Rental Housing Grows Less Affordable For Low-Income Households

May 6, 2010

For 10 years now, the National Low Income Housing Coalition has issued annual reports on the affordability of rental housing in the U.S. It’s just released the latest. And the news is not good–either nationwide or here in the District of Columbia.

No surprise, given what we read in the papers and in other reports, like the recent update from the Center on Housing Policy. But NLIHC provides a unique perspective and alarming figures.

Though the rental unit vacancy rate is up, demand is also up, due to the continuing foreclosure and employment crises. And though, in most states, the minimum wage increased last year, there is still no state in which someone working full-time, year-round at a minimum wage can afford even a one-bedroom apartment at the applicable fair market rent. (The affordability measure here is the U.S. Department of Housing and Urban Development’s standard 30% of income.)

The news is even worse for extremely low-income people, i.e., those whose incomes are at or below 30% of the median average for their area. Nationwide, there are an estimated 9.2 million renters in this category. But, according to the latest NLIHC survey figures, there are only 3.4 million available units they could afford. Seventy-one percent of extremely-low income renters pay more than half their total income for rent.

The figures are new, but the problem isn’t. As NLIHC notes, the affordable housing stock has shrunk–down 6.3% between 2001 and 2007. Meanwhile, high-cost rental stock has increased 94.3%. So the vacant units now available are mostly well beyond the affordability range for the growing number of low-income households.

As in the past, NLIHC has an online tool, plus some ranking tables to let us zero in on key data for every major metropolitan area and combined non-metropolitan areas, by state. So here’s the latest for the District.

  • A household would have to have an income of $59,760 a year to afford a FMR two-bedroom apartment. At full-time, year-round work, that’s $28.73 per hour.
  • This “housing wage” is higher than for any state except Hawaii.
  • A household would need 3.5 full-time minimum wage workers to afford the two-bedroom apartment.
  • A FMR one-bedroom apartment costs $1,116 per month more than someone who relies solely on SSI (Supplemental Security Income) can afford.

All these figures are higher than those NLIHC reported last year, when the District’s “housing wage” was $24.77 and two states, rather than one, outranked D.C.

This should be a wake-up call, if another were needed, to the DC Council, as it deliberates the proposed no-growth Fiscal Year 2011 affordable housing budget.


Senate Health Care Bill Puts Cost Burdens On Low-Income People

December 5, 2009

Bear with me for a moment. There’s been such an over-plus of proposals, polls, pontificating and  propaganda that I’ve half-forgotten why we decided to plunge into health care reform to begin with. And it seems I’m not the only one.

As I recall, the idea was to make good health insurance affordable for everyone because most people can’t get the health care they need without it. Bringing down health care costs was a means to this end, though it’s taken on a life of its own.

I’ve gone back to the basics because I think they’re a lens for looking at what the bill the House passed and the bill the Senate’s debating will do to ensure that low-income people can get sufficient, affordable health care.

I’ve already put in my two cents on the employer responsibility provisions. So what about affordable health insurance for those who won’t be able to get it through their jobs?

On this score, the House bill does more for poor and near-poor people. It would extend Medicaid, which offers good coverage at very low cost, to individuals and families up to 150% of the federal poverty line. The Senate bill would cut off Medicaid eligibility at 133% of the FPL.

Above these thresholds come a range of actuarial values, i.e., levels of subsidized coverage provided by insurance purchased through the exchange. These decrease as income brackets go higher. Put them together with the Medicaid cut-offs and you’ve got significant cost differences.

The Center on Budget and Policy Priorities has updated its comparative table. As it shows, the Senate bill would keep costs lower for individuals and families at higher income levels by shifting the costs to those who have less.

  • Individuals and families who would be covered by Medicaid under only the House bill would pay nearly two-thirds more under the Senate bill–$613 more for families and $362 more for individuals.
  • Those at 150% of the FPL would pay somewhat over a third more under the Senate bill–$462 more for families and $252 more for individuals.
  • The situation reverses at 300% of the FPL, with families paying $100 less and individuals $65 less under the Senate bill.
  • By 400% of the FPL, the point spread has increased to $1,611 less for families and $953 less for individuals.

Similarly, the House bill would provide cost-sharing assistance to families up to 350% of the FPL, while the Senate bill would cut it off at 200% of the FPL. At the same time, actuarial values are lower under the Senate bill at all levels except for 400% of the FPL.

This means that low-income households would have to pay larger deductibles and co-pays than under the House bill. And again, the differences would be greatest for those in the lowest income brackets.

CPBB estimates that a family of three at 175% of the FPL would be responsible for $3,867 in deductibles and co-pays if the Senate plan were in effect now. That would be more than 10% of its annual income. And it would already have paid $2,307–6.3% of its income–for the premium.

Yes, the family would have insurance. But would it be able to afford the health care services it needs. I rather doubt it. And there goes one of the bill’s two main objectives–“to provide affordable, quality health care for all Americans.”

And if the family can’t afford the out-of-pockets, its members are likely, as now, to wind up in emergency rooms–a very costly alternative to preventive and maintenance care. Or it may decide simply to pay the relatively modest penalty for not having health insurance. One way or the other, there goes the bill’s other main objective–“to reduce the growth of health care spending.”

Will the bill that comes out of the Senate come closer to these objectives? More likely getting those precious 60 votes will mean even more compromises at the expense of those who need health care reform most.


National Housing Trust Fund Needs Funds

November 19, 2009

In 2008, the Congress established a National Housing Trust Fund as part of a large bill intended to address the emerging housing crisis.

The Fund was to provide grants to states, which they were to use to increase and preserve the supply of rental housing for extremely low and very low income households* and to help them become homeowners.

Ninety percent of the funds had to be used for rental housing, and at least 75% had to benefit extremely low income households. The initial goal was to fund construction and/or preservation of 1.5 million affordable rental units. The National Low Income Housing Coalition estimates the shortage at about 2.8 million units. So the Trust Fund could make quite a dent.

However, the Trust Fund was to be financed principally by a percentage of the value of new business generated by Fannie Mae and Freddie Mac. Their contributions were indefinitely suspended when they fell into financial distress. So we’ve got a partial solution to the affordable housing crisis on paper only.

President Obama’s proposed Fiscal Year 2010 budget for the Department of Housing and Urban Development included $1 billion for the Trust Fund. Now two bills have been introduced that would give the Fund working capital in different ways.

Both would use funds in the Troubled Asset Relief Program (TARP)–the program that’s been buying up mortgage-backed securities and other “troubled assets” to stabilize financial institutions.

The Main Street TARP Act (H.R. 3766), introduced by Congressman Barney Frank (D-MA), would simply transfer $1 billion from the TARP account to the Trust Fund. It would limit what families have to pay for rent on units funded with Trust Fund money to no more than 30% of their adjusted income. This would ensure that the units remain affordable for the long term.

The Preserving Homes and Community Act (S. 1731), introduced by Senator Jack Reed (D-RI), would transfer $1 billion of the revenues produced by the government’s sale of warrants, i.e., rights to purchase stock in the financial institutions it bailed out. NLICH says that sales of warrants have already brought in $2.9 million. So the funds to transfer should be available.

Neither of these bills would give the Trust Fund the long-term, assured revenue stream it will need to achieve the 1.5 million unit goal. But both could jump-start construction and renovation at a critical time.

The House bill current has twelve cosponsors. The Senate bill has seven. Both will need more to get them on the action agenda. NLICH has e-mails we can customized to help build support.

* Extremely low income households are those with incomes at or below 30% of the applicable area median income. The upper income limit for very low income households if 50% of the AMI. AMIs vary widely, both from state to state and within some states.


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