particularly hard hit by both the overall economic crisis and the housing crisis, as history once again reminds us that homes and the economy are inextricably linked. Rhode Island’s unemployment remains at a record high level – which is not surprising considering that one out of every 10 jobs in Rhode Island is related to real estate or construction, and the production of homes is dramatically down. And few will disagree that good jobs and good homes that are affordable to working Rhode Islanders are essential for long-term economic growth and stability. Before the recession hit, Rhode Island suffered a stifling shortage of affordable homes. In 2005, our state suffered a staggering deficit of 13,000 homes that were affordable to the average working family. In 2008 and 2009, only about 2,000 new homes were permitted – and those numbers included high-end homes.

With foreclosures in the state continuing at a record high pace, some people assume that the gap is narrowing between the number of healthy, affordable homes that are available and the number of healthy, affordable homes that are needed. Experts are looking for hard data on what is happening in our housing markets. But to truly understand what is happening, we need to look between the numbers.

Whenever a residence is foreclosed, at least one family is left without a home. Last year approximately 10,000 Rhode Island residential properties were in foreclosure and 30 percent of these contained more than one home. And what happened to those homes that were driven into foreclosure? Many quickly deteriorated, becoming uninhabitable or at least requiring major repair work. Too often, a foreclosed home is left in deteriorating condition and abandoned. Many of those that can be restored will be priced out of the affordable-home market unless government subsidies are employed. Furthermore, there is a significant level of expertise and high degrees of patience and tenacity that are needed to purchase and rehabilitate a foreclosed home. Without special guidance many first-time homebuyers, or even experienced ones, find such a venture too daunting. Building homes that are safe, attractive and affordable to the average Rhode Islander not only addresses the income-to-housing gap, it puts people to work and families of workers into safe homes. Good jobs and affordable homes strengthen the fiber of communities, helping to restore neighborhoods that have been hard hit by the foreclosure crisis and generating local spending that is critical to economic sustainability.

At the new dawn of economic recovery, we have a convergence of factors, including increased real estate activity due to federal incentives, low-interest rates and prices, and newfound, but cautious, optimism. But with state and federal budget deficits mounting, and many longstanding housing programs at risk, we may lack financial resources to build on the progress that has been made by programs like Neighborhood Opportunities Program (NOP) and the Housing Bond – Building Homes Rhode Island (BHRI).

Rhode Island can anticipate slow but steady economic growth over the next decade – if we find ways to continue to build momentum and facilitate positive, long-term change. In the pages of this report, Rhode Island Housing provides the data to support and understand the need to create homes and construction-related jobs, and for more support at the state and local levels. In order to steadily move forward, we must wisely use the resources we have and apply new opportunities quickly, where they are needed the most.

With Rhode Island’s great potential, we can create a place where there is an adequate supply of good jobs and healthy affordable homes. We must find a way to capitalize on our opportunity and work together to create a promising, sustainable future for our fine state.

Helping Rhode Islanders

Rhode Island Housing works diligently to tackle the issues and rebuild the economic and housing foundation of the state on many levels. We take a broad perspective by addressing housing needs through three distinct, yet complementary, avenues by:

1. Providing safe loans, grants and services to help Rhode Islanders build, buy, rent and keep a home;

2. Helping Rhode Islanders who are having housing trouble; and

3. Creating a better, stronger future by building healthy, vibrant communities with safe, affordable homes for all Rhode Islanders.