Affordable Housing Challenges 

Summary

Lack of affordable housing is a leading cause of homelessness in America. The U. S. Conference of Mayors has found that lack of affordable housing now is by far the most commonly-cited reason for family homelessness nationwide. During fiscal 2008, family homelessness was up 9 percent, to about 517,000 homeless persons living in families, according to federal statistics.

Lack of affordable housing also is a leading cause of homelessness overall. Somewhere between 1.6 million and 3.5 Americans were homeless at some time during fiscal 2008 -- about 40 percent of them children -- according to most estimates.

Lack of affordable housing causes or aggravates the poverty of many millions of other Americans. In 2006, for example, more than 9 million low-income households (98 percent considered low-income) paid more than half of their income for housing. The federal standard of affordable housing is housing costing 30 percent or less of household income.

Then, between the fourth quarter of 2006 and the same quarter in 2008, the number of renter households grew by 2.2 million nationally, as the number of homeowners declined. The rent for a primary residence actually rose in 2008, amid the recession, in 13 of the 14 metropolitan areas covered by the Consumer Price Index (CPI).  The national poverty rate for 2008 rose from 12.5 percent to 13.2 percent of the population.

Most low-income families are renters, not homeowners. However, an estimated 40 percent of the households displaced by foreclosures are renters, as landlords default on their (often subprime) mortgages. During the third quarter of 2009, more than 14 percent of borrowers (7.4 million American mortgage-holders) were in trouble on their mortgages -- a new record, according to the Mortgage Bankers Association. An estimated 2.38 million properties were somewhere in the foreclosure process.

There are encouraging signs that the prolonged economic downturn may be abating – although the already-high unemployment and poverty rates are expected to increase to even higher levels, well into 2010. When the economy finally recovers, the stage will be set for another round of housing shortages, and hyper-inflation in housing prices, due largely to exclusionary housing policies (also called regulatory barriers to affordable housing (RBAHs)).  

It is crucial to eliminate those policies in order to avoid another vicious cycle of hyper-inflation and collapse in the housing sector.

Other factors also demonstrate the need for sufficient affordable housing reasonably close to where people work and obtain services. For example:

• Petroleum prices have spiked repeatedly in recent years, underscoring the need for reducing petroleum use; and
• Greenhouse gases created by the use of fossil fuels such as petroleum contribute to the Earth’s problematic climate change.

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