The Other Housing Crisis: Too Many Sick, Aging Homes

The Summerdale apartments used to look a lot like many other housing complexes in low-income parts of US cities. It’s a compound of low-slung suburban-style buildings built in two phases starting in the early 1970s, located near Interstate 75 in Atlanta’s Glenrose Heights neighborhood

When developer Marjy Stagmeier’s firm, TriStar Realty, bought the 244-unit property in 2018, Summerdale needed millions of dollars in repairs. Tenants reported mold and insect infestations, broken appliances and leaking roofs; several units were vacant and partially burned out. The conditions took a particularly harsh toll on Summerdale’s youngest residents: Of the 68 children living there who attended nearby Cleveland Avenue Elementary School, most had asthma, Stagmeier says.

As she recounts in her book Blighted, Stagmeier is a strong believer in a concept that has only recently become a larger part of the housing policy conversation — the connection between living conditions and housing insecurity. That’s the link that drives TriStar’s investment strategy, as well as that of an increasing number of other organizations. 

She describes the economics of managing a sick property. Two children, ages 5 and 8, lived in a Summerdale unit with a leaky window. Both kids had asthma. The family couldn’t afford to run the air conditioning, and the combination of heat and moisture in the apartment led to mold, exacerbating the children’s conditions. It cost Stagmeier $7,000 to repair the unit. That’s far less than the health-care costs for the children’s asthma treatments, she notes — a great return on investment, not to mention quality of life.

A legion of public health experts agree. Buildings are the “pillars supporting our nation’s health,” as several former Surgeons General declared in a September letter to US policymakers that cited a raft of research on how indoor air quality and other indicators of building performance are linked to medical costs and wellbeing. A study by Rebuilding Together, a nonprofit that provides free home repairs, found that every dollar invested in a home generated $2.84 in social benefits, half of which are savings on health-care spending. Having stable, healthy housing reduces depression, anxiety, and emergency room visits for children, according to Health Starts at Home, a five-year study by the Boston Foundation. 

Covid-19 further underscored the importance of quality housing, as does the impact of climate change, which will create increasing health hazards due to air quality issues and extreme heat, both exacerbated by substandard housing.

“Within the last five, six years, this idea of the intimate connection between housing and health has become much more mainstream,” said Angie Liou, executive director of Asian Community Development Corporation in Boston, an affordable housing developer.

Liou, Stagmeier and others believe that emphasizing the link between housing and health-care funding can unlock savings and fast-track much-needed investments. 

“Housing has rivers of cash around it: You’ve got education, health care, municipal funding,” Stagmeier said. “I don’t think I’ve ever seen them all come together in alignment.”

The High Costs of Sick Housing

Policymakers have been trapped in bind when comes to housing funds, trying to address both the immediate need for rent relief and the dearth of investment in new units with a finite pool of money and a byzantine set of regulatory and economic barriers. The traditional thesis of improving affordability in the US tends to lean on production; market-rate housing gets built, adds to overall supply, and then ages into affordability. But that approach has left a lot of housing, especially units for low-income renters, in poor condition. 

Currently 35% of the apartment stock in the US is at least 60 years old, per the Census Bureau; the median age of an American home hit 43 in 2021, according to the Harvard Joint Center for Housing Studies, up from 27 in 1991. HUD found 6.7 million US households live in substandard housing, including 1 in 10 of the poorest renters. A Federal Reserve Bank of Philadelphia study found it would cost $126.9 billion to repair the nation’s inadequate housing.

“The adequacy issue takes a backseat to the affordability issue in most jurisdictions in this country,” said Carlos Martín, project director of the Remodeling Futures Program at the Harvard Joint Center for Housing Studies. “Housing in this nation is like humans entering their mid-life crisis.”

With fewer discretionary funds, low-income homeowners often struggle to keep their properties up. In St. Louis, for example, the average bill for repairs among older homeowners in St. Louis was more than $13,000, according to Todd Swanstrom, a public policy professor at the University of Missouri-St. Louis who has studied the home repair gap.

A team of workers from Rebuilding Together repairs a fence for a low-income St. Louis homeowner.Photo courtesy of Rebuilding Together

Low-income renters have it even worse. Older mom-and-pop landlords often don’t have the appetite or the budget to invest in upgrades. If a private landlord does pay, the split-incentive problem comes into play; improved housing means higher rents and threats of displacement. That’s why most weatherization and upgrade programs have strict affordability requirements.

“There’s nothing more politically popular than an older homeowner,” said Swanstrom. “But on the other hand, helping landlords fix up their buildings might allow them to simply turn around and raise the rent and kick someone out. So there’s a kind of a moral hazard with helping them.”

The nation’s public housing systems, which house roughly 1.2 million households, face similar challenges due to aging facilities and poor conditions: In New York City, for example, NYC Housing Authority residents have faced decades of persistent mold remediation issues, despite court orders and years of reporting. 

Climate change makes all these problems worse. Neighborhoods at higher flooding risk are seen as less-valuable assets; the effects of extreme weather damage existing apartments and add to deferred maintenance burdens, as well as harm children’s educational performance. Between 16% and 25% of older homeowners in St. Louis do not have adequate air conditioning, Swanstrom’s study found, meaning there’s “a strong likelihood some of them will die during the next heat wave.”

But for those who can afford upgrades and repairs, growing awareness of the link between health and housing has become a selling point.

“The demand for healthy buildings couldn’t be any stronger,” said Jason Hartke, executive vice president of advocacy and policy of the International WELL Building Institute, a group that promotes its own certification standard for healthy buildings and invests in upgrades to affordable housing and schools. 

The pandemic, wildfire smoke, and wellness trends have created significant high-end market demand for health-related building upgrades and gear. US homeowners spent a record $567 billion on home improvement in 2022, per a recent Harvard Joint Center report, as nearly 30% of homeowners embarked on a renovation, such as adding outdoor space or home offices for remote work. But that spending was largely limited to higher-income households, and 80% of it was concentrated in homes, not in rental housing. 

Since Hartke started working at the organization in 2019, the square footage of space meeting the WELL Standard has grown tenfold, from 500 million to 5 billion square feet. But typically this is more expensive residential and commercial real estate, often equipped with the latest in pandemic-era HVAC upgrades. 

Housing as Health Care

There has been some promising progress in channeling one particularly large river of cash — health-care spending — into the low-income housing sector. By tapping Medicaid dollars, many states are conducting experiments and asking for the authority to do more; some can even fund limited home repairs with immediate health effects, such as removing asthma triggers.

For many years, states have been able to use Medicaid to cover what’s called tenancy support, providing those with disabilities or significant health conditions funding to help them navigate the housing market and find a home. But in recent years, there’s been more use of the Section 1115 demonstration pathway; states can ask for a waiver to use Medicaid funding to provide housing for a growing group of lower-income, at-risk Americans, especially those with chronic homelessness. 

“A lot of our focus has been on giving the homeless a place to live, due to the bad impacts of living on the street,” said Peggy Bailey, vice president for Housing and Income Security at the Center on Budget and Policy Priorities. The 2010 passage of the Affordable Care Act expanded Medicaid eligibility to homeless Americans, and it soon became obvious how expensive their health services had become. There’s still tension in terms of where dollars are being spent; longstanding rules prohibit using Medicaid to directly pay for housing. 

But early results illustrate the health payoff of high-quality housing. In Washington, a program utilizing Medicaid waivers to provide rental support has been paired with more than $141 million in state funding for building new housing units. The program, Apple Health and Homes, has 14,000 people signed up for health-care and employment assistance, says Matt Christie, foundational community supports supervisor of the Washington State Health Care Authority. 

“The goal is creating more options for people to live in, and having a choice in where you live is essential to recovery,” he said. So far, program participants have seen significant reductions in homelessness and increased placements in permanent supportive housing.

Many large nonprofit hospital systems have started to focus on housing. The Healthcare Anchor Network counts more than 70 such systems nationwide making these kinds of community investments. Kaiser Permanente announced in late 2022 that it would be spending $400 million on economic development and housing as part of their Thriving Communities social impact investment fund. The program, which launched in 2018, is expected to create and preserve a total of 30,000 housing units by 2030. Much of the funding has been aimed at helping address housing insecurity for veterans, said John Vu, Kaiser’s vice president of strategy for community health.

Other groups have tied their funding more directly to health outcomes. The housing-focused nonprofit Enterprise Community Partners has zeroed in on preserving small and medium-sized multifamily housing — “critical fabric” in cities, says Meaghan Shannon Vlkovic, the group’s vice president for the Southeast region. These buildings, which have 100 units or less, tend to provide 80% of the homes available to those earning at or below 80% of area median income, and often come with unique challenges: mom-and-pop landlords without lots of capital, extensive maintenance needs and vulnerability to outside investors. 

A tenant in a Houston apartment complex points to mold on a bathroom ceiling.Photo by Karen Warren/Houston Chronicle via Getty Images

“There are cash buyers out there salivating for these buildings, and the easy way for owners is to sell it to an investor who will gut it and do all the work,” said Liou. “But that just has a ripple effect on tenants when buildings change hands.”

Currently operating in California and Colorado and soon to start in cities in the Southeast, Enterprise’s Preservation Next program helps retrofit naturally occurring affordable units with loans, grants, trainings and other resources for tenants and owners of multifamily buildings. In 2019, Enterprise also launched the Housing for Health Fund with Kaiser Permanente and JPMorgan Chase & Co., an $86 million investment that has preserved 1,237 affordable units in 18 buildings across Northern California. 

Funding Fixer-Uppers

To close these housing and health gaps, there needs to be more philanthropic focus on housing preservation, said Vlkovic. Between 2019 and 2021, the US lost 1.2 million affordable rental homes. 

There have been signs of municipal policy shifts. Hartke points to cities such as Jersey City and Oklahoma City adopting WELL standards for municipal buildings, and the US Conference of Mayors passing healthy building policy resolutions. The White House has held a summit on indoor air quality, and Johns Hopkins researchers released a model indoor air quality standard.

But connecting resources to the sickest spaces remains a challenge. The Inflation Reduction Act, for instance, funds electrification and upgrades like new HVAC or heat pumps. In particularly dilapidated homes, however, basic repairs to plumbing and roofs are required first. And while the rise in ESG funding has brought targeted investment in environmental and sustainability issues, family health hasn’t typically been part of that equation. 

It exposes a persistent blind spot in US housing policy — the relentless focus on new construction as the key to the housing crisis, rather than repairing the housing that’s already been built. 

“It’s an issue that’s largely invisible to the public,” said Swanstrom. “You can see a collapsing porch. But you can’t see the little kid who has asthma attacks because of mold.”