[Continued from yesterday's Part 3 ,and the previous Part 2and Part 1.]

In yesterday’s post continuing our series on the enemies within of slum upgrading, we encountered the vociferous and conveniently righteous landlords, who stand to lose their questionable livelihoods when they face new, better competition.  Next up are those who, for one reason or another, like the slum as it is now.

Kibera in 2005: phone service for sale

Background: A while ago [Early September – Ed.], Kenya’s newspaper The East African Standard published a great and extensive series on the proposed upgrading of Kibera: Africa’s largest slum, which I visited in 2005.

0213_kib

Kibera in 2005: photo taken during my visit

The articles covered community resistance in the Standard, Kenya, the indignity of having no toilets, slumlord exploitation, slumdweller fears, an idealist’s critique, the power of savings, the potential to reform building codes, and an editorial endorsing affordable housing (which the Standard mistakenly but understandably calls ‘rent control’).  Woven throughout the series were the main themes that show why slums, though hard to eradicate, are also hard to upgrade. 

1.  Rabblerousers and demagogues

Where there are slums, there are votes to be captured, by making promises of brave deeds to be accomplished if only, or whenever.  Brave promises that are never broken because those promising somehow never have the right power at the right time.  Consider this example, from Slum upgrading initiatives in Kenya by South Africa’s Marie Huchzermeyer:

However, tenants in parts of Kibera (e.g. Gatwekera Village) under encouragement from their Councillor, have already stopped paying rent.  In short-sighted political self-interest, the Councillor has promised these tenants slum upgrading with free housing. 

Doesn’t sound short-sighted at all; the councilor makes a promise that secures votes.  If the government does not come through, the councilor tells people, you have to support me more strongly the next time.  Unfulfilled promises are the political vaporware that keeps on giving.

The tenants justify non-payment on the basis that structure owners have benefited in the past and that it is now the tenants’ turn to benefit from the slum upgrading.

Particularly in Kenya, whose land-use and housing history is redolent of broken promises:

Josephat Mukuna, 37, says the new housing programme is reminiscent of the Highrise National Housing Corporation project, in which he contributed money, only for outsiders to take all the houses upon completion.

04: Mr Josephat Mukuna says he cannot pay the Sh 1,000 rent for new houses.

The Highrise National Housing Corporation is a visible national disgrace.  Worse is that its towers stand right at Soweto East’s edges, where Kiberans daily will pass by them twice, once outbound to work, once homeward.

Kibera in 2005: HNHC towers at the entrance to Soweto East

“I am not prepared to leave for now. I know this project is based on falsehood and the

Government wants to just get us out of Kibera, demolish our houses, chase us from the new buildings and leave us as IDPs.”

What can one say to Mr. Mukuna – you’re crazy?  He has seen this happen before.  Why should this time be different?

“I am not ready for that,” says Mukuna, a father of four who has been a tenant in Kibera for the past 18 years.

Kenya’s government must prove Mr. Mukuna wrong.   Will it? 

2.  Criminals living in or off of the slum

Crime flourishes in slums.  Further, crime uses slums, and slums create external crime.  If everyone is illegal, then land and property ownership depend on who you know, or who you’ve paid off.

Professor Marie Huchzermeyer, a professor at the School of Architecture at the University of the Witwatersrand in Johannesburg, says … due to the existence of a deeply corrupt system of land allocation and profit extraction over the decades, 80% of Kibera residents are tenants of illegal structure owners.

She says residents fear the slum redevelopment will lead to displacement due to non-affordability and corruption.

Strangely enough, very few chronic bribe recipients will raise their hands and claim entitlement to being bribed.  Far better to find a useful spokesperson – preferably a Kiberan herself – and fill her full of irrational fears whose consequences coincide with stopping the slum redevelopment and thereby reducing the bribes as a source of income.

Kibera in 2005: Friendly Hair Salon

“Among residents and decision-makers slum upgrading is understood to mean demolition and construction of housing. Therefore considerable awareness raising will be necessary before upgrading can be implemented,” she says.

Awareness-raising?  Or bribe reduction?

3. People who want the lowest-cost housing regardless of quality

Some people live in a slum because they care little about their housing quality, and much about its cost. 

Tenants opposed to the move say they cannot afford Sh 1,000 monthly rent for the new housing units –– besides many other reasons.

Beatrice Omondi, 37, has already packed her belongings and is now awaiting the day the ministry officials will go with the National Youth Service trucks to move them.

Kibera in 2005: pub upstairs

“I have packed them in boxes and I can’t unpack. I am so elated,” she says.

The mother of four has lived in the shanties since 1987 and never thought even in her wildest dreams one day she would have the opportunity to live in a stone house, let alone own one.

From my visit four years ago, I remember doing the arithmetic.  When the total costs of occupancy are factored in – including water and sanitation – those living in Kibera now should be able to afford a single room in a three-room flat

“It’s a new life we are being given,” she says. At the moment, she lives in a rented three mud houses at the heart of the slum with her husband and four children.

She pays Sh3,000 in rent but her monthly bill go up to Sh4,000 because each member of the family pays Sh3 every time they go to the toilet, Sh5 for bathrooms and Sh300 for electricity.

That’s why they can afford it.

Omondi operates a small food cafe and also imports clothes and shoes from Uganda.

Business flourishes in slums.

Kibera in 2005: Baked goods cooling

Some women fear they may not be allowed to use firewood in the new houses.

They may not be.  Those building the new houses need to think through such issues.

Jane Ngolyo, 76, who sells groceries, told us that her future looks bleak if she is to move to the new houses.

“I know the city council will not allow me to operate my small business there so I will be left without any income to pay their rent and feed myself. They will eventually evict me and throw in the streets without anything to eat,” she says.

She has lived in Soweto for 30 years. She says she can only afford to pay the Sh300 that she has been paying at her current house. This is because she earns between Sh50 and Sh100 from her business.

There will be displacement of some worthy households.  I hope there is a relocation/ adjustment plan.

Kibera in 2005: The undeveloped decanting site

Lastly – and the most difficult enemies to address, because they would be offended to be called enemies of progress – are those idealists for whom any compromise is a taint, whose belief in the ideal trumps any concession to practicality.  People who suggest solutions like this:

As a first step for Nairobi’s slums, with immediate effect and at very little cost, the patronage by provincial officials (referred to as ‘chiefs’) in corruptly allocating land and extracting fees for improvements made by structure owners could be stopped.  The chiefs’ interests are illegitimate and unlawful and they would need no compensation for loss of livelihood.  This intervention would not require resources, but instead the level of political will that was present in various anti-corruption initiatives by the new Kenyan government in the past three years.

Why didn’t I think of that?

Maybe because it’s impractical, D

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[Continued from Thursday, October 29^th Part 2 and the previous Part 1.]

In yesterday’s post, we discovered that despite its many palpable benefits, and the visible reality of its construction, many Kibera residents are greeting Kibera’s first slum upgrading with fear.

Kibera in 2005: Whom can you trust?

Background: A while ago [Early September – Ed.], Kenya’s newspaper The East African Standard published a great and extensive series on the proposed upgrading of Kibera: Africa’s largest slum, which I visited in 2005.

Kibera in 2005: photo taken during my visit

The articles covered community resistance in the Standard, Kenya, the indignity of having no toilets, slumlord exploitation, slumdweller fears, an idealist’s critique, the power of savings, the potential to reform building codes, and an editorial endorsing affordable housing (which the Standard mistakenly but understandably calls ‘rent control’).  Woven throughout the series were the main themes that show why slums, though hard to eradicate, are also hard to upgrade. 

Although the program will provide the lucky relocates with much improved housing at only a small increase in rent from what they are paying structure owners, these residents – some of whom have known little else their entire lives – have a seemingly inexhaustible supply of fears.  Where do these fears come from?  From those who win from a slum, such as landlords – or, as they prefer to be called, structure owners.

Kibera in 2005: Most of what you see is owned, according to somebody

You might expect such slumlords to be embarrassed, or to voice their objections through useful mouthpieces like the residents.  Instead they’re visible and belligerent:

The landlords are bitter because they are about to lose property that has been their source of livelihood for decades. They therefore want compensation.

Do the landlords have legal title to their property?

Most of the about 500 landlords in Soweto-East village have been earning their daily bread from the shanties they own in the slum, some for up to 30 years.

They own the shacks by right of incumbency, and by right of force.

The proposed demolition of the structures once the tenants are relocated has caused fury among the owners, who insist they must be compensated since they will lose land and other property.

I’ve been told – unverified – that a structure owner recoups his capital investment (in the structure, that is) in a handful of months.  I doubt this – the payoffs to the enforcement-protection structure likely consume a major slice of his Net Operating Income.

Kibera in 2005: Bakery in the slum

In any case, the slumlords are vocal:

One of the landlords is Cyrus Kimemia who earns Sh18,000 from 24 structures.

That’s Sh 750 per month, as compared with Sh 1,000 per month in rent for a solid, one-room embryo house.  No wonder Mr. Kimemia feels threatened.

The father of five has lived in Kibera for 24 years and says the then-DO gave him the land in 1984.

‘Gave’ him the land?  Who was this person, and was the land his to give?  Did such a person even exist?   When there is no title system, no claim can be refuted.  Property rights inure solely based on current power, and that implies current bribery.

Upon retiring as a clerk with the Postal Corporation of Kenya, he says he used part of his Sh240,000 retirement payout to buy more land on which he built more structures.

He says.  Still, I was told that more than half of all structure owners are civil servants.

How can the government expect to enforce anti-slumlord laws when half of those doing the enforcing are slumlords by night?

Coined in the Spanish Civil War

“That is why I feel so much pain as I cannot just sit back and watch as my retirement benefits disappear. I want to be given title deeds for my plots or relocated,” he says.

Irresolution is the enemy of reinvestment.

Also to be affected is Millicent Anyango, a mother of six, who is a widow. The 32-year-old landlady owns seven houses. “I stay in two of them with my family and earn a livelihood from renting out the other five at a cost of Sh600 per month. I can say without fear that I am not ready to leave Soweto at whatever cost,” she said.

Where residents are fearful, structure owners are not.  Perhaps they pay friends in higher places?

Kibera in 2005: furniture factory

She wondered how she would cater for her family’s basic needs if the structures were demolished. Millicent, who has lived in Soweto East village for 20 years, says she is expecting nothing short of title deeds for her plots.

She’s never had them before.  Why be granted them now?

She says she can use the title deeds as security for a bank loan to start another venture for a livelihood. “If I leave with nothing, how does the Government expect me to even pay rent for the new house?” she asks.

Ms. Anyango, in other words, wants to be paid eminent domain compensation to relocate; she who has no property rights wants to be compensated as if she did.

Josephat Odhiambo, 49, also a landlord says he built 25 units in 1984 using savings he accrued from small-scale businesses. He says the then-DO gave him the land.

The structure owners’ claims also have the same ring, don’t they?  As if they had rehearsed their story into a polished tale that is irrefutable because all the evidence is verbal, and all of it is old.

Kibera in 2005: illegal jerry-rigged wiring to steal power

Besides the houses where he collects between Sh 600 and Sh 1,000 a month, the father of eight also sells water.

In slums, water-selling is big business.

When the project started in 2003, Odhiambo says, the impression the Government gave them was that it was to benefit everyone.

He says.  And what would you have done differently, Mr. Odhiambo, had you known?

“They made us believe that it was like giving Sh20 to somebody who had Sh5,” he says.

But he says they later learnt the structures were to be demolished, stone houses erected and then sold to former tenants.

He is among those who had moved to court to seek an injunction over the impending demolition.

Kibera in 2005: wide road through Soweto East

About 84 landlords went to court last week and obtained an injunction to stop the demolition of their structures for a week.

For a week.

The landlords found themselves an ally of convenience: newer residents.

Walter Hongo, a member of Soweto SEC, says residents who do not want to move from the slums were not part of the initial plan that started in 2003. He says the dwellers have teamed up with landlords who have been making huge profits from houses constructed on Government land.

Almost certainly correct.

“We divided Soweto East into four zones: A, B, C and D and gave each tenant a number and an identification card.”

As SDI has shown, enumeration is critical, else everyone claims the benefit, not just those who actually lived in the slum.

Dharavi household enumeration card

“Those in Zone A are the first to move. There are many people who moved in after the cards had been issued and these are the ones saying they won’t go because they do not have units at the site,” Hongo says.

Many a slum upgrading program, from Dharavi to HOPE VI, has grappled with angry disputes over who’s-in versus who’s-out.

Kibera in 2005: shoes for sale

[Continued tomorrow in Part 4.]

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[Continued from yesterday's Part 1.]

As we saw yesterday, the first new development in the Kibera slum upgrading has finally broken ground, nearly eight years after initial conception.

The former is supposed to be replaced by the latter

Background: A while ago [Early September – Ed.], Kenya’s newspaper The East African Standard published a great and extensive series on the proposed upgrading of Kibera: Africa’s largest slum, which I visited in 2005.

Kibera in 2005: photo taken during my visit

The articles covered community resistance in the Standard, Kenya, the indignity of having no toilets, slumlord exploitation, slumdweller fears, an idealist’s critique, the power of savings, the potential to reform building codes, and an editorial endorsing affordable housing (which the Standard mistakenly but understandably calls ‘rent control’).  Woven throughout the series were the main themes that show why slums, though hard to eradicate, are also hard to upgrade. 

It takes that long because slum upgrading, in addition to being expensive, complex, and risky for government, faces enemies within, starting with the skeptics, cynics, and fearful:

Some slum dwellers say they will not move to new houses constructed a few metres away, despite being charged a modest rent of Sh 1,000.

And they are giving all sorts of reasons –– some hilarious and others baffling –– to justify their defiance.

Kibera in 2005: Francis Umunde, savings group leader

Of the residents’ reasons, fear is uppermost, and fear need not be rational:

Some claim their children would contract waterborne diseases once they move to clean houses.

Such a fear maybe nonsense, but it comes from somewhere, and as we’ll see in tomorrow’s posts, there are plenty of people willing to encourage others’ fears.

Others say they are [so] accustomed to squalor life in Kibera that they would not know how to live differently.

Poverty creates a curious kind of dependency – that of the familiar.  Be it ever so humble, there’s no place like home sounds to us a homily, yet it conceals within our belief that we do not ‘deserve’ a better condition, that there must be some trick or hidden test, and we will fail it.  We saw entrenched distrust in American HOPE VI public housing redevelopments; we see it here in Kibera.

Kibera in 2005: eco9nomic empowerment, co-op office

They also fear they might not find affordable schools for their children since most of those in Kibera are sponsored.

Fear of the unknown.  Distrust of anyone in apparent authority who provides reassurance.

They say other fuels like kerosene, gas or electricity are out of reach.

Fear of hidden increased costs.  This is more rational, so you cannot heat or cook by a wood fire if your apartment is a concrete mid-rise.

Traders say they will lose their livelihood.

03: Ms Jane Ngoiyo, who has lived in Kibera for 30 years, is worried about her grocery business

Fear of disrupting their personal cryptobiotica: the delicate web of their economic lives.

Josphat Mondia, 28, calls the decanting site ‘The Hague’. He is jittery about moving because of the uncertainties that lie ahead.

“Life in Kibera is cheap. With Sh50 you can eat three meals in a day and sleep. That can’t happen at the location. There, you won’t get sukuma wiki or tomatoes worth Sh5.”

Mr. Mondia’s fears are a tangle: some plausible, some unlikely, some paranoid:

“Again, I feel the Sh1,000 rental fee is just a bait and will be increased progressively, eventually forcing us out of the houses when we default,” he said.

That’s just paranoid.  Why would the government, even a corrupt one, want to give people higher-value houses, only to take them away later?  Unlike Dharavi, it’s not as though the land on which Kibera sits has enormous redevelopment potential. 

Mondia, who was born in Soweto East, says he knows no other home and would want to remain at the village all his life.

Again the psychological dependency of poverty: it is too painful to imagine a better life that will be snatched from you; psychologically safer is to doubt its existence.  After all, when no one official in your life has ever been trustworthy, it’s understandable that you would not trust the government – especially if a majority of structure owners are civil servants, as they are in Kibera.

He said his children might fall ill with waterborne diseases once they move, ‘which is unheard of in Kibera’. “Watapata cholera na watoto wa Kibera huwa hawapati haya magonjwa (our children will be infected with cholera and other diseases unheard of in Kibera),” he says.

Kibera in 2005: the main thoroughfare of Soweto East

Mondia also says unlike in Kibera where there are many donor-sponsored schools, at the new site, parents will be forced to part with Sh5,000 every term.

Fear of the unknown.  Fear of the irreversible.  What makes him think that?  Fear.  Who starts such rumors?

“That is like burying me alive,” he says.

Mr. Mondia may not have heard the answers, or he may have disbelieved them.  No one can overcome disbelief and doubt in an instant.

Kibera in 2005: Warning slum dwellers not to buy illegal spirits

Philip Kiliswa, 40, who works as a security guard in the city centre, is opposed to the shifting because it will move him further from his workplace, yet walks there.

Compared with the walk Mr. Kiliswa now makes, the distance increase in minimal.

He is sceptical that the project might turn out like the Highrise National Housing Corporation project in which Kibera residents had been promised housing units that were later taken up by outsiders.

I understand his skepticism.  Given Kenya’s performance to date, I’d be skeptical too.

02: Mr Cyrus Kimemia fears outsiders may take over the houses. [PHOTOS: ANN/STANDARD]

[Continued next week, on Thursday, Nove 5^th, in Part 3.]

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A while ago [Early September – Ed.], Kenya’s newspaper The East African Standard published a great and extensive series on the proposed upgrading of Kibera: Africa’s largest slum, which I visited in 2005.

The mud structures (in the foreground) will be replaced by the new housing units (in the background) in Kibera under the Kenya Slum Upgrading Project (Kensup).  [PHOTO: BONIFACE OKENDO/STANDARD]

The articles covered community resistance in the Standard, Kenya, the indignity of having no toilets, slumlord exploitation, slumdweller fears, an idealist’s critique, the power of savings, the potential to reform building codes, and an editorial endorsing affordable housing (which the Standard mistakenly but understandably calls ‘rent control’). 

Kibera in 2005: Soweto East, with middle-class homes in the distance

All Kibera 2005 photos taken during my visit

Woven throughout the series were the main themes that show why slums, though hard to eradicate, are also hard to upgrade. 

The journey to the realisation of low-cost houses in Kibera, and the envisaged eradication of slums, has been long and bumpy. And it appears far from over.

Slums have enemies within: people who for reasons noble or ignoble will fiercely oppose any major upgrading program.  And every slum upgrading program faces one huge obstacle: the cost.  Affordable housing always costs money, costs that are non-recoverable over any normal private-investment horizon, and that money must come from government:

The Government estimates a staggering Sh880 billion will be needed to eradicate slums and informal settlements.

To give you a sense of scale, that’s $16 billion – and if that doesn’t seem large enough, figure it as 26% of Kenya’s $62 billion GDP; for America to spend the equivalent amount of our $14.4 trillion GDP would mean an expenditure of $3,700 billion – yes, $3.7 trillion dollars.

However, Housing Minister Soita Shitanda has been quoted as saying the Government does not have the money.

Minister Shitanda and his official vehicle

And that presumes slums will sit still while being eradicated, and that the development of new higher-quality housing will not attract thousands if not millions of new rural-to-urban immigrants.

Kibera in 2005: limited only by land area

It is, in short, a pipe dream. 

When the Kibera-Soweto slum upgrading pilot project was launched on World Habitat Day in 2004, it seemed like far away dream.

But we must start somewhere.

About 1,500 families from the largest slum in Africa, will in the next two weeks move to modern stone houses as part of the Kenya Slum Upgrading Project.

A drop in the ocean?  Or a pilot that shows feasibility and builds political and economic support?

The construction of 17 blocks of five-storey high flats totaling 600 three-room units is complete and residents of Kibera’s Soweto-East village would be the first to move.

Something has been done. 

Once they are moved, the shanties they live in will be demolished and new modern houses built.

Perhaps those shanties will be demolished to make way for better housing on their sites.  Slums die by withering; the bulldozer succeeds only when the people no longer need them, because they have moved into better accommodations.

Kibera in 2005: Our Dream House

Once the tenants are moved to the site, the Government will pull down their current structures and build permanent houses within two and half years.

“The people at the site will return to new houses but pay for them by installments. Most have already formed cooperative societies and their savings are impressive” –

This is my design!  They’re doing it!

Kibera in 2005: savings cooperative members and lists

The initiative to eradicate slums was mooted in 2000 as the Kenya Slum Upgrading Programme (Kensup) through an agreement between the Government and UN-Habitat.

After a detailed situation analysis in 2001, a pilot project began at Soweto village –– with 60,000 people –– in the southeastern sector of Kibera.

Progress was slow, and intangible:

The agreement was renewed in January 2003 and the slum upgrading initiative kicked off in earnest. The Kibera-Soweto pilot project was launched on World Habitat Day in 2004, with a graphic media presentation of the planned redevelopment of the slum into orderly flats.

We love the graphics.  The real work is much harder.

Kibera in 2005: plaque commemorating building on communal toilets

The Housing ministry says Kensup is a core programme aimed at addressing housing problems affecting the majority of the urban population who live in slums and informal settlements. Statistics show 60% of Kenya’s urban dwellers live in slums.

Four years ago, after the Bellagio housing conference, I visited Nairobi at the Kenya government’s invitation, to take further into implementation design the Kibera slum upgrading financing strategy several of us – including Angelo Mozilo, then-CEO of Countrywide, Stewart Paperin of the Open Society Institute, Nic Retsinas of Harvard’s Joint Center for Housing Studies, and various Kenyan government representatives – had brainstormed and recommended. 

Building on work that Kensup and UN Habitat’s Slum Upgrading Facility SUF) had begun, I spent an intensive week, hard numerous interviews, took copious notes, then returned to Boston and ‘built out’ the program, both its narrative and the financial model.  It was solid work; I was and am proud of it.

Kibera in 2005: vegetable stand

In August, 2005, I delivered the report, including an extensive financial model, and heard nothing further.  (It is often thus in Kenya, I find; one makes suggestions, is politely heard, then silence ensues.)  I thought it had gone nowhere. 

Now comes the first slum-upgrading development, incorporating principles in that original design.  Even if little of this was our doing, we pushed the boulder in the right direction.

– says Walter Hongo, a member of the Soweto East Settlement Executive Committee (SEC).

As the article explains elsewhere:

SEC’s are mainly comprised of slum dwellers. Their main role is to act as a link between the programme implementation unit and settlement community.

Buy-in from slumdwellers is critical; without it, nothing can succeed.

Kibera in 2005: checkers with bottle caps

The SEC is expected to facilitate community networks, co-operatives, and resource mobilisation processes such as savings and credit schemes among others. It is the forum for advocacy for community rights and ideally ensures participation in decision-making.

All this comes from Slumdwellers’ International’s best practice.

He says beneficiaries will allocated between one and three rooms in the site. Each room will cost Sh1,000 [Monthly rent – Ed.] according to the initial plan.  

Of course, this being Kenya, where there is never a last battlefield, there is dithering:

Hongo says the movement of tenants has been put off since President Kibaki and Prime Minister Raila Odinga have been, due to official engagements, unable to attend the first event.

We’re taking so much time on grip-n-grins

The Lang’ata decanting site was identified as a suitable holding ground.

The site is located at across the slum settlement adjacent to the village. It measures two hectares. Construction of 17 blocks of five storey high flats totalling 600 three room self-combined units has now been completed, months after the initial November 2007 deadline. In addition, a 4.26km spine road and associated infrastructure are under construction parallel to the railway line across Kibera. The proposed physical infrastructure on the spine road includes roads and walkways, storm water drainage among others.

If it happens – when it happens? – the change will seem as paradise to Kiberans:

Zipporah Onyango, Kibera resident.”All I need is change. I have always dreamt of the day I will stop paying to use a toilet and relieving myself in a bucket.”

After decades living in squalor, most families in the sprawling Kibera slums cannot wait to move to ‘paradise’.

To them, the slum upgrading project is godsend. They see it as an opportunity for a new lease of life from the flying toilets, leaking roofs, stinking and clogged trenches, and all other forms of unhygienic conditions that characterise life in Kibera.

‘Flying toilets’ are the colloquialism for defecating in public, usually into a plastic bag, and then throwing the feces … somewhere.

Mrs Zipporah Onyango who has lived in Kibera’s Soweto-East village for the past two decades says she cannot wait to board the truck that will take her closer to her dream house.

“This will be a miracle as I never imagined getting out of this place. It has been so frustrating that even my relatives have refused to visit me here because they say place is inaccessible and insecure,” says the 39-year-old mother of four.

You are what you live in.  Change your housing and you change your life, and your children’s lives

Her neighbour, Elemina Indeche, says the new houses will be an equivalent of paradise and will make a difference in her life.

“All I need is change. I have always dreamt of the day I will stop paying to use a toilet and relieving myself in a bucket,” says the 49-year-old mother of two.

Kibera in 2005: toilet built by the co-op

Everyone should have the human right to squat in private, safely and cleanly.

And after a 14-year sting in the heart of Kibera, Joseph Onyango, 34, says he has never believed in miracles, but says one is about to happen.

“Imagine the agony of being rained on while in your house or the shame and indignity of having to use a flying toilet. That is what my life has been like for 14 years now.  And when I dared report it to the landlord, he would scream at me, saying I should move to a house with toilets.”

Hideous.

“It was all mockery, but it is now just to happen,” he says.

Once the initial money had been found, why did it take so long?  Because of the enemies within.

Kibera in 2005: Sign outside the Ministry of Lands and Housing

Starting tomorrow, we’ll meet them.

[Continued tomorrow in Part 2.]

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By: David A. Smith

… is affordability?

Am I up when you’re down?

When the homeownership rate drops, what happens to apartment occupancy?  As illustrated by this Wall Street Journal article, the answer depends on two factors:

1. Why homeownership rates are dropping

2. How long it has been since the homeownership drop began

Start with a fact. 

Start with just the facts, ma’am

Apartment vacancies hit their highest point since 1986, surging in cities from Raleigh, NC, to Tacoma, WA –

While the Journal leaves its choice of cities unremarked, neither of these are primary cities, nor are they at the epicenter of foreclosures – Miami, Phoenix, Las Vegas, or California’s Inland Empire.

During the third quarter, vacancies increased in 42 markets, improved in 26 markets and remained unchanged in 11 markets. Omaha, Neb., saw the largest rise in vacancies, with the rate rising 1.1 percentage points to 7.4%. Other big rises were seen in Memphis, Tenn., Indianapolis, Raleigh and Tacoma.

Here’s a hint: dark red is bad

If apartment vacancies are high in such normal-America cities as Raleigh and Tacoma, the cause is not a glut of supply, but a withering of demand:

– as rising unemployment continued to chip away at demand during the traditionally strong summer rental months.

People tend to forget that housing demand is elastic.

The muscles in my mighty arms

Are as strong as rubber bands

When housing is cheap, people consume more – they move out of the house, lose the roommates, buy a larger home with a media room, a home office, or a game room.  Going the other way, when housing becomes expensive: the total number of households shrinks.

Driving the change is the troubled employment market, which is closely tied to rentals. With unemployment at 9.8% –  a 26-year high – 

“Hey, aren’t you as big as you think?”

Young singles double and triple up in larger roommate combinations.

And with the money we save not washing, we can be solvent!

– more would-be renters are doubling up or moving in with family and friends during periods of job loss.

Young adults move back home (’boomerang kids”).

Even if you charge him rent, household consumption has shrunk

Landlords have been particularly battered because unemployment has been higher among workers under 35 years old, who are more likely to rent.

Families put young children two to a bedroom.

Most of us grew up with bunk beds at one time or another

The result is fewer households, and higher structural vacancy:

The U.S. vacancy rate reached 7.8%, a 23-year high, according to Reis Inc., a New York real-estate research firm that tracks vacancies and rents in the top 79 U.S. markets.

When that happens, some landlords, usually of weaker properties, cut their rents as they seek to prop up occupancy, at least in the short term:

Meanwhile, the air leaving the market is driving rents down, most sharply in markets that had been chugging along until a year ago, when unemployment accelerated, including Tacoma; San Jose, Calif.; and Orange County, Calif.

From the WSJ: higher vacancy squeeze rents down

Nationally, effective rents have fallen by 2.7% over the past year, to around $972.

Only 2.7%.  Could be a lot worse.  Still, with structural weakness embedded in the rental sector, as long as the economy continues to shed jobs, we can expect to see apartment occupancies wobbling, even though new construction has largely dwindled to a stop.

Not so flashy any more

For the next six months, occupancy will also drop cyclically, because housing demand expands in the late spring, when people tend to move house and when we graduate a new crop of collegians.

The [vacancy] rate is expected to climb further in the fall and winter, when rental demand is weaker, pushing vacancies to the highest levels since Reis began its count in 1980.

The weakness has even hit that least-American of marketplaces: Manhattan.

Manhattan has all the drivers of structural rental tightness: pernicious and stubborn rent control, severe land restrictions and barriers to development, and a strong employment base.  Even so, New York City landlords are confronting market forces, some for the first time.

In New York, Jennifer Hyman rented a one-bedroom apartment in July at a monthly rate of $1,950 — down from $2,450 for the previous tenant — when she returned to the city after graduating from Harvard Business School. Her first month’s rent was free — and her landlord painted the apartment, scrubbed the floors and added window coverings.

Painting the apartment?  Scrubbing the floors?  Sprucing the window coverings? 

Half of America of ROTFLMAO right now, since in America (the land of the Kleen Rest Room and the free ice tea refill), all those things are de rigueur for landlords upon new rentals.  It’s called “prepping a turnover vacancy.”

“The experience was night-and-day different from before,” said Ms. Hyman, who had rented other Manhattan apartments between 2002 and 2007, each time paying a brokers’ fee –

Another sign of a formerly hyper-inflated apartment; the commodity was so scarce people paid finders’ fees to secure one:

– and feeling pressured to sign a lease the minute she found an apartment.

Third sign: haste in closing, because if you don’t take it, there is someone right behind you.

Now, she says, “Renters are the ones with the power.”

Not all the power, but certainly more than the zero they had before.

“When job losses stop, rents will firm and occupancies will firm,” said Richard Campo, chief executive of Camden Property Trust, a Houston-based real-estate company.

“Living inexpensive?”

Well, yes.

The deteriorating rental market comes amid some signs of stabilization in the housing sales market.

Normally, home ownership and rental are countercyclical, so as the demand gradually rises, we can expect apartment occupancy to tick up before home prices do. 

But then there’s our Federal government putting its thumb on the rent-buy scales:

Need rebalancing?

An $8,000 tax credit for first-time home buyers and investor demand helped to boost sales of low- and moderately priced homes this summer.

But some analysts warn demand could fall with the expiration of the tax credit and supply could increase with more foreclosed homes hitting the market.

Both are true: housing will fall again, and supply will probably rise, particularly when one looks at the interest rate resets still before us:

We’re not through the rate resets by any means

While a housing recovery could lead the best quality renters to move out and purchase homes, the move-out rate [into homes – Ed.] isn’t expected to surpass levels seen during the housing boom earlier this decade.

In other words, we have a very long hill to climb.

Mortgage credit standards have tightened considerably since then, which should keep more renters in place.

Can’t support that much, can I?

In the intermediate term, that should be good for rental.

Apartment owners ultimately could gain from the housing bust because the U.S. home-ownership rate has fallen as foreclosures rise. But the housing bust has also flooded some of the most overbuilt housing markets with new apartment inventory as developers have converted unsold condominium developments into rentals.

Reis projects that the vacancy rate will peak at well above 8% in mid-2010.

Folks, this recession is a long way from over.

SIGNS advertise apartments for rent in San Francisco in July. Rents declined during the third quarter, usually a strong period for rentals

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