“Affordable” is Gone

Beyond hurricanes, another type of storm is on the horizon, says New Orleans Area Habitat for Humanity Executive Director Marguerite Oestreicher, and it’s going to take area businesses, nonprofits and government all working together to stop it.

I haven’t had much normal since I’ve been here.

Since taking over as executive director of New Orleans Area Habitat for Humanity in 2009, Marguerite Oestreicher has led the 40-year-old organization through multiple hurricanes and a global pandemic. One of the first affiliates of the national organization, the New Orleans Habitat, however, is no stranger to storms. In fact, it was essentially reborn following the costliest natural disaster in U.S. history.

“We were a small- to moderate-sized affiliate, doing eight to, in a good year, 10 or 12 houses a year,” said Oestreicher. “When Katrina hit, everything changed. The crisis that we had in terms of housing, and poverty, transportation and disaster response, it was all out in full display for the world to see, and the world responded. They showed up in the form of thousands of volunteers and incredibly generous donations. That generosity right after Katrina is what laid the groundwork for everything we are able to do now.”

In the early years following Katrina, Habitat was building over 100 houses a year.

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“We’ve now built more than 700 houses in the Greater New Orleans area,” said Oestreicher, “and we’ve done storm cleanup on about 2,500 to 3,000.
Habitat is far more than just a homebuilder. The organization is also a lender, runs a robust home repair program and an internship and apprentice building program, organizes around 1,000 volunteers every year and runs advocacy campaigns. Habitat also operates two ReStores — resale stores stocked with donated furniture, appliances, home goods and construction materials, which has kept more than 1 million tons of waste out of area landfills, the organization boasts.
After a slowdown, she says the organization is now back on track — building about 25 houses a year and getting ready to launch a substantial new project on the Westbank that will result in the construction of about 150 homes over four years.

The pandemic’s effects, however, are far from over. In fact, Oestreicher says it has helped bring about a crisis unlike any the organization has seen before — one that threatens the very fabric of our region.

What are some of the major obstacles and challenges in creating workforce housing right now?
What we are seeing across the country is that there is nothing that people can build that is truly “affordable.” Everything is expensive.

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Inflation aside, when you add the complexities of supply chain interruptions from the pandemic, and you add increased interest rates, suddenly you have this perfect storm of a housing crisis, which has been building for a very long time.

For employers, if there’s nowhere for people to live within a reasonable distance of where they work, they’re not going to take that job. And what happens when prices are out of sync, people are forced to buy farther and farther away from services, places of employment, schools, health care, libraries, recreation activities, not to mention their favorite coffee shops and restaurants and a grocery store.

As people get farther and farther out, you then have to buy a car, because there tends to be less public transportation the farther out you go. You are then trading one set of expenses for another.

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What needs to be done?
We’ve got to figure out how to build to a little bit greater density, closer to transportation, beefing up our public transportation systems, and none of these things can happen in a silo, you have to integrate them.

As part of that mix, you will continue to hear me go back to the home repair program. The most affordable housing that exists is the housing stock that is already there. But you have to maintain it, and in many cases, people are not able to afford what it costs to make repairs, or they may not know how to do it. They may lack expertise in dealing with contractors and subcontractors. We spend a lot of time trying to help people stay in the homes they’re already in. That’s important especially for those who are older and can’t just move or go get a second job. We did over 120 significant home repair projects last year. That’s a growing piece of our operation.

How are you building to specifically suit today’s needs?
Housing is expensive and complicated. We need to look at the way we think about home ownership. What does it mean, what does it represent? We have to do that through the lens not just of affordability and proximity to where someone works, but to the shifting demographics. Families are smaller. We are older. Family makeups, you have more divorce, you have remarriage, you have blended families, you have people taking care of other family members. Designing ahead for changing demographics and family situations is a long-term strategy that we all need to get better at.

For Habitat, that means we are building doubles that we will sell to a qualifying partner family where they can live in half and rent the other half out. We will teach them how to be landlords, and we will manage the property for them over a three-year period, so it’s a learning and a handing-off process.

The way the building is designed, it’s configured so that it’s very easy to convert it from a two-bedroom, one bath on each side to a three-one. So, a young couple might buy the house, and they might have children, where they’re going to need that extra bedroom, so the double can be configured one way. Then, as the children get older, go off to school, then maybe it goes back and becomes an income-producing unit. We’re designing for flexibility.

We’re also looking at things like, should we be building condominiums, because you have to ask, “Whose American dream is it? Is it necessarily a single-family, freestanding home?”

And we need to have a broader range of price points. In New Orleans right now, we are top-heavy with luxury properties — there’s not much out there for starter homes.

How are insurance costs impacting your work?
Right now, we have families that have been in our pipeline for over a year who qualified a year ago. They’ve saved up their escrow, and their home has been built, and then they no longer qualify because insurance has become so expensive.

Whatever the cause, climate change is happening, so we have begun building with fortified roofs, which will make a tremendous difference in terms of affordability of insurance.

There’s been a fair amount of media locally around FEMA 2.0 and flood insurance. But even though it has gone up in cost, that still is a smaller percentage of the total cost of ownership than the homeowner’s insurance. That’s where we’re seeing the exponential increase in rates. Even though the Legislature has just voted to approve funds to recruit insurance companies to write business in Louisiana, it’s going to take some time for market forces to stabilize those rates, and we have no guarantees around that.

But in the interim, let’s assume we have no major hurricanes for another year or two or three, and rates can really settle back down, what happens before the rates settle? You have people who were already struggling, and then they got these radically increased premiums. If you are a household of modest means, working on a very tight budget month to month, and suddenly, your insurance costs have doubled, you are at risk of losing your home. You have hard-working people who’ve been in their homes for years who are suddenly unable to afford the biggest asset they have.

People are faced with impossible choices right now. It’s pay your mortgage, but they have to eat, they have to take the car get to work, they might need medication, they may have childcare expenses. It’s a band-aid, but we need a time-limited program of at least a year, where families could apply for some relief on homeowner’s insurance premiums.

If we fail to get creative on a solution for this, we’re going to see a lot of people moving into foreclosure, and that ripple effect is much larger and far more costly for us as a society than the cost of those insurance premiums, particularly if you made it needs-based.

It’s going to take a combination of government, nonprofits and businesses. It’s a greater problem than any single entity can manage alone, so we’re going to have to operate cooperatively and creatively. If we fail to act with urgency around this, we’re going to have a much bigger problem.

How is the supply chain situation for you right now?
For the most part, things have settled, but even though the price of lumber has come down from its peak, it’s still higher than it was pre-COVID. There are certain things that are very difficult to obtain, like windows. You are looking at eight to 12 weeks for windows.

The market is more unpredictable now than it was before, so we’re having to build far more contingencies into our program management, because you can’t just have a Plan A and a Plan B, you now have to have a Plan C and a Plan D.

If you’re building five houses at any given point in time, and they’re all at different stages, and you’ve planned your work and your construction teams and your volunteers, and then you can’t get what you need, construction and operations have to completely reshuffle. I asked the construction director how many times he had to rewrite the schedule on a particular house, and he just started laughing. He said, “I don’t know, probably twice a week.”

What do the next two years look like for Habitat and your work?
I am a clear-eyed optimist. I believe profoundly in the importance and relevance of the mission of this organization, which is to responsibly build communities where families can thrive in homes they can afford.

In our world, community building is not just the sticks and bricks, it’s creating opportunities. It’s our internship and apprenticeship programs, where we can create a true path to a wonderful career that pays well with stability for young people from our community. You can literally start as a paid intern and become a paid apprentice, plus benefits, and ultimately be earning a solid living within a year.

With our newest Westbank project, we just broke ground on 45 acres on what used to be a golf course. The land had been sitting there for 20 years, and we will be building 150 homes. We’ll have a component of smaller, age-qualified housing for people 55 and up, and the rest will be a mix of two-, three- and four-bedroom single-family homes. We also have some mixed-use fronting Belle Chasse (Highway) and Behrmann.

One of the things we’re super excited about is that when you build housing to be affordable, very often you’re acquiring land that may not be close to grocery stores and schools and health care. This parcel of land on the Westbank is close to everything. There are two grocery stores, two drugstores, three schools, churches and major health care, all in walking distance.

As wonderful as the Musician’s Village we created is, this is the next step. We’re building on that knowledge and experience. We’re able to say now, “What can we do next that’s bigger and bolder and will make a bigger difference?”

 

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