AMERICA IS EXPERIENCING A HOUSING AFFORDABILITY CRISIS
- “In no state, metropolitan area, or county in the U.S. can a worker earning the federal or prevailing state or local minimum wage afford a two-bedroom rental home at fair market rent by working a standard 40-hour work week.” (NLIHC, 2021)
- The 2021 national Housing Wage is $24.90 per hour for a modest two-bedroom rental home, $17.65 higher than the federal minimum wage of $7.25 per hour. (NLIHC, 2021)
- “Extremely low-income renters in the U.S. face a shortage of 7 million affordable and available rental homes. Only 37 affordable and available homes exist for every 100 extremely low-income renter households. Seventy percent (7.6 million) of the nation’s 10.8 million extremely low-income renter households are severely housing cost-burdened, spending more than half of their incomes on rent and utilities. Many are forced to make impossible choices between shelter and food, healthcare, education, and other basic needs.” (NLIHC, 2021).
- The number of households with “worst-case housing needs” – that is, households with very low incomes that either pay more than half their income for rent or live in severely substandard housing, and receive no aid – has risen by 66% since 2001 (Center on Budget and Policy Priorities, 2017).
- “People of color are much more likely than white people to have extremely low incomes. Twenty percent of Black households, 18% of American Indian or Alaska Native households, 14% of Latino households, and 10% of Asian households are extremely low-income renters. Only 6% percent of white non-Latino households are extremely low-income renters.”(NLIHC, 2021).
- A lack of affordable housing drives homelessness. People become homeless when they cannot afford a place to live. Because of a history of discrimination, people of color are most acutely impacted by the housing affordability crisis and therefore make up a disproportionate share of the homeless population. For example, African Americans make up 39% of the homeless population despite only representing 13% of the general population. (NAEH, 2020).
- “While the private market has never been able to produce an adequate supply of homes for extremely low-income households, the growth of low-wage work exacerbates the problem. Seven of the ten occupations projected to experience the greatest growth over the next decade provide median hourly wages that are insufficient for full-time workers to afford modest apartments.” (NLIHC, 2020).
UNAFFORDABLE HOMES DRIVE POOR PEOPLE DEEPER INTO POVERTY, DEPRIVE THEM OF OTHER NECESSITIES, AND LIMIT THEIR CHANCES OF CLIMBING OUT OF POVERTY
- Affordable housing frees up more family income for other necessities, such as nutritious food, transportation, health care, and savings. According to the Harvard Joint Center for Housing Studies, affordable housing enables families to spend nearly five times more on healthcare, a third more on food, and twice as much on retirement savings.
- When families struggle to pay rent, they face greater risks of instability, eviction, and even homelessness, which research links to food insecurity, poor health, lower cognitive scores and academic achievement, and more frequent foster care placement among children (see sector pages for more detail on the multi-sector impacts on unaffordable housing)
- In a recent national opinion poll, 60% of respondents – including 52% of those living in rural areas – said that housing affordability is a problem where they live. A similar number (59%) of respondents said that the amount they pay for housing was a concern, with the heaviest burdens falling on individuals with low incomes, African-Americans, Hispanics, and renters (36%). To make matters worse, 2 in 3 (67%) respondents believe that the average cost of rent in the area where they live will increase in the next year, with only 2% expecting a decline. Nearly half (49%) of the public reports that they have had to make at least one sacrifice since the beginning of the coronavirus outbreak to make sure they can pay their rent or mortgage, such as cutting back on healthy food, stopping retirement savings, using a credit card, and skipping medical treatments to help cover all or some of their housing costs. (The Tarrance Group, 2021)
FEDERAL HOUSING ASSISTANCE SUPPORTS SENIORS, FAMILIES, AND OTHERS BUT IT IS CHRONICALLY UNDERFUNDED and POORLY MATCHED TO NEED
- 10.4 million people in 5.2 million American households use federal rental assistance to afford modest housing. 68% are seniors, children, or people with disabilities. But 4 in 10 low-income people in the United States are homeless or pay over half their income for rent. Most don’t receive federal rental assistance due to limited funding. (Center on Budget and Policy Priorities, 2019).
- “Rental assistance not only enables families to meet their housing needs but also, by lowering their rental costs, leaves them with more resources to meet other basic needs. When this effect is taken into account, rental assistance lifted 3 million people above the poverty line in 2018 under the federal government’s Supplemental Poverty Measure.” (Center on Budget and Policy Priorities, 2019)
- Federal rental assistance provides a platform to expand opportunity for low-income families and sharply reduces hardship, homelessness, psychological distress, and the frequency with which children must change schools. (Center on Budget and Policy Priorities, 2019).
- Rental assistance enables families to live in safe neighborhoods with quality schools, which improves children’s chances of attending college and earning significantly more as adults. (Chetty 2015)
- Federal housing expenditures are poorly matched to need and overwhelmingly benefit homeowners, not renters in need (Center on Budget and Policy Priorities)
- “Funding for affordable housing solutions has been declining for decades. Adjusting for inflation, the federal budget authority for housing assistance programs in the 1970s was nearly three times more than it is today, despite the significant growth in the number of low-income renters eligible for housing assistance.” (Diane Yentel, Testimony to House Financial Services Committee, 2019).
A large-scale, sustained national commitment is the solution
Failures of both the private market and public policy — at the federal, state, and local levels — have contributed to today’s housing crisis. And many people and institutions, both private and public, must take part in addressing it. Among these institutions, the federal government has an indispensable role to play. The Opportunity Starts at Home campaign has outlined a set of federal policies that we believe are necessary to solve the affordable housing crisis facing the poorest individuals and families.
Federal action is necessary not only to expand resources, but also to set overarching policy priorities and incentivize and support coordinated efforts at the state and local levels. While state and localities also have important roles to play, they cannot solve this problem on their own.
Click here to read the campaign’s National Policy Agenda, entitled “Within Reach,” which outlines three key policy strategies: 1) bridging the gap between rents and income through rental assistance; 2) expanding the stock of housing affordable to low-income households; and 3) stabilizing households by providing emergency assistance to avert housing instability and homelessness.