Affordable Housing for People with Very Low Incomes Practically Nonexistent
By Carolyn Burstein
March 13, 2015
My colleague here at NETWORK, Sister Marge Clark, in a blog at this site on March 2, drew attention to the National Housing Trust Fund (NHTF) and some recent attacks on the fund itself. A research report by the National Low Income Housing Coalition (NLIHC), entitled “Affordable Housing Is Nowhere to Be Found for Millions,” released the week of March 9, highlights the acute need for the NHTF. It primarily analyzes the dire housing plight of all those who earn less than an area’s median income and thus depend on the fund and other related resources.
Let’s recall from Sister Marge’s blog that, although the NHTF was signed in 2008, it was not funded at that time because Fannie Mae and Freddie Mac (government-sponsored enterprises – GSEs) were taken into conservatorship and their federally-mandated contributions to the NHTF were suspended. By 2014, both GSEs were garnering profits again and Housing Finance Agency Director Mel Watt said NHTF funding should be available by March 2016.
The NHTF was originally structured so that 75% of rental housing must benefit those considered “extremely low income” or ELI (those with incomes at or below 30% of the area median income). However, estimates for the amount of NHTF funds for 2016 are too small to significantly impact the current shortage of rental housing needed for households below an area’s median income. Thus, it is critical to build and preserve affordable housing for the lowest-income households by seeking funding through the annual budgetary process and to find other funding sources.
Lack of Affordable Housing Nationwide
NLIHC’s report focuses on the gap between the number of ELI households (and other low -income renters) and the number of rental homes that are both affordable and available to them across the nation. Specific information is also supplied at the state level as well as for the 50 largest metropolitan areas. The focus of the report, therefore, involves the country’s most vulnerable renters.
We are probably all aware of the diminishing stock of affordable housing through witnessing the growth of multifamily housing, especially in urban areas, or the total modernization (gentrification) of what previously constituted affordable housing. This housing is advertised for those with incomes at or above 50% of the area median income. Combined with the demolition or contract expirations of federally-subsidized housing as well as the loss of housing vouchers in recent years, this has exacerbated the situation. As a result, waiting lists for housing assistance are often years-long. “Federal housing assistance is so limited that just one out of every four eligible households receives it,” maintains the NLIHC report.
The dearth of housing stock is only part of the problem. Since the Great Recession, the number of renters has increased significantly due not only to the foreclosure crisis but also to population growth. Coupled with a growth in the number of ELI renter households, the mismatch in supply and demand has resulted in a notable shortage of affordable units for this segment of the population, which constitutes 24% of all renter households (2013 data, according to NLIHC).
For those who depend on Supplemental Security Income (SSI) to cover housing costs, the NLIHC report says that in “181 housing markets across 33 states, one-bedroom rents exceeded 100% of monthly SSI income.” This fact illustrates another facet of the housing affordability problem: a large percentage of low-income households are considered “severely housing cost-burdened.” This is because they are spending 50% or more of their income on rent and utilities at a time when 30% is considered the norm. Any unforeseen expense, whether a car repair or an expensive illness, can become a financial disaster, leading to eviction and eventual homelessness (a subject not covered in this report, other than to conclude that the topic of affordable housing is even more egregious than this report indicates, and to suggest that homelessness requires increased investment for ELI households).
High Housing Costs Impact Spending on Other Needs
NLIHC’s research in some cases depended on recent surveys that found that housing cost-burdened renters cut back substantially in other areas such as healthcare, especially prescriptions, vehicle maintenance and even food, to pay the rent. These renters were more likely than homeowners to use payday lenders when finances were tight.
Such renters live “on the margins,” unable to afford savings for education, retirement or any long-term needs. Those facing housing challenges are often forced to double up with family members. This often leads to overcrowded conditions, and these are the same people who sometimes are forced to rent substandard housing with pest infestation, gas leaks and poor electrical systems.
Eligible ELI Renters Shut Out of Housing
Approximately 45% of the units considered affordable for ELI renter households are not available to them because they are occupied by higher-income households. In fact, there were only 31 affordable and availableunits per 100 ELI renter households.
So, who is occupying these units? Not those who have incomes above the area median, but probably other low-income households who are better off than ELI renter households. And none of this analysis takes into account the fact that the location of the rental may be too far from jobs, public transportation or other needed services and does not speak to the condition of the apartment, which could be execrable.
While the extent of the affordable housing shortage varies by state, the report was clear that “no state has sufficient housing units affordable to ELI renter households,” and “in every state, at least 60% of ELI renters paid more than half of their income on rent and utilities.” Yet some states have a wider gap to fill than others. The states where ELI renters were least likely to find housing affordable and available to them included Nevada, which had only 15 units per 100 ELI renters, California (21), Oregon and Arizona (22) and Florida (23). The states with the most affordable and available units per 100 ELI households were South Dakota (56) and Wyoming (55). Vermont, Massachusetts and Rhode Island joined South Dakota (not Wyoming) in having a lower proportion of ELI renters facing a severe housing cost-burden; whereas at least 80% of ELI renters faced this situation in Nevada, California, Oregon, Arizona, Florida and Georgia.
There is also great variation among the 50 metropolitan areas with the largest rental populations. The Las Vegas-Henderson-Paradise metropolitan area in Nevada had the greatest need, with only 10 units that were affordable and available for every 100 ELI renter households. Compare these metropolitan areas with Boston-Cambridge-Newton, MA (47) and Louisville/Jefferson County KY-IN (46).
Twenty (20) metropolitan areas experienced large increases (2013 compared to 2012) in the shortage of units affordable and available to ELI renters: Richmond, VA (21%), Pittsburgh (20%), Las Vegas-Henderson-Paradise (17%), Washington DC -Arlington-Alexandria, VA (17%) and New Orleans-Metairie (14%). The other 30 metropolitan areas had relatively small decreases in their shortages of affordable and available housing for ELI renter households.
In seven of the 11 largest America’s cities most people rent their homes – up from five cities seven years ago. And the number of renters grew substantially in five of these cities. As the rental vacancy rates decreased due to increased demand, rents rose significantly and drove many low-income renters to outlying suburbs and beyond. The NLIHC report concludes, “As renting becomes more popular in large cities and elsewhere, it becomes more important to ensure that the lowest-income renters can access high quality, affordable housing in areas of opportunity.”
As Sister Marge has indicated, we, at NETWORK have been concerned about the issue of affordable housing for a very long time. The NLIHC report provides us with a distinctive lens from which to view the world of the ELI and other low-income households anew. We know that affordable housing stock is being lost as upper-income renters move back into metropolitan areas. The issue is compounded as retail/office space is rapidly constructed in these same areas and plots of land previously used for affordable housing are subtracted from the affordable domain.
As we have seen, when rental costs escalate, lower-income groups are forced to flee to less desirable areas or to areas farther from their work. All lower-income groups, including ELI renter households, suffer as they experience higher transportation costs and extra commuting time, added to other difficulties related to poverty.
At the same time, government’s attention and resources have neglected the needs of renters, focusing instead on issues relating to home ownership, primarily the foreclosure crisis.
What has happened on our watch is that low-wage workers have experienced the overpowering of their group by those more powerful and with more wealth. This situation is in opposition to a sense of solidarity and the common good. No low-income renter households, including ELI renters, can live in human dignity or enjoy meaningful security while facing the obstacles that the NLIHC report describes. All the more reason to defend the National Housing Trust Fund from anyone intent on distorting its meaning or destroying it outright.