Here & Now

Noon Wednesday: The High Cost of Housing

Marisa Wojcik:

Welcome to “Noon Wednesday,” I’m Marisa Wojcik:, multimedia journalist with “Here & Now” on PBS Wednesday. Today is September 15. The housing market is on fire and fiercely competitive, pricing out people who thought they could afford to buy a starter home and even further dividing people from ever attaining that goal. Joaquin Altoro, CEO of the Wisconsin housing and economic development authority, joins us now to explain the context around this growing issue and point to how his agency is working towards solutions, and thank you so much for being here.

Joaquin Altoro:

Thank you, thank you very much.

Marisa Wojcik:

I want to start with what, in your mind, is the state of housing in home ownership in Wisconsin, and would you characterize this as a crisis?

Joaquin Altoro:

You know, right now, we absolutely are reading the headlines around the issues of supply and demand and the cost. I mean, that’s affecting so many things in this conversation, but right now, in the state of Wisconsin, when it comes to a crisis, I would say it depends. It is absolutely a crisis when it comes to those that are homeless. When we speak to particular stakeholders like our tribal nations, so we know there’s no time like now to wait to resolve the issues. Sometimes in a time of crisis, we still don’t consider tomorrow and planning for tomorrow and making sure that we’re ahead of any potential on coming crisis, and so the conversation around the disparity of African American and Latino home ownership in the state of Wisconsin versus white home ownership. The fact we need to think about housing and supportive services to get it. That takes long-term planning because the fact not only are we building buildings that will be concerned about the well-being of a person, but there’s people that have to provide services, and there’s particular models that are successful or not successful, and so we have to be able to show those models to our developers and our practitioners as to what the models look like. That takes longer, and then the conversation of supply, right? There’s a really what it’s come down to is that right now, you know, you have a significant amount of buyers that are trying to get into the market, that want to purchase a home, but, you know, homes on the markets for minutes, hours, and we’re asking above the asking price. That all is about the fact of supply, and if I were to pull that back a little bit further, it is because we don’t have a diverse supply, a diverse set of different types of options of the supply of housing. A majority of what we built over the last 20 years has been mostly above market and luxury housing, and so there are different income levels of people, and so are their needs for the type of housing that is needed for them to live in.

Marisa Wojcik:

And has the pandemic shed a light on this crisis, and do the patterns we see in renters and evictions, do those tell us anything about the home ownership market?

Joaquin Altoro:

Yeah. The pandemic has absolutely shed a light on what’s going on. You know, I think, if you think about the fact that there are people that sit on the ledge, and at any moment, they can go from a position of great opportunity to a position of great despair, and that has a lot to do with people’s opportunities, their jobs, income, family stability, mental and behavior stability. There’s a significant amount of our folks that sit on that ledge. You know what the pandemic does, it pushes you either way. So, what we’ve seen is in place where the fact of maybe where we’ve had certain amount of folks that were considered homelessness in the state of Wisconsin, but how about the families who could barely afford rent that were just barely at a job that was paying enough to afford the rent. Job disappears. Income disappears. You can imagine then families are couch surfing with other families. That lasts so long. Then there’s a need for some of the help through the social services, and even the question of can folks afford their rents, and we’ve heard the conversation right now in the nation around some of the moratoriums, some of the protections, some of the emergency rental assistance, that is absolutely what happens when the pandemic shows its face and has an impact on our communities.

Marisa Wojcik:

So, is this an issue of stagnating wages, or the rising cost of the housing market and real estate?

Joaquin Altoro:

Oh, my god. You know, to ask a question — and I appreciate the question — but to ask the question is it an issue of this or this? How about we say it’s an issue of everything. That’s hard for people to understand, right? It’s like when I talk about building homes nowadays, folks want to focus on a specific issue around that, but when I say it’s the perfect storm, the perfect storm has arrived in this particular situation when it comes to affordability. Affordability of purchasing or affordability of renting. That perfect storm is now, and that’s why, you know, we are really trying to get engaged in that conversation around affordability, making sure we provide affordable products, either it be when one wants to buy a home, making sure we are investing in and being involved with the down payment side, low interest loans, and on the rental side, making sure that we provide tax credits to build multifamily rental units, that we work closely with property managers making sure they understand not only their rights, but the right of the tenants and making sure that through our compliance that they are treating the tenant with the correct rights that they deserve.

Marisa Wojcik:

And some areas of Wisconsin, we’ve seen it in rural areas and heavily tourist areas, communities are struggling to find or create affordable housing, and it’s creating a harder job for employers to find people who can work in that area because they can’t find a place to live, and it is creating almost a domino effect of economic development. What is the role or vision of how to approach an issue like that?

Joaquin Altoro:

So, this is another important topic, and it is actually very important topic nationally. What we see with our colleague associations across the nation is the fact that we have these manufacturing jobs that left our urban cores in the 40s and 50s and 60s, but we have industry, like agriculture, that’s always been in rural communities, that needs the work force, but along with work force is, how do you support their housing needs? The need is great outside of, obviously, the urban core in the state of Wisconsin, and so, for us, the question is, how do we participate in making sure that the tools that we have and the limited resources that we have are helpful to building more housing or multifamily rental units in the state of Wisconsin. A couple things we’ve done over time is that we have redefined what rural meant in Wisconsin because we realized that when we cast a wide net, there’s a lot of other communities that were not specifically rural that were being able to use our resources, so us in redefining that was important. We also came up with a pilot project we are working with multiple communities in helping them and participating with them and helping them decide what are your priorities? I think sometimes it is important for us to get into these communities and say, hey, we are a part of that equation to potentially beginning to get at the issue of work force housing, but it is not us alone. We need you all, first of all, to have your priorities and make sure you are aligned with what your priorities are, and then we can say this is where we step in, but then who else should be at the table? Because in the past, usually when it came to development, municipalities, a developer, a banker, that doesn’t make — that right there is not the secret sauce to success so right now as a part of our engagement, we bring educational systems in, health systems in, employers in, and it is creating a great friction, real hard conversations, but what we see in this alignment is what has to happen next. We had folks come to us saying we need more tax credits or we need your tax credits to build, but the truth it, in some cases, we could award all the tax credits we want to build, but six years later, nothing would have been built, and the reason why is because there were other things that had to be considered in advance of actually building. Things like maybe some communities are saying, oh, no, you’re not building any type of housing or multifamily rental housing in our communities, or the fact that the zoning doesn’t allow in that type of area for that housing, even infrastructure cost. You know how expensive it is to build streets and the electrical infrastructure? Ridiculously expensive. It is an awakening for us and the communities and exciting as we progress going forward.

Marisa Wojcik:

Does that definition of “rural” and “urban” change the priorities, or do priorities even just change from rural community to rural community, urban community to urban community?

Joaquin Altoro:

I was appointed to the position by Governor Evers, and when I met with him, I really appreciated the challenge he put forward. He knew that I was nearly a 30-year banker in urban communities, but in his research and the fact that when I explained to him is that working in rural communities — excuse me, in urban communities, we are still working with very limited resources, and so the way we stretch a penny has to be innovative in our process, and the challenge was for me to take that same mentality, that same vigor and that same innovative process to rural communities. I took the challenge from him. I realized, not through the job, but in advance of the job, is that I, myself, was really concerned about any community that didn’t have access to opportunity that really had a need for either economic develop or housing, and I noticed that that need was equally or sometimes even more in rural communities, and so I, again, says the challenge from Governor Evers has been noted, and we are working very hard with our legislators on both sides of the aisle because the issue of housing is not a partisan issue. It is a bipartisan issue. When I speak to either my republican and/or democrat colleagues, they understand the fact that it is important that we are safely housing our community, but we also are affordably housing our communities, and so the work is real. It is tough. It is not easy. We have to understand this issue is that the question’s always asked around, you know, what do we need to do to solve the issue of housing in the state of Wisconsin? I am a firm believer that we will not solve of issue. This is something that has to be ongoing and organic forever indefinitely, and if we understand that, then we will plan accordingly to make sure we are consistently testing, consistently serving, consistently innovating, and consistently executing to have success around the housing issues in the state of Wisconsin.

Marisa Wojcik:

You’ve spoken to a focus on underserved, underrepresented communities and trying to work on home ownership in those populations. What does that mean to you? What does that mean in the state of Wisconsin?

Joaquin Altoro:

So one of the places that I would consider to be underserved and underrepresented when it comes to home ownership is the African American and Latino community. They are — we — the state of Wisconsin has the third worst disparity rate between white homeowners and African American and Latino homeowners. That issue is for us and absolutely everyone else a very important issue because it gets at this conversation of legacy and more importantly wealth creation and stainability. That changes the fabric of neighborhoods and the needs of those communities, either it be health or education, and my research in listening to national organizations like the National Association of the Hispanic Real Estate Professionals and the National association of Real Estate Brokers, which is the African American National Real Estate Broker Association, they came up with some of the top three barriers to entry when it comes to home ownership. The number one, first, was down payment. What we are seeing regardless of race is that in the change of the age demographics is that we’re just not saving dollars like we used to, and so that is a huge impact amongst African American and Latino homeowners is that down payment. We just have not saved for it, and that is a requirement in order for us to purchase a home. Number two is home buyer education counseling. I can’t stress enough how important this education is. We think we know the process, but the truth is, when you understand the difficulties of what it means to apply, who to speak to, who to trust, what is the costs, should I be paying this, what’s the contract mean? There’s so much to learn, and we realized that that education is invaluable. A colleague of mine in Tennessee did a research on those that went through the home buyer counseling education, and they had a lower default ratio during the recession than conventional homeowners and home buyers, and so that, in itself, says it is important. And then the third issue is an issue of affordability. You know, we’ve talked about that on touched on a lightly, but, again, that is going to be very important that the state of Wisconsin, all of us, have to be concerned about the fact that this question of affordability is that, how do we support, how do we create policies, how do we move forward to make sure we have supply, and when I say “supply,” just housing that folks at different income levels that they can find it and afford it so that it can add to their wealth creation.

Marisa Wojcik:

You mentioned legacy, and you’ve been meeting with different people from first nations across Wisconsin. What are you learning and planning from these conversations?

Joaquin Altoro:

Born and raised in the city of Milwaukee, and Ive had friends that identified as Native American, and Ive seen particular social service groups or organizations, veterans’ groups that identified as Native American. What this job has given me the true privilege of getting deeper in understanding kind of the plight of our tribal nations. First thing I learned and was made very clear is of their sovereignty and we have 19 I think it’s 11 tribes, excuse me, I get confused with another stat that I have here, but I believe that we have 11 tribes in the state of Wisconsin, and of the tribes, they were very clear at how diverse they are. It seems like in most cases in the past, when government wants to partner with tribes, they just make this assumption, like, let’s have this tool or this opportunity and just paint a brush like all tribes need this or this is the way to treat all of them. We should be very clear they are very diverse in their need, they are very diverse in the opportunities that are presented. We’ve worked really hard at meeting with every single one of them trying to visit them, you know, when it was safe for us to visit them, and really understand what their need was when it came to housing and economic development. What we learned is the fact that, and this is, I would say, in a general sense because we really tried to see were there anything trending amongst all the tribes, and a general sense, we realized that COVID-19, the pandemic, it hit the tribes hard, and the tribes that actually had revenue from the casinos, casinos were shut down, and if they were not shut down, people were not going to them, which effectively significantly impacted the revenues of the tribes, and so our tribal nations are thinking really hard right now and thinking in advance, but it was further exacerbated so the next time this happens, we are protected. We want to participate in that strategic planning to think how do we participate in diversifying their revenue sources to protect them going forward. Also, there was some of the tribes that have seen a significant increase in opioid usage. What it has is it’s impacted the housing need for the tribes in many different ways, and so the question is, how do we participate with the tribes in providing kind of the correct models of what supportive service looks like with housing so that we can house those that are affected by opioid usage, and at the same time, can have some of the services that are needed to get them above water to be in the right place.

Marisa Wojcik:

Now, in the short term, Governor Evers has announced $92 million in homeowner financial assistance, but some experts are saying, just in general, there’s not been an incentive for developers as we talked about to build affordable housing since the great recession. Is this kind of pattern of rising housing costs, if it continues, what is going to be the outcome, and what is WEDA’s the role in that? You spoke to innovative approaches. What are the new ways that this has to be thought of, and is this another kind of bubble that’s just slightly different from what we thought we saw in 2008?

Joaquin Altoro:

Big question. I’ll do my best to add to that question. I do want to start first and foremost is that if anybody has had an opportunity to listen to kind of the public sessions of our governor in where he goes around and listens to communities, he’s realizing, as he realized for some time, the fact that the issue of broadband is a significant issue, but it continues to come forward to him around housing, and housing is a very important issue to our governor. I think with the fact of the tax credits that we used to build multifamily rental units in the state of Wisconsin, I think some folks that are folks in our community that think a tax credit alone is the answer to our problem, but a member — if you remember earlier in our conversation, that there are many other issues impacting our ability to get housing up. First of all, the costs. You might have heard in a news recently, just wood, alone, how it exploded in price. Finding skilled work force. Finding work force, first and foremost, that wants to come to rural communities to develop. Developers willing to develop in rural communities. It is just like this perfect storm of so many things that are happening. That doesn’t — because of that, that truth, it doesn’t stop WEDA from wanting to innovate in place and really understand. I will let you know that if you listen carefully to what’s happening at the federal level, there’s a lot of policy right now and conversation about housing, and it’s — it’s coming, and it’s coming forward. I want to believe that we may see, in the future, an increase in tax credits that will allow us to build more or favor to homeowners, if it is what we’re seeing — what we’re seeing is, and in the state of Wisconsin, housing stock is getting a lot older, and in order for one to be able to sell a home, to maintain a home, there has to be affordable lending, affordable debt or affordable tax credits that allow one to rehab their home, and so we think that that potentially is being floated right now at a federal level, and so we would hope and trying to support it through our federal legislators that to see the increase in tax credits or potential resources that allow homeowners to fix their homes up to either sell them or maintain them, which is really important. I think when it comes to us here at WEDA and the direction we go, what we’ve done is listened very carefully over the last couple of years, and the places that we are going to go in deep and support, I think, first and foremost, is really that middle income area. It is that affordable work force housing area to make sure we are supporting that, that area, and you heard me say through the innovative engagement with the communities, but also the set asides of the dollars that we’re putting to make sure we are supporting those efforts. The work that we’re doing around the African American and Latino home ownership disparity, internally, we point the finger at us first. What have we done and not done internally to make sure we have a product that our customer experience, that our work is thinking about the bias and we’re actively treating our process internally, and then, also, how can we use our own personal clout and our reputation to influence the market, our realtors, and our bankers so that they understand this is an important issue that it can impact our communities. Our workaround supportive services with housing. So, I think for a long time we’ve built housing and just thought that they would come, but I think we need to flip that around now, and if we are to think innovatively about that, then we have to think about the person first. If we have a person and we want to be concerned about their well-being, then we have to understand what type of housing needs to be built to protect that person and to grow their well-being. Then that will inform the type of housing that we need to build. Home buying counseling. You heard me speak to that. We put dollars aside and continue to find partners outside of WEDA, outside of the state of Wisconsin that want to help leverage our dollars, so we increase the amount home buyer counselors in the state of Wisconsin. We saw a loss of home buyer counselors after the recession. WEDA need tos be a lead and be a catalyst to have more in the state of Wisconsin, and then rural housing. So, what we’re seeing in rural communities is the fact that, as a percentage of the total population, those in rural communities are becoming older, and our elderly, sometimes they don’t want to age in place, but they don’t have options. It is unfortunate they don’t have option. How does WEDA participate in getting our rural, excuse me, our development community, our banks, and everybody to understand we have to look deeper at our rural communities and demographics? They are getting older. Also, if you saw recently as part of the census that came out, is that our state, our state’s, including the majority of the states and state of Wisconsin, is becoming more diverse. So the question is, as that happens and what we see in southern Wisconsin is an explosion of the Latino community. We know that. We have seen the Latinos are coming from Illinois or they are coming from other states because of opportunity for jobs, opportunities for just, I think, just the wonderful well-being and life that Wisconsin provides, and so for that case, what does that mean? What type of housing is aligned with that? What type of economic opportunities and entrepreneurial opportunities is aligned with the changing of the demographics in the state of Wisconsin?

Marisa Wojcik:

All right, we need to leave it there. Joaquin Altoro of the Wisconsin Housing and Economic Development Authority, thank you so much for joining us today.

Joaquin Altoro:

Thank you.

Marisa Wojcik:

For more from “Here & Now” and PBS Wisconsin, visit pbswisconsin.org, and thank you so much for joining us on “Noon Wednesday.”