Opinion: Why building more housing cannot solve the problem of housing affordability for the millions of people who need it most

Even before 2020, the United States faced a serious housing affordability crisis. The COVID-19 pandemic did much worse after millions of people who lost their jobs falling behind on rent. While evictions prohibit mass homelessness, and emergency rental assistance has helped some– most of the moratoriums have now been lifted, putting many people at risk of losing their homes.

A solution pushed by the White House, state and local legislators and many others is to increase the supply of affordable housing, for example by reforming zoning and other regulations on land use.

As experts in housing policy, we agree that there is a need to increase the supply of housing in areas where housing costs are rising rapidly. But that will not, in itself, make a significant dent in the country’s affordability issues, especially for those with the most serious needs.

This is partly because in much of the country, there is no shortage in fact rental housing. The problem is that millions of people do not have the income to afford what is on the market.

Where the crisis hits the hardest

Tenants with the most serious affordability problems have extremely low incomes.

Nationally, around 45% of all renter households spend more than 30% of their pre-tax income on rent, which is widely recognized affordability threshold. About half of these tenants, 9.7 million in total, spend more than 50% of their income on housing, impair their ability to meet other basic needs and putting them at risk of becoming homeless.

Almost two-thirds of renters who spend half or more of their income on housing earn less than $ 20,000, which is below the poverty line for a family of three. Tenants with some higher income also struggle with housing affordability, but the problem is most prevalent and most severe among very low income households.

More than 6 million families earning less than $ 20,000 a year pay more than half of their monthly income in rent. Building new housing will not help them.

For a household earning $ 20,000, $ 500 per month is the highest affordable rent, assuming the affordability standard does not exceed 30% of its housing income. In contrast, the median rent in the United States in 2019 was $ 1,097, an affordable level for households earning as much as $ 43,880.

And homes that rent for $ 500 or less are extremely rare. Less than 10% of all occupied and vacant homes are rented at this price, and 31% are occupied by households earning more than $ 20,000, pushing low-income renters into homes they cannot afford.

A pervasive problem

The issue of housing affordability does not only affect a few high-cost cities. It is ubiquitous across the country, in the most expensive housing markets with the lowest vacancy rates like New York and San Francisco, and the cheapest markets with high vacancy rates, like Cleveland and Memphis. .

For example, in Cleveland, with a median rent of $ 725, 27% of all tenants spend more than half of their income on rent. In San Francisco, with a median rent of $ 1,959, 18% of tenants spend at least half of their income on rent. And it is even worse for the poorest inhabitants. In both cities, more than half of all renters with very low incomes spend at least 50% of their income on rent.

In fact, there isn’t a single state, metropolitan area, or county in which a full-time minimum wage worker can afford “fair market rent” for a two bedroom house, as designated by the US Department of Housing and Urban Development.

Even the smallest and most basic homes are often unaffordable for people with very low incomes. For example, the minimum rent needed to maintain a new 225 square foot efficiency apartment with a shared bathroom in New York built on a given lot is $ 1,170, affordable for households earning a minimum of $ 46,800. It’s out of reach for low-income households.

At the heart of the country’s affordability crisis is the fact that the cost of building and operating a home simply exceeds what low-income renters can afford. At the national level, the the average monthly operating cost of a rental unit in 2018 was $ 439, excluding mortgage and other debt-related expenses.

In other words, even if landlords set rents to the bare minimum necessary to cover the costs – without profit – of housing would remain unaffordable to most very low income households, unless they also receive housing subsidies.

The grant solution

Covering the difference between what these tenants can afford and the real cost of housing is therefore the only solution for the nearly 9 million low-income households who pay at least half of their income in rent.

The United States already has a program designed to help these people offer themselves houses. With Good Housing Choices, also known as Section 8, beneficiaries pay 30% of their income on rent, and the program covers the balance. While some owners refused to accept tenants using vouchers, on the whole the program made a significant difference in the lives of those who receive them.

The $ 26 billion program currently serves around 2.5 million households, or only 1 in 4 eligible households. The Democrats’ current version social spending bill would gradually expand the program by approximately 300,000 over five years at a total cost of $ 24 billion.

Even though this would be the biggest increase in the program’s nearly 50 years, millions of low-income renters still cannot afford a home. And that’s not a problem that more supply can solve.

Alex Schwartz is professor of public and urban policy at The New School, a university in New York. He is the author of “Housing Policy in the United States” (Routledge, 2021), which is in its fourth edition.

Kirk McClure is professor of urban planning in the School of Public Affairs and Administration at the University of Kansas. He was Researcher-in-Residence in the Policy Development and Research Department at HUD. Dr McClure is Associate Editor of Housing Policy Debate and sits on the editorial boards of Housing Studies and the Journal of Planning Education and Research.

This commentary was originally posted by The Conversation—Why building more homes won’t solve the problem of affordable housing for the millions of people who need it most

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