Jonathan Reckford on Housing’s Role in Strengthening Families and Communities

Lisa Hamilton:
From the Annie E. Casey Foundation, I'm Lisa Hamilton and this is CaseyCast.

Joining us today is Jonathan Reckford, the chief executive officer of Habitat for Humanity International.

Habitat, as it's also called, is a global nonprofit devoted to helping people build, repair and retain their homes. Today, the organization operates locally in all 50 States and more than 70 countries and aids almost 6 million people annually.

Jonathan has led Habitat and its growth for 16 years. In fact, he's done so well in this role that the nonprofit times dubbed him the most influential nonprofit leader in America in 2017. Prior to joining habitat, Jonathan held leadership posts at some familiar for-profit companies, namely Goldman Sachs, Marriott, the Walt Disney Company and Best Buy. I know we have plenty to talk about, so welcome Jonathan — and thank you for joining us on CaseyCast.

Jonathan Reckford:
Thanks so much, Lisa. It's great to be with you today.

Lisa Hamilton:
Lots of people know Habitat for its founder, former President Jimmy Carter and his history of building houses for those in need. What else do you want people to know about Habitat and the work that you do?

Jonathan Reckford:
Well, thank you, Lisa. I think the first is people are surprised by two of the biggest misconceptions. One, actually jumps right to it that President Carter is not actually the founder of Habitat, but there is no question that when he and Mrs. Carter got involved in 1984, they put it on the map, and they are our most famous volunteers. Certainly, I don't think Habitat ever would have become what it is without the Carter's involvement.

I think the other big misconception about Habitat is that we give away houses. As people understand that deep in the ethos of Habitat has always been idea the idea of partnership with families and communities, where everyone has something to give, and everyone has something to gain.

Our partner families purchase the homes. They go through training in both home maintenance and financial management, and then they pay back an affordable mortgage and those mortgage payments recycle into local community. So, as they make their payments, they're helping the next family have an opportunity. I think that brings dignity, helps create financial assets, but also does create that long-term sense of a true partnership.

I think the last thing that people may be surprised by with Habitat is — you mentioned a piece of it — which is that we're global. I think because we are so widespread in the U.S. and with our 1,100-plus affiliates, people don't realize that the great majority of the families we serve are outside the United States.

And that we've gone through a big transition. We are so well-known for that volunteer wall raising in your local community. And we want to do more of that than ever. We can certainly talk about that. But you may not know that we very intentionally move from being primarily a home builder to really trying to be, as we say, a partner and catalyst for worldwide access to safe, decent and affordable housing. And that really pushed us very heavily into the policy environment, as well as trying to make markets around the world work better for low-income families so they can improve their own housing conditions. So, it drove us to becoming a leader in housing microfinance, and really working with entrepreneurs and the private sector, as well as the public sector and other nonprofits, to really try to remove the barriers that stop people from being able to access housing.

Lisa Hamilton:
Maybe it will be helpful for you to just say clearly what Habitat is focused on. What are the pillars of your work and how do you do it?

Jonathan Reckford:
So our first pillar is really community development, that core work with families. And the biggest change there has been not just working family by family, but in the context of neighborhood revitalization and community development. And obviously that starts with the community itself. We really don't want to pretend we have the answers as much as can we come alongside communities and support them in their goals and transformation.

Our particular niche continues to be affordable home ownership because there are very few players in that space. We think there's a real need for all of the spectrum of housing affordability. We need supportive housing. We certainly need a huge increase in supply of rental housing, that's affordable. But we also think there is a role both at the family level and community level where home ownership helps anchor families, but also anchor the communities. And it's also one of the best ways over time for low-income families to build a financial asset. As we look at the wealth gap and particularly some of the racial implications of that, we think home ownership is an important piece of that solution, as well. That's the first pillar.

The second pillar is what we call our sector work. And that's really where we are trying to do markets and market development. In a way it changed the framing question from “How many houses can we build,” to “What would it take to meaningfully reduce the housing deficit in every geography that we serve?” Which is a more frightening question. And that led to our Terwilliger Center for Innovation in Shelter, where we raised a wholesale housing microfinance fund, where we're laying lending money to microfinance banks and training them to do home improvement lending. We have a shelter tech venture accelerator where we're investing with entrepreneurs who are coming up with better building products for low-income families and then a significant advocacy effort.

We've just completed our first ever global advocacy campaign called Solid Ground, which was particularly focused on property rights for women and disadvantaged groups all around the world. Because if you don't have the right to stay on your land, then all the other things we want to do don't work as well. We've actually just launched our first U.S. advocacy campaign.

And then our third pillar, if you can think of these as three houses, is really about how do we change society and change hearts and minds. And that's where our volunteers come in. COVID of course has been a great interrupter, but in a given year before COVID, we had about a million and a half volunteers. And that's less a construction strategy than a social change strategy.

Lisa Hamilton:
I love the fact that you all do so much in terms of direct service for individuals and families and communities, but that you're also innovating. But really to that third point about trying to win hearts and minds, a lot of that's about helping people understand the issues in this country around affordable housing, which are often invisible to lots of us.

Could you explain what it is you want people to understand about the issues of housing insecurity and the many ways it impacts has ripple effects on other aspects of people's lives?

Jonathan Reckford:
You're so right. And my experience and I'll often actually ask if people are comfortable for a show of hands in an audience, back when we had physical audiences, of how many people grew up with housing insecurity. It's very rare if you're in a group of CEOs or political leaders, maybe you see one or two hands go up. And those people get it, right, because if they experienced it, it is viscerally clear to them how foundational housing is. We would never say that housing is the only need, but in many ways it is that foundation or almost a prerequisite for all the other things we want. Because we know housing correlates with health, correlates with education and, therefore, correlates with livelihoods. Not only do people need safe, decent and affordable housing. We also have learned more and more that where they live is also incredibly important as well.

We're trying to bring more empathy into that conversation, because historically people moved to the cities for jobs, but they had to live close enough to walk to work, so everybody lived together. I often share in my college town I grew up in, everybody went to the same schools. Everybody went to the same faith institutions. We've now become so economically segregated that we often now worship with, go to school with, spend our time with only people in our own socioeconomic class. And therefore, I think the understanding and empathy for what it means not to have those things has changed.

It's not our primary mission — but one of the things I actually most love about Habitat's work — is that less scalable aspect of bringing people together across different barriers. I'm just seeing amazing things happen. I have worked with Blacks and Whites in South Africa and Protestants and Catholics in Northern Ireland and Christians and Muslims in Egypt and Hindus and Muslims in India. I have even worked with Democrats and Republicans in the United States. You can see miraculous things happen when people actually do something that appeals to their shared values, they can focus on what they have in common, as opposed to what separates them. I think we need that in such a big way right now in our country.

Lisa Hamilton:
We do. I applaud you for creating that platform. What we are missing is platforms for that to happen. And I think it is a great asset to both our country and the world that Habitat is a platform like that.

You started exploring this earlier, but I'd like to dig more into how you help people view housing as a community issue and not just as an individual problem. Where people live is often perceived as a very personal issue. But you talked about your work is really being around community development and how having people stably housed in a neighborhood has many, many benefits to that community. Talk more about housing as a community issue, not just as an individual basic need.

Jonathan Reckford:
I think it goes to how deeply interconnected all these pieces are. And so in some ways we were guilty too. We're a housing organization. So we'd say housing is the answer to everything. A health organization would say, health is the answer to everything. Educational organization, and everyone's right and everyone's wrong because none of these will stand alone. But what we do know is housing stability is fundamentally important to children's ability to both stay healthy and do well in school. If they don't stay healthy and do well in school, then the whole rest of the picture doesn't work well either. Raj Chetty and so many other researchers have made it so clear that in a way, what we believe in the American Dream for social mobility is also deeply tied to whether you live in a mixed-income community or a community of opportunity.

Where you live does matter and we know stability does matter, as well. Every time a child gets pushed to a move and has to change schools; they can lose up to a year of academic progress. There's a big cost, but also if we think about crime statistics and home ownership, all these pieces interconnect.

We believe that, in many ways, if people can't afford housing, and the general global guideline is that you shouldn't be paying more than about 30% of your income on housing. Because if you do, you start then having to make unacceptable choices about giving up on health care spending or food security or the ability to support your children's education, all the other wants. Again, they all tie together and I would argue our budget process doesn't address this very well.

I remember a number of years ago on World Habitat Day, I was in New Zealand and on a panel with the New Zealand health minister. He said something that really struck me many years back. And he said, the most efficient thing we could do for the health of our country is invest in winterizing and weatherizing elderly housing across the country because we would have such a decrease in tuberculosis, pneumonia, and other illnesses. But our health budget can't be spent on housing. I'm really interested now in how do we create these partnerships? And there's some creative ones starting to happen where if you pay hospitals for health outcomes rather than procedures, they start looking at the root causes of the problem. And therefore realize that in fact, investing in housing would lower their health costs. I do think the better we can use data to make these connections, we can actually make more intelligent investments in our overall communities.

Lisa Hamilton:
I think that's so true. I appreciate the ways that you put housing in the context of what happens with children and families and communities because that's obviously what we care deeply about. Well, to narrow in on the United States, when it comes to housing, what are we getting right and what is it that we need to do better?

Jonathan Reckford:
When we started what we call market development — trying to focus on making markets work better — that was really outside the U.S. in low- and middle-income contexts. I'm increasingly struck that the market is broken in the United States. We are incapable of actually creating enough housing to house our population in so many parts of the country now. In some ways, we have had to flip it back. I think it's easier, unfortunately right now to see what we're getting wrong than we're getting right.

Now, I would say on the getting right side, new houses are much more energy efficient than they used to be. I think we have better building materials than we used to have. I would say our construction methodology has not advanced nearly as fast as most other industries have. And that's still a big opportunity. But I would say what we've gotten wrong goes to a couple of things.

One, is I think this increasing economic segregation, so that people have made that I think about so many people who are actually quite comfortable mixing across race or faith or ethnicity, but don't have meaningful relationships with people outside their socioeconomic class. Because, as I mentioned before, we are so segregated.

I think the second thing, but it relates to that, is that has artificially constrained the supply of housing. Because people are economically segregated, there's a tendency—even among very liberal people—California is probably the worst of all our States in terms of the sort of, not in my backyard. Or in California, it's BANANA (build absolutely nothing anywhere near anything). They sort of made it impossible to build housing. Therefore, you've ended up with actually a lose-lose because people are commuting an hour or two hours to get to work. That's horrible for their families. It's actually horrible for the environment and it's a terrible tax and it's not sustainable.

I think it'll be interesting as we move to really look at why don't we build more housing. What's worrisome now is it used to be, there were 12 or 15 super high-cost markets and housing was more affordable in the rest of the country. Now the Atlanta's and the Houston's they've actually become really expensive. Because—again—supply has not kept up and we can look at one side of that is what are the incentives? Clearly, zoning is a gigantic piece of the puzzle, but then the other side is, practically, incomes just have not risen as fast as housing costs. We've gotten this growing gap and we've got to collectively figure out how to solve that gap if we're going to make progress.

Lisa Hamilton:
You mentioned the segregation that exists in this country, both socioeconomic and racial. I wanted to talk about the sort of racial equity issues, which have been such a part of national conversation over the last year. Habitat recently published an evidence report on home ownership, wealth building and the struggles that people of color face in becoming home homeowners. Can you talk about the racial inequities that exist in home ownership and how Habitat’s work seeks to address this?

Jonathan Reckford:
This is such an overdue and really important conversation. You have to actually understand the history — and I know Lisa, you know this so well, but maybe some of your listeners don't know the history. Housing actually is probably the preeminent example of truly a system that clearly discriminated. And so, coming out of now World War II, the federal government actually mandated that the new public housing — which was for working families — be segregated by race, and then instructed the FHA to prefer lending to the better, therefore less risky, but what they really meant was white neighborhoods. That's where the term redlining came from.

For so many families over time, that house was the way they built a financial asset that was an intergenerational asset, that then let them have the capacity later to be able to put their kids in college, to be able to have down payments for their children to be able to get housing.

A whole generation of black families were shut out or pushed into markets that didn't get the same appreciation, couldn't get the same financing. And so, what we've ended up with is a huge gap, 72%+ White home ownership, 43% Black home ownership and there's a whole variety of factors, but you can't ignore that historical piece that got us to where we are. And for many people, we would never say that everyone should own a home, but—historically—owning a home is one of the best ways over time to build a financial asset.

Habitat in a way has always been part of this. We're now 46 years old and we were actually founded on a small interracial farm was the Genesis of Habitat for Humanity. It was a remarkable pastor, named Clarence Jordan, who in 1942, founded this farm in Southwest Georgia. You can imagine how popular and interracial farm was in Southwest Georgia in the 1940s. They were bombed and harassed and beaten and boycotted. The farm never had tremendous success, but in the sixties, he pulled a group together to think about what the next phase could be. He was a clearly a man ahead of his time. And he wrote the most extraordinarily prophetic letter in the late ‘60s that then became the sort of basis for what turned into Habitat for Humanity later.

And what he said, I thought was so great back then and I quote him all the time. He said, "what the poor need is not charity, but capital. Not caseworkers, but co-workers. And what the rich need is a wise honorable and just way of divesting themselves of their overabundance."

And this was rooted in faith, but with a deep idea that everyone has something to gain and everyone had something to give when they work together.

The original test model was for sharecropping farmers, Black farmers in this case who were living in terrible shacks in poor conditions. With the idea of the Fund for Humanity, they got a no profit loan and this community came around and built a better house with them. And then they would pay back that loan and, in the spirit of community, actually the idea was they would keep making payments so that the fund would be sustainable over time. They called it the Fund for Humanity, which eventually then became Habitat for Humanity.

But I think those principles are so important and so we have always just proportionally aimed towards helping the families of course, most in need. Our core criteria for selling a house to a family is that they are too low income to be financed by a bank, that they are willing to partner, which means they're willing to put in hundreds of hours of sweat equity, literally helping build their home and their neighbor's homes, and demonstrate the ability to pay back that affordable mortgage so that they can be part of the next step.

I don't think that's the only model, but I think the principles underlying that are actually very powerful in terms of creating successful families. One of the proof points that was really powerful to me is in the now seems like so long ago, in the great housing crisis of 08, we saw foreclosure rates across the country up at 10%, 15%, 20%, even 25% in some markets. And Habitat foreclosure rates, even though we are a sub subprime lender went up to about 2%. The myth was, “Oh, low-income families should not be homeowners,” which I think is absolutely the wrong lesson. The right lesson is nobody should buy a home they can't possibly afford under terms they don't understand. And there was bad behavior across the whole value chain.

But we saw actually high-income families default at the same rates as low-income families. Those Habitat families stayed in because they bought a simple energy efficient house that they could afford.

Lisa Hamilton:
When you talked about Habitat's work earlier, you talked about policy being an important part of the change that you want to see in the world. Casey joins you and understanding that the systemic change really can best happen often through policy change. I'm curious what kinds of policies you're advocating for or have advocated for and what kinds of changes are still on your to-do list?

Jonathan Reckford:
Unfortunately, it's a big to-do list. When we thought about doing a U.S. campaign, we thought, how could we serve? How could we help given that we're part of lots of coalitions with lots of other groups? We thought a distinctive aspect of Habitat is that we are local and visible in 1,100 communities. Our Cost of Home is actually an umbrella campaign of now about 330 local and state campaigns. And because so often the real action on housing is going to happen at the local level.

I think that the toughest answers are going to come from market by market. I'm probably more optimistic at what can be done locally than in some ways what can be ordained from the federal level. But if we can get the mayors and the builders and the financers and the community leader sitting together and talking about what would it really take to meaningfully increase supply? And it's going to have to be carrots and sticks. On the one side, we need things like inclusionary zoning that ensure that we push towards mixed income.

But on the other side, we'd probably need carrots and incentives, whether it's density bonuses, or discounted land, or some kind of financing support that allow the math to work.

Because if I'm a good-hearted developer, I actually can't make the project pencil at a low enough cost to be affordable for a family making two minimum incomes, a minimum wage income. So how do we figure out the blending of subsidy? And the other side though, is how do we welcome people in?

And in a way we've gotten constrained in two ways. For legitimate fear of gentrification because they don't want to be displaced, communities that have been historically under invested in don't want investment in some cases. And the flip side is much tougher which is, communities of opportunity, where there are lots of opportunities and high-income, have put the walls up and said no, we don't want—the not in my backyard is alive and well.

We really need to address both sides. In my view, we need to continue to invest and invest even more in historically under invested communities, but also make sure we're investing in opening up communities of opportunity. I think then the displacement fear is less of an issue if some of the families could choose to go to places where they have high performing schools, better access to jobs, other pieces. Today the problem, is if you get displaced, you don't have anywhere to go. That doesn't work from a societal perspective. So to me the clear, best answer is everyone living in a mixed-income, mixed-use community.

Lisa Hamilton:
Well, can we talk about the pandemic? When many people talk about it, they don't usually start by talking about housing. But there have been some crazy things going on in the housing market as a result of the pandemic. We see a lack of housing supply, but I'm curious for lower-income homeowners or renters, how the pandemic has affected housing in America?

Jonathan Reckford:
The saddest and strangest aspect of this year, Lisa, is the housing market has behaved counterintuitively for what has been a downturn or recession. If you look at most recessions, housing prices go down and incomes go down. So it's still terrible news for families, but the affordability ratio doesn't change as dramatically. My friend Raphael Bostic at the Atlanta Fed termed this the less than economy, if you think about the mathematical less than sign. For those of us who have knowledge jobs, good housing and good internet, COVID has been a terrible inconvenience, but it hasn't changed our life.

And in fact, the stock market has exploded. Assets have gone up for the people who have assets. Their home values have increased and their financial portfolios have increased. Now the flip side, if you're a family that was a service worker without assets, without stable housing, without internet, this is a catastrophe. Your income has gone down, your kids can't go to school, your ability to keep your family moving forward and in the midst of that housing prices have gone up as everybody wants more living space to be able to work from home.

The good news is in theory, interest rates being low would make things more affordable, but in fact, it's just driven inflation. The other side is because everyone expected things to get worse, the supply chain shrunk down and is now burdened. So for instance, lumber costs have tripled in the past year which means the average new house has $24,000 more expensive just from lumber.

That's shocking. So ironically skilled laborer is up, building materials are up, land is up and that more than offsets the benefits of very low interest rates for mortgages. It's a big concern and it's exacerbated the haves versus have-nots side of it.

And then of course, globally, it's just heartbreaking. We have over a hundred million people being pushed back into extreme poverty. That's probably a very conservative estimate. And here in the United States and happily — I think I would applaud the federal action on housing in this case is — we had a huge number of people getting ready to be evicted or pushed out of their existing housing.

This one has not behaved the way you would have expected the housing market and therefore unfortunately, the hurdle or the math problem to build enough new housing supply has actually probably increased other than the fact that the financing is at a historic low.

Lisa Hamilton:
Your work really depends so much on volunteers and how you engage them. How has your work with volunteers changed during the pandemic?

Jonathan Reckford:
This is the saddest part of COVID for me. We of course had to put the safety of our communities at the front. We immediately stopped all our international volunteering and then very quickly stopped all of our local volunteering as well until we knew what was safe. We closed all of our retail stores. The good news is we've learned along the way and now we have the stores largely reopened after a couple of months with all the new safety protocols and they're back in action. We have volunteers helping in the stores. Unfortunately, the saddest part is we have not been able to bring back, with some exceptions, our regular group volunteers or unskilled volunteers. And that hasn't stopped us from building. Our affiliates have been really creative and resilient finding ways to build with contractors and their professional staff and keep the construction going.

But it's such an important piece of our mission, as I mentioned that earlier in the show. I am desperately eager to get back to where we can bring people out.

Lisa Hamilton:
Do you think there are going to be significant changes in our housing priorities or needs as we move into recovery?

Jonathan Reckford:
I'm an optimist Lisa. I don't think we'd do this work if we weren't optimists. I think there's potential. I think that it's hard and it's going to be hard and expensive, but as I've talked to members of Congress, when I used to say, “Why don't you care about housing?” The answer was, I don't hear about it from my constituents. Because for all the reasons we talked about, they're listening to the people with money and influence who have good housing.

Now they're hearing about housing. It was two years ago, I think the U.S. Conference of Mayors said as far as I know for the first time ever, the housing was the number one priority for the cities in the United States. I do think it's on the agenda now, that's the first step.

Now we've got to take it from being on the agenda to really leaning into the solutions. But I do think our current president has talked more about housing and in a deeper way than any president in recent times. The arrows are pointing in a positive direction, but I think it's going to take people of good will to be willing to say “yes in my backyard” and to be willing to really stand up. That's where we are pushing our friends to say, “Hey, we all have to be a part of this solution.”

Lisa Hamilton:
You and I both entered the nonprofit world after years of working in corporate America. What role do you think corporate partners play in advancing your work?

Jonathan Reckford:
I think they are central to it. If you think about why a company wants to be operating in a community, they want good schools, they want a stable workforce, and they want their employees to be happy. If a significant number of their employees can't afford to live there, that's a real problem. I do think it is very much in the corporate interest to be engaged in the issue and not just the ones who were involved in the housing world directly, but all employers.

I think that's why we've seen in the extremes, the Amazons and the Silicon Valley tech folks actually making housing finance commitments because they recognized actually they can't recruit people anymore into those markets if they can't come and afford housing. So I think it's on the agenda.

For us, we are very much dependent on our corporate partners. They're important funders for us. It started with employee engagement because it was a way to come out and do team building. And actually that was my first Habitat experience when I worked for the Walt Disney Company and brought my team out a million years ago.

Disney would spend a fortune on what I would call artificial team building and actually going out and working alongside a family on their home was so much more powerful as an experience. But now I think it's moved beyond that. I think now we're in such a serious conversation about stakeholder capitalism and companies really thinking about environmental, social and governance, that I do think both employees and customers are pushing their companies to tangibly show that they are being corporate citizens. I think both moral, but actually on the very practical level, companies need to be engaged in housing.

Lisa Hamilton:
And thank you so much for your time today, Jonathan. It has just been wonderful to talk with you and to hear about all of the great work that Habitat is doing today and every day on behalf of children and families. So thank you so much for joining us today.

Jonathan Reckford:
Well, thank you, Lisa. It's a pleasure. So great to be with you and right back. Thank you for the great work that Casey has done for so long to invest in these communities. We know it takes all of us if we're going to make a difference.

Lisa Hamilton:
It does. Thank you so much.

Well, you can ask questions and leave us feedback on Twitter by using the CaseyCast hashtag.

And you can feel free to follow me at @LHamilton_AECF.

To learn more about Casey and the work of our guests, you can find our show notes at aecf.org/podcast.

Until next time I wish all of America's kids and all of you a bright future.