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Community Development Needs and Resources
by
Scott Turner, Community Affairs Department, Federal Reserve Bank of
San Francisco
with contributions from Anne McDonough-Hughes and Ethan Jennings
Affordable Housing
Providing affordable rental housing as well as opportunities for homeownership
for low- and moderate-income people in the Twelfth District is a huge
and increasing challenge. Homeownership is the single largest source
of equity for Americans, and low interest rates have helped boost homeownership rates significantly
across the country in recent years. The overall homeownership rate for
the district has risen as well, climbing from 60.5% in 2000 to 61.7%
in 2002. Overall, however, the district significantly lags the rest of the nation in
homeownership, with its 61.7% homeownership rate still falling well below
the national rate of 67.9%. On an individual state basis, six district
states are among the ten states with the lowest rates of homeownership
in the nation, led by Hawaii (2nd lowest, with a homeownership rate of
only 57.4%) and California (3rd lowest, with a rate of 58.0%). (See Chart 1 for each of the nine district states’ homeownership rankings.
In this and all other charts, the top- and bottom-ranked states in the
country are also included for comparison.)
Moreover, rapid home price appreciation in
the district, while boosting the overall net worth of homeowners, is
increasingly pricing first-time homebuyers out of the market.
Three of the district’s states—California, Hawaii, and Washington—are among
the top 10 states nationwide in terms of the median value of a mortgaged
home. In some markets, these price increases are outstripping incomes and only a
very small percentage of residents are able to afford the median-priced
home. For example, in California , only 19% of households were able
to afford the median-priced home in September 2004, compared to 55%
of households in the U.S. In Santa Barbara County, California’s least
affordable region, only 6% of households could afford the median-priced
home. Homeownership in Oregon has also become increasingly out of reach—between 1990
and 2000, the median household income increased by 50.2% while the
median value of owner-occupied homes increased by 126.7%.
On the rental side, five district states are among
the worst 10 in the nation in terms of the severity of the affordable
rental housing problem. Specifically, the entire West Coast (Washington,
Oregon, and California), plus Arizona and Hawaii, face some of the most
difficult rental housing markets in the nation, with well over one fifth—and
in the case of Oregon and California, more than one quarter—of their
renter households “severely cost burdened,” meaning that they spend more
than 50% of their income on rent. (See
Chart 2.)
Not surprisingly, nine out of the ten most expensive cities for renters are
in the Twelfth District, including Seattle, Honolulu, Anchorage, and six cities in California (three in the San Francisco Bay Area). Even in some of the better-ranked states, such as Alaska and Idaho, there are
still areas with similar difficulties. For example, Alaska’s non-metropolitan
areas rank among the top three least affordable non-metropolitan areas,
and even in Idaho’s Pocatello MSA, 48% of renters are unable to afford
the two-bedroom fair market rent. Many district states can be credited with programs to build and preserve affordable
rental housing and support homeownership, but finding new and innovative ways to affordably house the district’s rapidly-growing
population is a paramount concern.
Small Business
Entrepreneurs and small businesses are not only critical components
of the overall economy, but also provide important opportunities for
advancement for low- and moderate-income people. They are the second
most important source of total household wealth, and are a traditional
route into the middle class for many people, including immigrants. For
these reasons, supporting existing small businesses and entrepreneurs,
especially with financial resources, and fostering the establishment
of small businesses
where they are less prevalent, are essential community development activities.
Looking at the Twelfth District, this sector is quite pronounced in the
majority of the nine states, and is very small in a few others.
On one measure, comparing the importance of small business in each state (defined
for the purpose of these reports as the share of total employment accounted
for by firms with fewer than 10 employees), Chart 3 shows that five
district states are in the top 20 in the nation, with Alaska (fourth
highest, with a 14.9% share of employment in very small firms) and
Idaho (fifth, with a 14.6% share) leading the way. In contrast, based
on this measure, Nevada has the least significant small business sector
in the country (only an 8.5% share), with Arizona not far behind (44th,
with a 9.8% share).
Chart 3
Percentage of Total Employment Attributable to Firms with Fewer than Ten Employees
(national rank indicated below)
Another measure yields a similar result. Comparing
the rate of entrepreneurship (the percentage of the labor force that
owns their own firm), Chart 4 shows that six district states are in the
top 20 in the nation, with especially high entrepreneurship rates in
Oregon (seventh highest, with 16.2% owning their own firm) and Idaho
(eighth, with 15.8%). Once again, Nevada ranks at the bottom in the nation
in its level of entrepreneurship (only 9.3% of the state’s labor force
owns their own firm).41
Chart 4
Percentage of Labor Force That Owns Employer
and Non-Employer Firms
(national rank indicated below)
There is evidence in many of the district’s states
of difficulties faced by entrepreneurs and small businesses in accessing
the capital necessary to grow and prosper, and of other obstacles faced
by this sector. There is also an array of supportive programs available
that attempt to assist those in the sector, but helping existing small
businesses and creating an environment conducive to the establishment
of new ones are key ongoing community development challenges in the district.
Poverty and Asset Accumulation
The environmental assessments also explore specific issues of poverty and financial
stress and provide information on asset accumulation and preservation programs
in each state. As exhibited in Chart 5, none of the district states are in
the bottom quintile in terms of the share of their residents falling below
the poverty level (based on a three-year average from 2001-2003), and only
two, Arizona (37th, with a 13.9% poverty rate) and California (35th, with
a 12.9% poverty rate) are in the next-to-last quintile. At the other end
of the rankings, Nevada and Alaska, with poverty rates of only 9.0%, are
tied for having the ninth-lowest percentage of their populations in poverty
in the nation.
Some argue that a more accurate measure of poverty
is to double the official federal poverty levels. Measuring the “near-poor” in
this way still shows similar results. Among the district states, Alaska
fares the best, with only 31% of its population living below twice the
poverty levels, and Washington, Oregon, and Utah are also better than
the national average. The worst-ranking state is California, with 39%
of its population living below twice the poverty rate, ranking the state
43rd nationally.
One of CFED’s chief contributions to the analysis
of asset accumulation in the U.S. is to generate estimates of levels
of net worth. An examination of this data shown in Chart 6 reveals that
about half of district states have serious deficiencies in terms of the
percentage of households with zero or negative net worth, with four states
in the bottom quintile in this measure: Nevada (48th worst level, with
22.0% of households with zero or negative net worth), Hawaii (47th, with
18.1%), California, (43rd, with 16.7%), and Arizona (42nd, with 16.3%).
Only Alaska enjoys a high ranking on this measure (5th,
with only 11.3% of households with zero or negative net worth), though Oregon is not far behind (12th, with only 13.0%).
Chart 6
Percentage of Households With Zero
or Negative Net Worth
(national rank indicated below)
A final telling measure of personal financial stress
is the rate of personal bankruptcy filings. On this measure, the district
encompasses both the best and the worst states in the nation. In fact,
as seen in Chart 7, not only does Utah have the highest rate of personal
bankruptcy filings in the nation—a rate that is almost five times that
of the best ranked state—but Nevada is not far behind at 47th. In contrast,
Alaska is first in the county in having the best (lowest) rate of filings,
followed not far behind by Hawaii (5th).
Chart 7
Personal Bankruptcy Filings per 1000 Households
(national rank indicated below)
Native People and Immigrants
The final topic addressed in the environmental
assessments is a specific focus on two groups of special concern
to community development practitioners in the West, native people
(defined in the reports as “American Indian or Alaska Natives,” or “AIAN,” for
all states except Hawaii, and as “Native Hawaiians/Other Pacific
Islander” in Hawaii) and immigrants. In total, AIAN individuals
and Native Hawaiians make up 2.1% of the total district population,
compared to 1.1% overall in the U.S. Chart 8 clearly shows that
Alaska leads the way in AIAN share of the population, with AIAN
residents accounting for 15.6% of the state’s population, trailed
by 6th-ranked Arizona, with a 5% share. However, the other five
mainland states still have notable AIAN populations, with all eight
states ranking in the top two quintiles in this measure. In absolute
terms, the AIAN population in California is the nation’s largest
and Arizona ranks third. Similarly, Hawaii’s Native Hawaiian/Other
Pacific Islander population represents 9.4% of the state’s population,
which would rank it near the top in the nation on a combined measure
of the concentration of native people.
Chart 8
Percentage of Population That Is American Indian or AlaskaNative
(AIAN)
(national rank indicated below)
* tied
**Hawaii’s AIAN population accounts for 0.3%
of total state population; data used in this chart reflects Native
Hawaiian/Other Pacific Islander population
The native population faces a number of community
development challenges, including a poverty rate twice the national average,
far lower educational achievement, higher unemployment, and more serious
housing issues. While
a number of programs and services are specifically targeted to these
populations in each state, the disparities are stark and warrant special
attention.
As with other areas of the country, portions of
the Twelfth District are also magnets for immigrants. Twenty percent
of Twelfth District residents are foreign born, and in total, they account
for 36% of the total foreign-born population in the nation. As illustrated
in Chart 9, California is the clear frontrunner of all the states in
immigrant population share, with more than a quarter of its population
foreign born. However, three other states—Hawaii (fourth-largest concentration,
with an immigrant share of 17.5%), Nevada (sixth, with 15.8%) and Arizona
(eighth, with 12.8%) are not far behind. Even Washington, Oregon, and
Utah are in the top half of the country in terms of the concentration
of immigrants, with foreign-born people comprising between 7% and 10%
of their total populations.
The native population faces a number of community development
challenges, including a poverty rate twice the national average .
. .
Chart 9
Percentage of Population That Is Foreign Born
(national rank indicated below)
Like Native Americans and Native Hawaiians,
the foreign born are more likely to live in poverty and face a number
of obstacles, including cultural and linguistic barriers, which hinder
their ability to start businesses and find affordable housing. Additional
programs for these groups would be especially helpful.
Twenty percent of Twelfth District residents are foreign
born, and in total, they account for 36% of the total foreign-born
population in the nation.
Concluding Thoughts
These environmental assessments highlight the challenges facing
the community development field in the Twelfth District: exploding population
growth; pockets of economic weakness; increasingly limited homeownership
opportunities for low- and moderate-income people; severe shortages of
affordable rental housing in many states; unmet demand for capital and
other support for entrepreneurs and small business; a huge unfilled need
for asset accumulation and preservation strategies for the district’s
poor; and very specific community development needs for two especially-important
groups in the district, the native population and the immigrant population.
While daunting, these challenges are not insurmountable. With continued
dedication and hard work, together we can make a real difference in the
district’s low- and moderate-income communities.
CFED,
State Asset Development Report Card (SADRC), 2002, p. 92.
U.S. Census Bureau, Census 2000 and American Community Survey Data.
U.S. Census Bureau, Statistical Abstract of the United States:
2003.
U.S.
Census Bureau, 2003 American Community Survey Data, http://www.census.gov/acs/www/.
California
Association of Realtors, California’s Housing Affordability Index at
19% in September, Down Five Points from Year Ago, November 2004.
Oregon
Housing and Community Services, Setting the Standard: 2003-2005 Strategic
Plan, p. 12.
National Low Income Housing Coalition, Up
Against A Wall, November 2004.
U.S. Census Bureau, 2003 American Community Survey Data.
National
Low Income Housing Coalition (NLIHC), Out of Reach 2003, http://nlihc.org/oor2003/.
CFED,
SADRC, pp. 129-132.
Ibid,
p. 106.
U.S. Census Bureau, County Business Patterns 2001.
CFED, SADRC, p. 107.
U.S.
Census Bureau, Income, Poverty, and Health Insurance Coverage in the United States: 2003, p. 23; poverty rates are calculated using a 3-year
average, 2001 to 2003.
Henry
J. Kaiser Family Foundation. Distribution of Total Population by Federal
Poverty Level State Data 2002-2003, U.S. 2003, http://www.statehealthfacts.kff.org.
CFED,
SADRC, p.91.
American
Bankruptcy Institute, Households Per Filing, Rank During the 12-Month
Period Ended March 31, 2004, http://www.abiworld.org/statcharts/HouseRank.htm.
U.S. Census Bureau, Census 2000 Data.
Ibid.
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