Our country is in the midst of a rental affordability crisis that is having a devastating impact on our nation’s most vulnerable families. Many of these families are forced to make the difficult choice of spending less on health care, food, and other basic necessities just to cover their housing costs. With rental demand expected to be strong throughout the remainder of the decade, rents are likely to rise even higher, exacerbating an already difficult, if not impossible, situation.
The latest figures from Harvard’s Joint Center for Housing Studies tell the story: in 2012, the number of households spending more than 30 percent of their income on rent set a new record — 21.1 million, or about half of all renter households. The percentage of renter households that are “severely cost-burdened” (paying 50 percent or more of their income on rent) now stands at 27 percent, another record-high number.
Not surprisingly, those families with the lowest incomes are hit particularly hard by rising rental costs: in 2011, 83 percent of renters with incomes of less than $15,000 were cost burdened, including 71 percent whose housing costs consumed more than 50 percent of their budgets.
For our lowest-income families, a major factor contributing to these housing-cost burdens is the acute shortage of affordable rental homes. Over the past decade, the number of extremely low-income households (those making less than 30 percent of area median income) has increased significantly, while the stock of low-cost rentals has remained essentially unchanged. Competition from higher-income renters for the same units further limits the supply of rentals affordable to those at the bottom of the income ladder. According to the Joint Center, in 2011, for every 100 extremely low-income renters, only 36 units were affordable and available.
To increase the supply of affordable rentals, the Bipartisan Policy Center Housing Commission recommends a 50 percent increase in federal support for the Low-Income Housing Tax Credit. With a long track record of success, the Housing Credit has been our nation’s most effective tool in supporting the production of rental housing for low-income families. The Housing Credit is a true private-public partnership, engaging private market forces to build affordable housing while minimizing risk to the federal government and the taxpayers.
In light of the great need for more affordable rental housing, creative ideas to maximize the Housing Credit’s impact merit serious consideration. The President’s Fiscal Year 2014 budget, for example, proposed to increase support for the Housing Credit by permitting states to convert up to seven percent of their qualified private activity bond cap into Housing Credit allocation authority. If a state were to make maximum use of this conversion option, it is estimated that allocation authority would increase by 19 percent.
While increasing the supply of affordable rental homes is critical, we must also address the “demand side” of the affordability crisis. Over the years, federal rental assistance programs have provided essential help to millions of low-income families, but fewer than one in four eligible households is actually served by these programs. Scarce rental subsidies are often allocated through waiting lists and by lotteries.
The commission has offered a comprehensive set of “demand-side” recommendations, including a more precise targeting of federal rental assistance to ensure our nation’s most vulnerable families receive help if they need it. The commission has also urged the adoption of a new performance-based system for delivering federal rental aid that focuses less on process and more on achieving positive results for those assisted. It is my hope that Congress and the Administration will seriously consider these reform proposals as the year unfolds.
Perhaps the most critical, short-term step is setting the right priorities for the federal budget, particularly at a time when resources are tight and the demands on these resources are great. In my view, ensuring that our nation’s most vulnerable families can afford their shelter should be at the very top of the priority list. It is simply unacceptable in a country as wealthy as ours that so many of our fellow citizens lack access to an affordable home.
In the recently-enacted Fiscal Year 2014 omnibus appropriations bill, Congress provides a modest increase in funding over Fiscal Year 2013 levels for a number of important housing assistance programs, including the HOME Investment Partnerships program, project-based Section 8, Housing Choice Vouchers, homeless assistance, and Section 202 Housing for the Elderly.
This additional funding, while not sufficient to meet the great need that exists, will help prevent what could have been an even more dire situation under sequestration.
Looking ahead, as Members of Congress develop a budget plan for Fiscal Year 2015, it is my hope they will continue to find ways to fund our nation’s federal rental assistance programs to the fullest extent possible. These programs not only help millions of families meet their immediate housing needs, they are also an essential investment in our nation’s future.