State of the Union’s Affordable Housing


By Terri Ludwig

In his inaugural address last month, President Barack Obama said that “a great nation must care for the vulnerable and protect its people from life’s worst hazards and misfortune.” If a benchmark for that care is ensuring that everyone has a fit and affordable place to call home, the U.S. is falling dreadfully short.

On a given night around 630,000 people are homeless in the U.S., nearly 40 percent of which are families with children. An additional 10 million families are paying more than half of their monthly income on rent, a severe cost burden that leaves little for other essentials like groceries, clothes and healthcare.

Without a stable and affordable home, these families have little hope of working toward better lives. Their home plays a key role in determining whether they can find a well-paying job, send their kids to a good school, get quality health services, access reliable transportation—the list goes on.

For President Obama to succeed in his inauguration pledge, he must start by meeting the housing needs of these struggling families. Tuesday’s State of the Union address is the perfect time to renew his dedication to America’s most vulnerable people, starting with two simple promises.

First, the president can pledge to preserve and expand effective programs that help increase the supply of affordable rental housing. Today there are more than 10 million low-income renters but only five million “affordable” apartments in the U.S., according to Harvard’s Joint Center on Housing Studies. That’s more than double the shortfall observed a decade ago.

The Low-Income Housing Tax Credit has financed virtually all of the country’s affordable housing construction since the mid-1980s. The program is a remarkable success story and a true public-private partnership, in part because the government only awards a tax credit when a private developer actually builds a home and rents it out to a low-income family. It also creates about 95,000 jobs each year, according to the National Association of Homebuilders.

Still, annual tax credit allocations are far below the level necessary to fill the affordable housing gap. And as Congress and the Obama administration look to overhaul the federal tax code in the coming years, some have called for the tax credit to be eliminated or substantially cut.  As a recent New York Times editorial put it, without the tax credit “affordable-housing construction, which already falls far short of the need, would quickly grind to a halt.”

Second, the president can promise to increase funding for rental assistance programs. Demand for affordable rental housing has skyrocketed in recent years, thanks in part to a sluggish economy and a five-year-long foreclosure crisis. Between 2001 and 2010, the number of low-income renters in the U.S. increased by more than 25 percent, while the total supply of affordable apartments actually decreased, according the Joint Center for Housing Studies. Meanwhile, only about a quarter of eligible low-income renters receive federal rental assistance today, according to the Center on Budget and Policy Priorities.

To make matters worse, average rents are expected to rise by another five percent in 2013 alone, according to the National Association of Realtors. Few expect wage growth to match that pace, meaning an even deeper affordability crisis for low-income families.

Instead of stepping up to meet this rising need, Congress has actually decreased federal funding for affordable housing assistance by six percent since 2010, according to the Center on Budget and Policy Priorities. That includes deep cuts to the HOME and Community Development Block Grant programs, which support affordable housing initiatives managed by local governments and community groups.

In addition, as part of recent efforts to reduce the deficit, further across-the-board spending cuts are set to kick in just a few weeks—so-called “sequestration.” If Washington allows these cuts to happen, they could cripple affordable housing programs at a crucial time, with devastating consequences for hundreds of thousands of low-income families and communities across the country.

As President Obama addresses the nation on Tuesday, we’ll be in the midst of a promising recovery in the U.S. housing market. Home prices are appreciating at the fastest clip in six years, foreclosure activity is at a six-year low and home construction is showing new signs of life.

But millions of people are not seeing the upside of that recovery, namely low-income families watching their rents soar as wages stagnate. These are the people President Obama needs to speak to on Tuesday night, proving that America is indeed a great nation.

Terri Ludwig is the President and CEO of Enterprise Community Partners, Inc.

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Author: Housing Horizon

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