Our country faces an alarming gap between the housing needs of our nation’s poorest households and what is available and affordable to them. The result is rising family homelessness in cities across the country, and more and more families paying at least half of their income towards their rent each month. Two new reports just released by the National Low Income Housing Coalition paint a very clear picture of what we’re up against.
In March, NLIHC released its annual report The GAP: Affordable Housing Gap Analysis 2016 that shows that there are just 3.2 million rental apartments affordable and available to our nation’s 10.4 million lowest income renter households. The direct result of this 7.2 million unit shortage: 75% of the lowest income families, many who are elderly or disabled, spend more than half of their incomes on rent. This severe housing cost burden forces families to sacrifice other basic necessities like food, child care and health care, to double-up with friends or family, to work multiple jobs. Many end up homeless on our streets and in our shelters.
NLIHC recently issued its annual Out of Reach 2016 report, showing that a full-time worker in America today needs to earn $20.30 per hour to afford a modest two-bedroom apartment at fair market rent. The average hourly wage of renters in the U.S. is $15.42, almost $5 less than the two-bedroom housing wage. In no state in our nation is the mean renter wage sufficient to afford a two-bedroom apartment at the fair market rent.
Of course, the situation is most severe for those at the bottom of the income ladder. The federal minimum wage is $7.25 per hour. This is what child care workers, nurses’ assistants, emergency medical technicians, cashiers at the grocery store people who prepare and serve food at restaurants – the people in our communities who we rely on every day – earn. A minimum wage worker needs to work 2.8 full time jobs, or approximately 112 hours per week for all 52 weeks of the year, in order to afford to rent a modest two bedroom apartment. If this worker slept for eight hours per night, she would have no remaining time during the week for anything other than working and sleeping.
Today’s federal housing programs serve approximately five million low income households, but the needs of many more households go unmet. Those receiving affordable housing subsidies are in many ways the lucky ones – most often they won a housing lottery to receive that assistance. Only one out of every 4 families eligible for subsidized housing receive the assistance they need.
Our nation took an important step to address the shortage of affordable homes for those with the lowest incomes last month when the Department of Housing and Urban Development announced the allocations of the first national Housing Trust Fund (HTF) block grants. Created under the Housing and Economic Recovery Act of 2008 and funded by a small assessment on Fannie Mae and Freddie Mac’s new business, the HTF is the first new federal program in a generation to focus on housing for the lowest income households.
Despite this achievement, there is so much more to do—the current funding to the national HTF is woefully inadequate to meet the need. Modest reforms to the mortgage interest deduction (MID) could provide enough savings for us to fill the gap, and end the affordable housing crisis. In fact, reducing the portion of a mortgage eligible for a tax break from $1 million to $500,000 and converting the deduction to a 15% non-refundable credit would save more than $20 billion a year to invest in the national HTF and other critical affordable housing programs. The federal government has the resources to end the shortage of housing affordable to the lowest income families: it is simply a matter of how those resources are allocated.
Ultimately, higher wages and a greater supply of housing affordable to the lowest income people are necessary to solve the crisis. At NLIHC, we look forward to the day when affordable and decent homes are no longer out of reach.