Two Years After the Storm: Housing Needs in the Gulf Coast

Before the Senate Committee on Banking, Housing and Urban Affairs, Amy Liu’s testimony provided an overview of the state of recovery of greater New Orleans following Hurricane Katrina and the implications of current trends for federal housing and other efforts in the New Orleans region.

Mr. Chairman and members of the Committee, I am pleased to appear before you this morning and very much appreciate your invitation.

The purpose of my testimony is to provide an overview of the state of recovery of greater New Orleans following Hurricane Katrina. The overview draws from our monthly New Orleans Index and other wide array of data we at Brookings have been collecting since the storms in 2005. My hope is that this basic recovery picture will give you important context as you consider legislation to provide affordable housing in the region and any future legislation aimed to improve the future of the Gulf Coast.

Here is what we know about who lives in New Orleans, who has yet to move back, and the extent of the housing market, two years after Hurricane Katrina.

First, how many people are back in the city?
Two years after the storm, the best and most reliable population estimates indicate that the city of New Orleans has recovered 68 percent of its pre-storm households, a big jump from one year ago, when just half of the population had returned.

However, the city makes up less than one-third of the region’s population, pointing to a dramatic shift of growth in the suburbs. Post-Katrina, all of the surrounding parishes, except for St. Bernard, have reached or exceeded the number of households they had before the storm.

Second, who is living in the city?
The latest data we have on the details of who is living in New Orleans is for 2006, one year after Hurricane Katrina. But the data is still quite revealing.

The population living in New Orleans is more educated; it is less poor—by 6 percentage points—and consists of fewer renters than in 2000. Further, there are dramatically fewer households with children. That share has dropped from 30 percent to just 17 percent.

Yes, the city is also more white. But, the city remains a majority black community. Approximately 58 percent of the city’s population is African American.

Third, who has yet to return?
Approximately 197,000 residents remain displaced or have not returned to New Orleans one year after Katrina. Of these displaced, 70 percent are African American and 38 percent live below poverty.

Many of these low-income and African American families remain widely dispersed across the nation one year after the storm. The Census data confirms that former black and lower-income New Orleanians were most likely to still live in the Houston, Dallas or Atlanta metro areas and other parts of the South and the U.S. In contrast, whites and wealthier households mostly stayed nearby, having relocated elsewhere in the New Orleans area.

Fourth, on housing, the main concern here is that the cost of housing and rent levels have escalated two years after Katrina.
Home prices have jumped up in St. Tammany and Jefferson and the less-impacted parts of Orleans parish.

Fair market rents in the region have risen an astounding 45 percent in the last two year.

Meanwhile, the demand for housing assistance is high. There were 180,000 households that had applied to the state’s Road Home program. Unfortunately, as of the end of July, just 22 percent had been served.

Fifth, the New Orleans region has recovered the vast majority of its job base and labor force.

The challenge is that two key sectors— health and education, and leisure and hospitality—are still missing one-quarter of their pre-Katrina workers, hurting schools, health care, and tourism.

In closing, I want to point to the implications of these trends for federal housing and other efforts

First, strategies to boost the supply of affordable housing are critical to help soften home and rent prices. Thus, this Senate bill is critical. The data shows that just one-quarter of the new housing units approved for new construction in the New Orleans region are multifamily housing. With few new hard units, one other thing the federal government can do is to aggressively recruit existing apartment owners to accept families with federal housing vouchers. Just giving a family a voucher does not guarantee they will get housing.

Second, federal leaders should consider making affordable housing available not just in the city but also near job centers in the suburbs. Much of the data point to the explosive population growth and job growth in the suburbs, as well as the increasing number of low-income families and Hispanics living there. With the heavy reliance on housing vouchers, that means that the vouchers must be portable. While the Housing Authority of New Orleans (HANO) may be the issuer of these vouchers, the vouchers should be allowed to be used in both New Orleans and in surrounding jurisdictions.

Third, given the many low-income and African American families in the diaspora, affordable housing options should not be limited to just the greater New Orleans area but to many of these new far-flung destinations.

Finally, a strong federal, state, and local partnership is still needed to address outstanding challenges in the Gulf Coast. But, future recovery efforts must go beyond the simple focus on speed of recovery but on the quality of the outcomes. Prior to the storm, New Orleans was plagued with high concentrations of poverty, a stagnant economy with a weak workforce, and a region that was growing in unsustainable ways. No doubt, the city had enormous assets. But federal investments and taxpayer dollars must not rebuild the same city and metro area as before. These efforts must help greater New Orleans rebound from Katrina as a better version of itself: safe, economically robust, with mixed-income neighborhoods and opportunities for all.

Once again, thank you for the opportunity to appear before you. I would be pleased to answer any questions you might have.