By Mallach, Alan
Sixty years after Congress passed the Housing Act of 1949, calling for "a decent home in a suitable living environment" for every American, housing conditions have improved dramatically for the nation's lower income families. And yet the need for housing continues. The percentage of households living in substandard housing has dropped sharply, as has the number of those living in overcrowded conditions, although not as much. Both, however, continue to be problems for millions of households. Meanwhile, the cost of housing has risen dramatically, to the point where today the majority of lower income households are heavily burdened by excessive housing costs. Yet, despite the continuing persistence of severe housing problems in American society, housing programs - except for the current focus on the foreclosure crisis engulfing our towns and cities - have received little attention in recent years. In 1996 reporter Jason DeParle wrote that "housing has simply evaporated as a political issue," and things have not changed much since then. Perhaps, as the current crisis forces us to ask how we could have gone so badly wrong, that may change. If so, it is worth taking a look at why we need to build affordable housing, and how to go about it.
What are today's housing needs?
The housing problem that affects the most Americans today is cost burden, which happens when families spend so much for housing that their ability to pay for the other necessities of life is compromised. While the weight of the burden varies widely from household to household depending on income and nonhousing expenses, the federal government has adopted the standard that a household spending more than 30 percent of gross income for shelter is cost- burdened, and one spending more than 50 percent is severely cost- burdened.
For a low-income family earning $20,000 to $30,000 per year, it is easy to see that what's left after taxes and annual housing costs of $8,000 to $10,000 will be difficult to stretch to cover the cost of putting food on the table, getting to and from work, and raising children.
Although cost burdens have been rising steadily since 1950, they took a sharp upward turn between 2000 and 2007, both for renters and - even more so - for home owners, as house prices skyrocketed to unprecedented levels. The number of renters spending 30 percent or more of their income for rent went from just over 13 million to over 18 million in seven years. During the same period, the number of cost-burdened home owners nearly doubled, going from 12 to 23 million. Today, more than one out of three American households - and half of all renters - is cost-burdened. Most low-income people with cost burdens are not home owners, but renters.
Housing needs also arise from overcrowding, when limited money or inadequate housing supply forces families to move into housing that is too small for them, or where families double up in the same house or apartment. The federal government currently defines overcrowding as more than one person per room, and severe overcrowding as more than 1.5 persons per room.
A family of five living in a typical twobedroom apartment, which contains four rooms, is considered overcrowded, while a family of seven in the same apartment would be considered severely overcrowded. Although renters make up less than one-third of American households, they make up nearly two-thirds of overcrowded households.
Renters also suffer more from substandard housing conditions. While today nearly every American house or apartment has heat and indoor plumbing, other problems are still widespread. According to the American Housing Survey, nearly one out of seven low-income families lives in physically deficient housing.
Finally, disproportionate numbers of lower income households are geographically segregated and concentrated in high-poverty areas - usually urban but also rural locations, particularly in the South. Although their homes may meet minimum standards of living space and condition, the areas in which they live are isolated, with limited access to jobs, poor public services, and poor schools.
Areas of concentrated poverty not only lack opportunity, but are subject to other ills, including high crime rates, abandoned buildings, and environmental contamination. This issue represents a fundamental challenge to American social and housing policy, which can only be addressed by entire regions, not just by the cities where poverty is most heavily concentrated.
Is this a housing problem or an income problem?
One question constantly recurs in housing policy: Should affordable housing problems be addressed by increasing the supply of housing that lower income families can afford, or by increasing the demand for housing by raising their incomes so they can afford housing that already exists?
This is a very different question than that faced by policy makers in the 1930s, when millions of families lived in houses and apartments that lacked even the rudiments of decent housing and a new unit in a new building was their only hope to attain sound and safe living conditions.
Since the 1980s the federal government has favored addressing the demand side of the equation through the Housing Choice Voucher program, originally known as Section 8. For the 2007 fiscal year, HUD planned to spend nearly $22 billion on vouchers, while spending only $5 billion to build or rehabilitate affordable housing units.
This is not an either-or proposition. It should be seen instead as a different question: Where is it better to increase supply or to enhance demand?
High-demand and low-demand markets
There are many places where we need more affordable housing. We need to increase the affordable housing supply in areas of high housing cost and demand, where the supply of moderately priced housing is severely limited; in low-poverty, primarily suburban areas, where affordable housing is needed to deconcentrate poverty and foster regionwide opportunity; in areas where the imbalance between jobs and housing promotes sprawl and threatens economic competitiveness; and in areas where housing is in short supply for particular segments of the population, such as large families, the frail elderly, and individuals with special needs.
At the same time, there are parts of the U.S. where it makes more sense to expand demand rather than add supply. Large parts of the South and Midwest contain an ample supply or even an excess of housing relative to demand. In those areas, housing vouchers can add enough to a household's income to allow those families to afford decent housing in the private market, usually at much lower cost to the public purse than providing them with a brand-new unit.
This is not true everywhere. In high-demand, high-cost areas like the New York or San Francisco metro areas, housing is in short supply relative to demand, and what is available is far more expensive. As a result, the cost per household for a demand-side program will be far greater. It is far less expensive to fill the gap between what a low-income family can afford and the cost of private market housing in Yazoo County, Mississippi, even though the family is far poorer than its counterpart in Stamford, Connecticut, because the market cost of housing is so much lower.
The housing may not be there, though. In high-demand areas, households at all income levels compete for a limited supply of sound, reasonably priced housing. Even with financial help, a low- income household may be unable to find a home or apartment that meets its needs.
Families in those areas who receive vouchers are often frustrated in their search for such a home, and end up giving their vouchers back to the housing agency. A 2000 study found that only 47 percent of families receiving vouchers in Los Angeles and 57 percent in New York City were able to find an apartment meeting the program standards. High-demand areas need new affordable housing the most, because the supply of housing on the private market is either too limited or too expensive for a demand-side program to work at any reasonable cost.
In distressed cities like Flint, Michigan, or Youngstown, Ohio, on the other hand, building new affordable housing may actually be a bad idea. New housing built under programs like the Low Income Tax Credit, even with the public subsidy, ends up renting for more than most of the housing in the private market, which already has a large surplus of vacant houses. New affordable housing in those areas can actually undermine the existing housing market and contribute to further housing deterioration and abandonment.
Deconcentrating poverty and building regional equity
As America became more suburbanized after World War II, it also became more segregated. And as the middle class fled the cities, suburban communities became the locus of jobs, resources, and opportunity. Lower income households, particularly people of color, were unable to move along with those opportunities. They stayed instead in older cities and a handful of inner suburbs largely lacking the social, economic, or fiscal resources that would give their residents opportunities and a decent quality of life.
Within those cities and suburbs, these households are disproportionately in high-poverty areas where they are doubly burdened by the social problems associated with the concentration of poverty, including a lack of private-sector business activity; increased costs of retail goods and services; limited job networks and poor access to employment; limited educational opportunity; greater crime; diminished physical and mental health; reduced ability to build assets; declining local government services and fiscal capacity, and increased political and societal fragmentation. Despite the economic revival of many cities since the mid-1990s, these problems still plague the nation. Deconcentrating poverty and creating opportunities for lower income households to share in the benefits of American society should be seen as a basic societal goal. While this is not solely a housing issue and cannot be addressed through housing policies alone, it cannot be achieved without providing affordable housing opportunities.
In most growing metropolitan areas this goal cannot be achieved by enhancing housing demand through vouchers because of the high price and limited supply of housing in the region's opportunity- rich areas. Meaningful efforts to deconcentrate poverty and foster regional equity demands that new housing opportunities be created in those areas by building additional affordable housing.
Fostering economic competitiveness
America's metropolitan regions are paying a high price for decades of policies that have dispersed employment centers without providing housing for the workforce needed to sustain them. Sprawl, long commuting distances, air pollution, and increasing demands on infrastructure are some of the consequences.
As these regions have become more aware of that price and the fragility of their economic underpinnings, they have also begun to realize that the lack of affordable housing affects their ability to remain competitive not only nationally but globally. In recent years, coalitions have emerged in Minnesota, Connecticut, and elsewhere, making the case that their states' economic prosperity may well depend on their ability to address their shortage of affordable housing.
The affordable housing that may have the greatest impact on economic competitiveness may not be the same as that designed to address other housing needs. The term "workforce housing" has come into widespread use to describe housing oriented toward individuals who will fill jobs in the local economy, such as school-teachers or nurses' aides. While there is no generally accepted definition, the term is often used in a way that is both broader and narrower with respect to the populations it attempts to serve than other definitions of affordable housing. It reflects the fact that many full-time workers may earn decent salaries, but are still unable to live near where they work, particularly in high-cost areas such as the New York or Boston suburbs.
Housing shortages for specific populations
In some regions or cities, lower income households may be able to find affordable housing, but for others it is out of reach. In Stamford, where small apartments are much less expensive than large houses, it might be cost-effective to use vouchers to meet the housing needs of single people and couples, but not the needs of large families. In such areas, it might be desirable to direct resources for new housing production toward creating affordable homes for large lower income families.
Who should be the focus of additional housing supply will vary from area to area depending on the characteristics of the population and the area's housing supply. While some regions have ample affordable housing for the elderly, others may need more. This is particularly true in areas of the Midwest, where the number of older households is rising steadily. This may be true even in areas that are not lacking in moderately priced housing overall, but which may lack enough housing to meet the needs of the elderly.
The same may be true for people with special needs, by virtue of their physical or developmental disabilities. Individuals with disabilities and the elderly often need housing with particular features and may benefit from being housed in clusters to enable them to share facilities and supportive services.
Where do we go from here?
In the situations described above it makes most sense to build new affordable housing rather than just providing households with vouchers. It can also make sense in urban areas, even in distressed areas, where it is part of a larger strategy to revitalize a city or neighborhood, or where, as in many urban neighborhoods from Los Angeles to Boston, market changes and gentrification have begun to price many lower income residents out of their communities.
Vouchers, moreover, are a limited resource. It is one thing to argue theoretically that it is better to build demand through vouchers than build new housing, but another matter to provide the means to do so. In contrast to some European countries, where housing allowances are an entitlement program, in the U.S. they are a scarce resource or a lottery, available only to a fraction of those eligible.
Federal outlays for Housing Choice Vouchers have not risen in constant dollars since 2002. It is hardly reasonable to expect a nonprofit developer to refrain from building affordable housing if the need exists, and if additional vouchers are not available and not likely to become available in the foreseeable future. Similarly, public entities often prefer to provide one-time capital funds to finance additional affordable housing, rather than make the long- term commitment of funds year after year to address the demand side through vouchers.
Furthermore, by adding to the affordable housing supply we gain at least one potentially important benefit that is not available with vouchers: permanence. Once a new affordable housing unit has been created, it can remain an affordable unit for as long as is appropriate and desirable, up to and including forever. By contrast, demand-side assistance is not only dependent on continued annual government funding; it is also at the mercy of the marketplace to ensure that units will be available to future voucher holders.
Although it may be unrealistic in the short run, in the long run a basic housing allowance for all families who need it should not be out of reach. In the meantime, if affordable housing is fated to remain a lottery, we need to make it a fairer and better one for all concerned. That means using resources more efficiendy to increase the number of beneficiaries without spending more money; targeting resources more effectively to ensure that those with the greatest needs benefit; and finally, using housing programs so they enhance the health of the communities where they are used, instead of undermining them.
Everyone now realizes that to increase lower income home ownership by simultaneously making it more expensive and lowering credit standards was not only a bad idea, but a disaster for lower income families and their communities. Home ownership for lower income people is an inherently risky proposition. If increasing lower income home ownership is a good idea - which it may or may not be - we need to come up with radically different ways of doing so. We need policies to ensure that owners can afford their homes and that provide them with a support system to keep them in their homes when they run into the inevitable financial problems associated with limited incomes.
Home ownership can never be the beginning and end of a housing policy, as it has been for most of the past decade. More than half of the nation's low-income families are renters. Without adequate amounts of decent, affordable rental housing in our cities and towns, millions of families will continue to live in unsound, overcrowded or cost-burdened conditions, at constant risk of homelessness.
Looking forward, we need to restructure the Low Income Housing Tax Credit program, the one national program that builds affordable rental housing. The program should be redesigned so funds are targeted where added supply is truly needed, to encourage putting low-income rental housing in mixed income housing developments, and to build new housing in areas where jobs and good public services exist. We could take a cue from France, where much of the new affordable rental housing is included in mixed income condo projects, financed through partnerships between nonprofits and private developers.
Redesigning the tax credit program is not enough. We also need to focus on replenishing the dwindling supply of plain vanilla rental housing - like the modest garden apartments of the '50s and '60s and preserving the existing stock, both subsidized projects in need of repair or refinancing and the affordable housing in the private market, which will continue to house most lower income renters for the foreseeable future.
For the next couple of years, we will be busy digging ourselves out of the current crisis. We should spend some of this time also thinking about where we go from here - how we build a new set of affordable housing policies in this country that will be fair and cost-effective and meet the needs of the millions of American families who still suffer from bad housing and neighborhood conditions.
Copyright American Planning Association Mar 2009
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