Another year, another report on how extraordinarily unaffordable housing is for low-income people nationwide and in every state, as well as the would-be state of the District of Columbia.
The National Low Income Housing Coalition’s overview of the “housing gap” focuses on rental units that the lowest tier in the official housing policy lexicon could afford and actually move into.
These are extremely low-income households — those whose incomes are at or below 30% of the median for the area they live in. NLIHC includes a sub-tier it introduced several years ago — deeply low-income households, whose incomes are half that.
Housing affordability for both, as generally means costing no more than 30% of income. So, for example, a family with one full-time, year round worker paid the federal minimum wage would have a gross income of $15,080 and thus could afford, at most, $377 a month for rent.
Acute Affordable Rental Shortage
As of 2014, the survey year NLIHC has used, there were roughly 10.4 million ELI households in the country — 24% of all renters. They could hope to rent, at an affordable rate only 3.2 million units. Virtually no affordable units for the DLIs — just about 700,000.
The shortage is surely greater than what NLIHC could report because the Census Bureau survey it uses doesn’t reach homeless people. So what we have instead are households that did rent, but mainly way above what they could afford.
Nearly three-quarters of the ELIs were severely cost-burdened, i.e. spent more than half their income for rent, plus basic utilities. A mere 7% of the DLIs weren’t so cost-burdened — not to say they weren’t cost-burdened at all, however.
Far From Enough Money Left Over for Other Needs
We can readily fathom what the cost burdens mean. Our minimum wage worker family would have, after payroll taxes, no more than $590 a month and change for all other expenses.
Low-income households with, at most, 50% of their income left spent, on average, 38% less for food and 55% less for health care than comparable households without cost burdens, the Harvard Joint Center for Housing Studies reports. Those most likely to face such trade-offs are households with children and seniors well past retirement age.
Not hard to see the long-term health consequences — and others for those children, e.g., reluctance to form trusting relationships, lags in learning the basic skills schools measure.
These and others put them at higher risk for poverty as adults, perpetuating the cycle of severe cost burdens — or worse.
Many Shortage Drivers
Both NLIHC and the Joint Center cite diverse reasons for the affordable housing shortage, e.g., foreclosures during the recession, a broader preference for renting, developers’ understandable preference for units they can charge much more for.
At the same time, rental units subsidized by Housing Choice (formerly Section 8) project-based vouchers, i.e., those that cover all but 30% of rent, plus basic utilities for specific units, are disappearing far faster than they’re being replaced.
NLIHC cites a nationwide loss of 46,000 such units over the last decade — some demolished, others no longer affordable because the contracts that bound the owners to keep their rents within the limits HUD set expired.
Add to these roughly 150,000 public housing units lost — most, though not all for ELI households. The Joint Center estimates the loss at 10,000 every year.
This should come as no surprise to anyone who’s followed federal funding for major repairs and renovations. A study for HUD estimated the total funding need for such capital investments at more than $25.6 billion in 2010.
The total grows annually at roughly $3.4 billion, as costs rise, more units deteriorate and deteriorated units get worse, leading ultimately housing losses, but perhaps in the meantime units egregiously below any reasonable standard.
Since the 2013 across-the board budget cuts, funding for capital investments has remained virtually flat at about $1.9 billion. This isn’t the only reason so many units became so unlivable that public housing authorities closed them. NLIHC cites others, but the bottom line is lost units affordable for ELI and DLI households.
The supply-demand dynamic includes another factor. Higher-income households live in nearly half the units the ELIs could afford. If the ELIs could actually move into those units, the gap would shrink by about 2.6 million.
Now this is only one side of the story, of course. If you’ve got more income, you can afford more for housing. But incomes generally aren’t keeping pace with rent increases — quite the contrary. While rents rose, on average 7% between 2001 and 2014, incomes dropped 9%.
This average includes households that had plenty of money. Those in the bottom fifth, where we’d find the ELIs and DLIs had to cope with losses through at least 2015. Sparse federal housing assistance for them. Only about a quarter of low-income households get any at all.
This is perhaps especially notable because Congress has restored and supplemented the funding needed to offset the cut that caused public housing authorities to withhold or cancel nearly 60,000 unused tenant-based vouchers, i.e., the kind recipients can use to rent at market rates and still pay only 30% of their income.
We’ve got policy remedies, as well as reasons for the gap. But at this point, we can foresee threats to even sustaining current funding levels. More than I can do any justice to here.
But since this is supposed to be a policy-focused blog, I’ll return to them shortly.