Q&A: More than shelter -- Habitat for Humanity Int'l 1

Q&A: More than shelter

A conversation with Dr. Eric Belsky, managing director, Joint Center for Housing Studies of Harvard University

Q: Habitat for Humanity’s belief is that a house is far more than a roof over one’s head. It is an investment in economic security, a safe and secure place to raise a family, a conduit for safer and more cohesive communities, and sometimes a place in which to build a family business. Can you reflect on a few of the functions of a housing policy that would serve as a microeconomic stimulus, foster community development, and support family self-sufficiency and advancement?

The Habitat for Humanity view of the importance of housing is one I fully agree with. I think that the nature of people’s lives is that their housing is more than shelter; it provides a place from which they can get to other opportunities. It provides a place for them to have a home business. It provides access to resources. It is very fundamentally engaged with the type of health conditions under which one lives.

Of course housing plays out differently in different parts of the world. When you look at places where just basic shelter is a challenge—the quality of the housing itself is very poor, and the housing is also very poorly serviced—it becomes very essential to provide basic sites and services for poor and low-income people. At the most fundamental level, you want to make sure people have decent-quality housing that doesn’t expose them to health and safety hazards, either in the home or in the community in which they live. This is an enormous challenge and a rapidly growing one around the world.

When you move beyond that, and you make the assumption that you’ve solved that problem—that people are living in decent housing and decent communities—then there are a whole series of other things that you would want to do from a public policy perspective to help people use housing as a platform for other things. One of which can be, in a developed nation context, zoning that allows for certain home businesses and to have live- and work-space built into subsidized housing policies and programs.

Another very important one—because this governs outcomes for future generations—is to attend to the conditions under which children are living, especially in places where the government or private sector may be engaged in helping people to afford their housing. One way to do this is through the delivery of child care services that help children achieve more in school and day care when parents are working. But it also can include support of economic self-sufficiency strategies. And you can combine some level of job training and services or help with entrepreneurship and small business, if that’s what members of a household want and need.

Lastly, there could be programs to help people save, because savings is just such a fundamental necessity if you are going to succeed in investing in yourself, your children and your home—both keeping your home and, if you’re a homeowner, making repairs. If a policy can try to create opportunities that get people to save, that is a wonderful thing. In the United States, an example is using the family self-sufficiency program with Voucher and Section 8 certificates in order to help people save for a variety of different kinds of investments.

As the global population continues to increase and move to cities, and the resulting demand for shelter grows and changes, what would you say are three key ingredients to an economically, socially and environmentally sustainable shelter approach in the developing world?

One of the things that I think is just an unbelievably significant challenge around the world is how to deal with rapid rates of urbanization. UN-HABITAT has estimated that the number of slum dwellers jumped by about 55 million to 828 million, which is really a staggering figure, over the 2000s. So dealing with these issues is absolutely critical. And the scale of the problem far outstrips the resources that are available to deal with it.

In terms of key ingredients, I think the first is the resources to get it done. The second is to create effective public/private partnerships.

In the context of Habitat for Humanity, that would involve the government acknowledging the importance of creating environments where Habitat can build housing where the people who live in the house own the clear title and that they are provided with the kinds of municipal services and infrastructure they need in order to create an environmentally sustainable community—and one that works.

There is also, of course, the question of settlements and slums that are in very poor condition. These are not places that are amenable to being laid out with new construction for sites and services.

Those pose really significant challenges because you want to try to help people improve these places or move to places that are safer environmentally if they are in places that expose them to natural hazards. But it’s challenging to do.

And as challenging as the conditions may be, the people in the communities are communities, and they want to stay with their communities. So another key ingredient is to think and plan carefully around what to do with those communities in ways that fully engage the people who live there.

Thirdly, there is a need to think more proactively about the continuing flow of people who are poor and need housing in cities. We need to engage in a much more robust planning exercise about what kinds of pressures development may place on existing slums. More importantly, we need policies to help people in those places to build their incomes and assets. In the end, it’s desirable for them to have the income and the assets to invest in their communities, to potentially make stronger demands—for the land to be titled, for example. And it provides people an opportunity to move up and out of those communities into perhaps even better housing elsewhere.

Pervasive, large-scale housing inadequacy has enormous costs to society at large. For example, slum conditions make it harder to attract investment to developing cities. Slums also create higher costs for city-scale infrastructure development. They reduce property values for better-off households. Yet slum dwellers typically cannot afford to upgrade their housing on their own. Given this market failure, how can housing policy best address the positive externalities of housing, especially for low-income communities?

It is really a human tragedy. Many people are living in deplorable conditions without the resources and capacity to improve their housing to a point where you and I would consider it decent, safe and within a community that is safe. As you pointed out, these communities have enormous negative externalities. Often, those communities have living conditions where sanitation isn’t adequate, where water isn’t distributed in any safe and simple and easy way. So I think the negative externalities are often very strong for them.

And in addition to these challenges, the communities often come under pressure from development, which leads to potential displacement of people. What can housing policy do in those situations? There are a number of things that people are trying to do. Some successfully, but not at a scale that is addressing the problem. One is to help people improve their own housing through microloans. I think this is important and should continue. Another is to get governments—national typically, sometimes municipal governments— to recognize the importance of making investments in those communities and using those investments to improve living conditions. Certainly, nongovernmental organizations are very active in doing this. Often the NGOs are operating with some government support, sometimes financial. The scale has to be increased dramatically if these issues are going to be addressed meaningfully.

There are other creative examples of efforts to help people in these communities. One example is a program called Patrimonio Hoy in Mexico. In this example, a large cement company (CEMEX) wanted to find a way to help serve a poorly developed housing market and help build with cement and concrete in a way that would make their housing stronger and more secure. They realized that people were spending an enormous amount of money just getting the building materials to the work site. When they got the materials there, they often had to pay someone to advise them on how to use it because they were unfamiliar with the construction techniques.

It was possible for this company to help facilitate the movement of those materials to the community on a larger scale. They also helped organize a savings scheme to help people save as a group to build sequentially on each of the families’ homes using the cement. And they helped them with the technologies to do it. They could do all this in a way that was at least marginally profitable for the company because so much money was being spent on services that could be provided more cost effectively through a more organized effort.

So there are promising programs, and we should try to replicate them in some fashion, adjusting for local building materials and other issues in other places.

We’ve seen that insecurity of tenure and lack of property rights deprive the poor of basic economic security in many countries around the world. This has been one of the overwhelming challenges in developing housing for the poor, especially in the reconstruction of houses in Haiti. What type of viable solutions do you recommend to address and overcome land tenure issues?

It is challenging for a number of reasons. One is because there are already people living in these communities. And sometimes these communities are devastated by natural disasters. But even when they’re not, deciding who “owns” the housing is often challenging because there will be people paying rent to someone who perceives themselves as owning that property. But there may be no recognition of renters there, suggesting that there is an absentee owner. Other people would say, in that situation, that the renters have lived there long enough and they should have the rights to the land.

It is important to begin to document land rights, so if there is a decision made on the part of the government to grant title to somebody for this space, there is a sense of whom that titling should go to. This was discussed extensively in Hernando de Soto’s book “The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else,” when he talked about a variety of informal or reasonably formal ways these rights are established and internally recognized but may not be legally recognized. So the first question is, can you sort all that out?

Then the second absolutely essential element is for the government to support the granting of legal title to people who are occupying places or have been renting places for some time. Some governments are willing to do this. Other governments are reluctant to do it. In some cases, the same areas we are talking about come under pressure from formal development. Therefore, people that are interested in developing it formally are willing to try to pay to establish legal rights there. Then there is a question of what would happen to the people there, just as there would be in a developed country. What rights do they have to stay or not stay if there is going to be a redevelopment of that area? As I said, different governments have different takes on what they are going to do. When you look at most countries around the world that we consider developed, most of them have significant areas in which these kinds of informal methods of title were eventually recognized formally by the governments. But not all governments are willing, or feel they are able in some cases, to grant title to people.

In many developing countries, housing is built by the poor through incremental housing and using microfinance methods rather than traditional mortgage lending. This has become quite an issue in India, where microfinance is now being dealt a harsh blow with increased foreclosures. Can you comment on the use of housing microfinance as a tool to build capacity and economic growth for the poor?

This kind of lending is not a panacea. It is not easy. Using it in the context of housing is something that is still relatively recent, and people are trying to understand the dynamics of doing it. But it has been demonstrated in a number of places that people whom we would perceive of as being very poor and having erratic incomes often are able to make payments on very small loans. And they really need those small loans if they are going to try to improve their economic or their housing situation. Doing it is a very challenging business, and it certainly has high transaction costs relative to the tiny size of the loans. But I think work in this area is going to continue. In fact, there has been some discussion of what lessons might be learned as far as lending to the poor in this way that are transferable to the developed world.

Nothing like that is going to go without problems. It’s not going to be a linear path to getting it right. Like any form of lending, it is going to be heavily influenced by what happens in the broader economic environment in which people are situated. It is going to be part of the solution and mix. What people would like to see, of course, is a way to move the formal bankable frontier down into these markets. This has been described by a colleague of mine, David Smith, who I think is a really great thinker on these issues, and also David Porteous, who named his organization Bankable Frontier Associates. The goal is to move the formal bankable frontier down into these markets rather than tapping into very small-scale loans in very specific ways. In this way, the broader financial system begins to work out how it can reach into those markets, and deeper pools of capital can be tapped.

A recent article in Time Magazine made the case against homeownership, stating that people put far too much of their money into paying for housing, that homeownership contributed to the hallowing out of cities, that it fed America’s overuse of energy and oil, and that it made it more difficult for people who had lost a job to find another. What is your reaction to this argument? And is the case for homeownership different in the United States than in other parts of the world?

A lot of people got into homeownership with the expectation that they were going to accumulate wealth through building equity in their home. And they found that is not always the case. In fact, if you look back over time, you see that in different cities and different communities across the United States over the last 20 or 30 years, there were periods that many saw some level of price decline and therefore were at risk of not accumulating wealth but in fact losing money on their homes or ending up in foreclosure. So people’s view of homeownership has been influenced by this. And this helps people recognize that when they make the decision to own or rent, by owning they are investing. And that investment carries both potential risks and returns.

What impact do you think this change in the view of homeownership as an investment has had internationally?

There really isn’t an active rental market in many developing countries. And in the slums, where many people aspire to own their homes, they are not worried about appreciation. They are worried about just being in a place they feel that they have some rights to, that they either can’t be evicted from or if they are they are going to be compensated in some way if they are evicted. They are thinking of homes as someplace to live and much less as investment. Although in the back of their mind they may be hoping that the things go up in value.

The Joint Center for Housing Studies has been mostly focused on housing and the United States. It seems like you are moving into the international side. What is the Joint Center doing now, and what are your strategies?

The Joint Center for Housing Studies is largely a domestically (U.S.) focused research center and continues to be. Over the years, we have done some international work. We looked at assessing housing conditions in Mexico and developed a couple of reports that we modeled after a report we do here in the United States called “The State of the Nation’s Housing.” It was an attempt to draw together information about what was going on in terms of housing, housing markets and housing needs in Mexico with an eye toward the government and the private sector together formulating a more complete view of what might be helpful to advance housing policy in the country.

We also did a conference that was funded by the Rockefeller Foundation with a number of countries. The goal was to encourage the countries to discuss and describe ways in which they viewed housing as more than shelter—as a potential engine for social and economic development, and what principles would guide that.

What we are exploring now, with support from the Ford Foundation, is how to address the issues of very rapid urbanization. Urban poverty in developing countries takes a very specific spatial form in unplanned and untitled slums, sometimes called informal settlements. We thought it was important enough to begin to look at that. So we are working on a project to understand what scope there might be for urban planning and design and municipal authorities to play a much stronger role in dealing with urban poverty that understands its spatial context and is aimed to help people build income and assets and improve their living conditions. We want to help think about what would be the right steps to take in these situations to improve planning and what are some of the policies and programs that would help municipal governments have more authority to think more deeply and with a longer-term vision around dealing with urban poverty and housing for the poor.

Eric Belsky is managing director of the Joint Center for Housing Studies of Harvard University and lecturer in urban planning and design at the Harvard Graduate School of Design. The center is a collaborative venture of the Graduate School of Design and the John F. Kennedy School of Government.

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