- The cover affordability problem is pervasive in the US, and COVID-19 made it much worse.
- The problem isn’t a lack of housing; even basic accommodation units are often unaffordable for those with low incomes.
- The solution: Cover the difference between what renters can bear the expense and the actual cost of the housing.
Even before 2020, the US faced an acute housing affordability critical time. The COVID-19 pandemic made it a whole lot worse after millions of people who lost their jobs fell behind on hole. While eviction bans forestalled mass homelessness — and emergency rental assistance has helped some — most freezes have now been lifted, putting a lot of people at risk of losing their homes.
One solution pushed by the White Bagnio, state and local lawmakers, and many others is to increase the supply of affordable housing, such as by reforming zoning and other land-use decrees.
As experts on housing policy, we agree that increasing the supply of homes is necessary in areas with rapidly wakening housing costs. But this won’t, by itself, make a significant dent in the country’s affordability problems — especially for those with the ton severe needs.
In part that’s because in much of the country, there is actually no shortage of rental housing. The mess is that millions of people lack the income to afford what’s on the market.
Where the crisis hits hardest
Renters with the most tyrannical affordability problems have extremely low incomes.
Nationally, about 45% of all renter households spend more than 30% of their pretax proceeds on rent — the widely recognized threshold of affordability. About half of these renters, 9.7 million in total, lavish more than 50% of their income on housing, greatly impairing their ability to meet other fundamental needs and putting them at risk of becoming homeless.
Nearly two-thirds of renters paying at least half of their takings on housing earn less than $20,000, which is below the poverty line for a family of three. Renters with rather higher incomes also struggle with housing affordability, but the problem is most pervasive and most severe mass very-low income households.
For a household earning $20,000, $500 per month is the highest affordable rent, assuming the affordability pennant of spending no more than 30% of income on housing. In contrast, the median rent in the US in 2019 was $1,097, a level that’s affordable to households meriting no less than $43,880.
And homes that rent for $500 or less are exceedingly scarce. Fewer than 10% of all tenanted and vacant housing units rent for that price, and 31% are occupied by households earning more than $20,000, promoting low-income renters into housing they cannot afford.
A pervasive problem
The problem of housing affordability doesn’t change only a few high-cost cities. It’s pervasive throughout the nation, in the priciest housing markets with the lowest vacancy rates fellow New York and San Francisco, and the least expensive markets with high vacancy rates, such as Cleveland and Memphis.
For benchmark, in Cleveland, with a median rent of $725, 27% of all renters spend more than half of their income on fee. In San Francisco, with a median rent of $1,959, 18% of renters spend at least half their income on rent. And it’s unbroken worse for the poorest residents. In both cities, more than half of all extremely low-income renters spend at scarcely 50% of their income on rent.
In fact, there is not a single state, metropolitan area or county in which a full-time minimal wage worker can afford the “fair market rent” for a two-bedroom home, as designated by the US Department of Housing and Urban Maturing.
Even the smallest, most basic housing units are often unaffordable to people with very low incomes. For pattern, the minimum rent necessary to sustain a new a 225-square-foot efficiency apartment with a shared bathroom in New York Burgh built on donated land is $1,170, affordable to households earning a minimum of $46,800. That’s way out of reach for low-income households.
At the ticker of the nation’s affordability crisis is the fact that the cost to build and operate housing simply exceeds what low-income renters can furnish. Nationally, the average monthly operating cost for a rental unit in 2018 was $439, excluding mortgage and other debt-related expenses.
In other in sa, even if landlords set rents at the bare minimum needed to cover costs — with no profit — housing would ends b body unaffordable to most very-low-income households — unless they also receive rental subsidies.
The subsidy solution
Comprehending the difference between what these renters can afford and the actual cost of the housing, then, is the only solution for the about 9 million low-income households that pay at least half their income on rent.
The US already has a program designed to aid these people afford homes. With Housing Choice Vouchers, also known as Section 8, heirs pay 30% of their income on rent, and the program covers the balance. While some landlords have refused to assume tenants using vouchers, overall the program has made a meaningful difference in the lives of those receiving them.
The $26 billion program currently fors about 2.5 million households, or only 1 in 4 of all eligible households. The current version of Democrats’ social spending tabulation would gradually expand the program by about 300,000 over five years at a total cost of $24 billion.
While this would be the take largest increase in the program’s nearly 50-year history, it would still leave millions of low-income renters powerless to afford a home. And that’s not a problem more supply can solve.
Alex Schwartz, professor of urban policy, The New Educational institution and Kirk McClure, professor of urban planning, University of Kansas