Median gross rent and median gross rent as percent of household income, 1990 and 2000
| 1990 | 2000 | |||
| Area | Median gross rent | Median gross rent as percent of household income (1989) | Median gross rent | Median gross rent as percent of household income (1999) |
| United States | $571 | 26.4 | $602 | 25.5 |
| Region | ||||
| Northeast | $638 | 26.4 | $651 | 25.9 |
| Midwest | $506 | 25.4 | $533 | 24.0 |
| South | $517 | 25.7 | $559 | 25.0 |
| West | $684 | 27.9 | $694 | 27.1 |
| State | ||||
| Alabama | $415 | 24.8 | $447 | 24.8 |
| Alaska | $714 | 23.8 | $720 | 24.8 |
| Arizona | $560 | 27.5 | $619 | 26.6 |
| Arkansas | $418 | 26.5 | $453 | 24.4 |
| California | $792 | 29.1 | $747 | 27.7 |
| Colorado | $533 | 26.1 | $671 | 26.4 |
| Connecticut | $764 | 26.6 | $681 | 25.4 |
| Delaware | $634 | 24.7 | $639 | 24.3 |
| District of Columbia | $612 | 25.4 | $618 | 24.8 |
| Florida | $613 | 28.0 | $641 | 27.5 |
| Georgia | $553 | 25.8 | $613 | 24.9 |
| Hawaii | $830 | 27.4 | $779 | 27.2 |
| Idaho | $422 | 23.8 | $515 | 25.3 |
| Illinois | $569 | 25.9 | $605 | 24.4 |
| Indiana | $477 | 24.3 | $521 | 23.9 |
| Iowa | $429 | 24.1 | $470 | 23.2 |
| Kansas | $474 | 24.5 | $498 | 23.4 |
| Kentucky | $408 | 24.9 | $445 | 24.0 |
| Louisiana | $450 | 27.9 | $466 | 25.8 |
| Maine | $535 | 26.8 | $497 | 25.3 |
| Maryland | $700 | 25.4 | $689 | 24.7 |
| Massachusetts | $741 | 26.8 | $684 | 25.5 |
| Michigan | $540 | 27.2 | $546 | 24.4 |
| Minnesota | $539 | 26.7 | $566 | 24.7 |
| Mississippi | $394 | 27.1 | $439 | 25.0 |
| Missouri | $470 | 25.2 | $484 | 24.0 |
| Montana | $396 | 25.0 | $447 | 25.3 |
| Nebraska | $445 | 23.7 | $491 | 23.0 |
| Nevada | $650 | 26.8 | $699 | 26.5 |
| New Hampshire | $701 | 26.4 | $646 | 24.2 |
| New Jersey | $756 | 26.3 | $751 | 25.5 |
| New Mexico | $473 | 26.5 | $503 | 26.6 |
| New York | $620 | 26.3 | $672 | 26.8 |
| North Carolina | $488 | 24.4 | $548 | 24.3 |
| North Dakota | $400 | 23.9 | $412 | 22.3 |
| Ohio | $483 | 25.3 | $515 | 24.2 |
| Oklahoma | $434 | 25.4 | $456 | 24.3 |
| Oregon | $521 | 25.5 | $620 | 26.9 |
| Pennsylvania | $516 | 26.1 | $531 | 25.0 |
| Rhode Island | $625 | 27.5 | $553 | 25.7 |
| South Carolina | $482 | 24.4 | $510 | 24.4 |
| South Dakota | $391 | 24.6 | $426 | 22.9 |
in poverty; a family of four with two children under age eighteen was in poverty if their income was less than $19,350 (Federal Register 70, No. 33, February 18, 2005). Thus, in 2005 low-income housing for a family of two should cost no more than $321 a month; for a family of four it should cost no more than $484 a month.
Not Enough Affordable Units Available
Researchers from every discipline agree that the number of housing units that are affordable to the poor is insufficient to meet needs. A paper published by the
TABLE 4.1
Median gross rent and median gross rent as percent of household income, 1990 and 2000 [CONTINUED]
| 1990 | 2000 | |||
| Area | Median gross rent | Median gross rent as percent of household income (1989) | Median gross rent | Median gross rent as percent of household income (1999) |
| Tennessee | $456 | 25.0 | $505 | 24.8 |
| Texas | $505 | 24.6 | $574 | 24.4 |
| Utah | $471 | 23.8 | $597 | 24.9 |
| Vermont | $570 | 27.1 | $553 | 26.2 |
| Virginia | $632 | 25.8 | $650 | 24.5 |
| Washington | $569 | 25.7 | $663 | 26.5 |
| West Virginia | $387 | 26.8 | $401 | 25.8 |
| Wisconsin | $510 | 24.9 | $540 | 23.4 |
| Wyoming | $425 | 23.7 | $437 | 22.5 |
| Puerto Rico | $261 | 29.4 | $297 | 27.0 |
| Note: The dollars have been adjusted to 2000 dollars using the government's Consumer Price Index (CPI). This means that the effect of inflation has been eliminated. | ||||
National Low Income Housing Coalition (NLIHC) quoted a finding by a congressional commission that there were almost two million fewer units of housing affordable to low-income households than there were such households in 2004 (Cushing N. Dolbeare, Changing Priorities: The Federal Budget and Housing Assistance, 1976-2005, National Low Income Housing Coalition, 2004).
The poor essentially have two rental options: low-income housing units operated by local public housing authorities and privately owned housing, whose owners accept Section 8 rental assistance vouchers issued by the federal government. In 2002 about 1.5 million families took advantage of the Section 8 vouchers. However, the rents permitted under the voucher program have not kept pace with actual rents in many markets. In his testimony before the House Subcommittee on Housing and Community Opportunity on April 23, 2002, Roy Ziegler of the National Leased Housing Association reported that many Section 8 vouchers go unused because there are not enough rental units available to which the vouchers can be applied.
According to a 1999 report from the U.S. Department of Housing and Urban Development (HUD) (Waiting in Vain: An Update on America's Housing Crisis, Washington, DC), in 1998 a family spent an average of thirty-three months on a waiting list for HUD-assisted housing operated by the largest public housing authorities. The situation had improved somewhat by 2003, when the U.S. Conference of Mayors reported that applicants waited an average of twenty months for public housing; however, the survey also revealed that 59% of the surveyed cities had stopped accepting applications for at least one assisted housing program (Hunger and Homelessness Survey: A Status Report on Hunger and Homelessness in America's Cities, A 27-City Survey, December 2004). High housing costs also contributed to the homelessness problem. The city officials estimated that low-income households spent an average of 45% of their income on housing.
In December 2000 Congress established the bipartisan Millennial Housing Commission (MHC) to examine the role of the federal government in meeting the nation's housing needs. In Meeting Our Housing Challenges (Washington, DC, May 2002), the commission stated that "there is simply not enough affordable housing. The inadequacy of supply increases dramatically as one moves down the ladder of family earnings. The challenge is most acute for rental housing in high-cost areas, and the most egregious problem is for the very poor."
The federal government considers a housing cost of 30% or less of current income affordable and appropriate. In 2003 the median monthly housing cost for renter households was $651; the median monthly housing cost as a percent of current income was 30.1%. In other words, half of renters paid more than 30.1% of their income on rent—more than what the federal government considers affordable and appropriate. The median monthly housing cost for owner households was $758; the median monthly housing cost as a percent of current income was 18.2%—lower than that of renters. However, almost a quarter (23.5%) of owners paid above 30% of their income for housing (American Housing Survey for the United States: 2003, Census Bureau, September 2004).
The National League of Cities, in its annual opinion survey of municipal elected officials (The State of America's Cities 2004), found that 23% of city officials believed that increasing the availability of quality affordable housing should be a priority for the federal government. (See Table 4.2.)
The Joint Center for Housing Studies of Harvard University reported in The State of the Nation's Housing: 2004 that in 2003, three in ten households had housing affordability problems, spending more than 30% of their incomes on housing. Thirteen percent spent more than half of their income on housing. Two million households were housed in severely inadequate units. The report also stated that affordability problems for renters were on the rise in the early 2000s, with the median share of income spent on rent rising to near 29% by 2003. (See Figure 4.1.)
At Risk of Becoming Homeless
In January 2001 the HUD Office of Policy Development and Research released the results of an in-depth study (A Report on Worst Case Housing Needs in 1999—New Opportunity Amid Continuing Challenges). The report found that in the two years between 1997 and 1999, a time of economic prosperity, the number of renter households with
TABLE 4.2
Issues selected by city officials as high priorities for federal attention, 2004
| Cost and availability of health services | 31% |
| Overall economic conditions | 29% |
| Impacts of unfunded mandates/preemption | 28% |
| Unemployment | 25% |
| Availability of quality affordable housing | 23% |
| Homeland security/emergency preparedness | 18% |
| Infrastructure | 15% |
| Traffic | 12% |
| Quality of public education | 12% |
| Federal relations with your city | 10% |
| Note: Data reflects percent of city officials listing item as one of the three conditions the federal government and the presidential candidates should devote the most attention to. | |
worst-case housing needs declined at least 8% (440,000 households), reversing the preceding ten-year trend of growing worst-case needs. However, there were still nearly five million households in serious need of housing assistance. HUD defines families with "worst-case needs" as those who:
- Are renters
- Do not receive housing assistance from federal, state, or local government programs
- Have incomes below 50% of their local area median family income, as determined by HUD
- Pay more than one-half of their income for rent and utilities, or live in severely substandard housing
In other words, these are extremely impoverished people who do not own their housing and can barely afford to pay their housing costs, or can only afford to stay in the very worst housing. Of all the people who had housing, they are the ones closest to being forced into homelessness. HUD found that 10.9 million people inhabited the 4.9 million households in the worst-case housing classification in 1999. This number included 1.4 million elderly and 3.6 million children.
The reduction in the number of worst-case households between 1997 and 1999 was attributed to income growth among low-income renters rather than to growth in the number of affordable rental housing units. The report stated that the number of units affordable and available to renters with extremely low income fell, and also predicted that in the event of an economic slowdown, income growth among low-income renters could very well be reversed. In fact, the study done by the Joint Center for Housing Studies of Harvard University showed that as the country entered a period of recession in 2001, renter affordability problems worsened. (See Figure 4.1.)
FIGURE 4.1
Median share of income spent on rent, 1990-2003
For as long as worst-case needs have been reported, affordability rather than housing quality has been the main problem facing renters. A household that spends more than 50% of its income on housing is considered severely cost-burdened. The State of the Nation's Housing: 2004 found that fully half of the households in the bottom fifth of income distribution spent more than 50% of their income on housing. This group spent, on average, only $161 per month on food and $34 per month on health care.
Working Families Struggle to Keep Up
Out of Reach, 2004, a report by the National Low Income Housing Coalition (NLIHC), compared the Fair Market Rent—the U.S. Department of Housing and Urban Development's estimate of what a household seeking modest rental housing must expect to pay for rent and utilities—to the median hourly wage. The hourly wage needed to pay the fair market rent for a two-bedroom apartment is $15.37. However, the median hourly wage in the United States is only $14.00, more than a quarter of people in the United States earn less than $10.00 per hour, and the federal minimum wage was $5.15. The report stated that rents continued to rise faster than did incomes in 2004.
According to Out of Reach, in no metropolitan area of the country could a minimum-wage worker afford a two-bedroom apartment. In only four counties in the country could a person earning minimum wage even afford a one-bedroom apartment. In most cities, the housing wage was at least twice the federal minimum wage.
Reasons for the Lack of Low-Income Housing
The major reasons for the lack of low-income housing are declining federal support; bureaucratic red tape, fraud, and waste; and a variety of local factors that affect new construction.
DECLINING FEDERAL SUPPORT.
The development and operation of low-income housing units depends on government funding administered by HUD. In Changing Priorities: The Federal Budget and Housing Assistance, 1976-2005 (National Low Income Housing Coalition, October 2004), Cushing N. Dolbeare argued, "The federal government's high water mark for housing assistance was the mid-1970s, and funding has not come near that level in the years since. Nor will it in the next five years, absent a major policy and funding shift." Between 1976 and 2004, the housing assistance budget authority decreased 48%; in addition, in 1976 low-income housing units were being built, while in 2004, the budget mainly maintains existing units. In fact, due to public housing demolitions, the number of low-income housing units declined by 2004.
FRAUD, WASTE, AND DELAYS HAMPER REHABILITATION.
A major HUD goal is to increase the supply of affordable, decent, and safe rental housing, but it has not been particularly successful in this regard. In Department of Housing and Urban Development: Status of Achieving Key Outcomes and Addressing Major Management Challenges (Washington, DC, July 2001), the U.S. General Accounting Office (GAO), now Government Accountability Office, the watchdog arm of Congress, noted that HUD programs had been plagued by fraud, waste, and errors.
One of the few federal housing production programs administered by HUD is the Urban Revitalization Demonstration Program, commonly known as HOPE VI. This program provides grants to local public housing authorities, who contract with private developers to rehabilitate public housing. Between fiscal years 1993 and 2001, HUD awarded about $4.5 billion in HOPE VI revitalization grants to 98 public housing authorities for 165 sites. In 2002 Congress charged the GAO with investigating and reporting on progress and HUD's oversight of the projects. In Public Housing: HUD's Oversight of HOPE VI Sites Needs to Be More Consistent (Washington, DC, May 2003), the GAO reported that as of December 31, 2002, construction was complete on only fifteen of the 165 sites. About one-quarter (27%) of the planned rehabilitation work had been done but nearly half (47%, or $2.1 billion) of the grant money had been spent. Work had been completed by the deadline on only three of the grants and the construction deadlines had expired on forty-two grants. For fiscal year 2004 the Bush administration proposed eliminating the HOPE VI program; however, the program was funded at $120 million, down 76.7% from the $574 million funded in fiscal year 2003.
LOW PROFIT MARGINS BRING NEGLECT.
HUD contracts with private owners limit profits and often limit the monies put back into the property for repairs. The existing housing available to renters at the lowest income levels often suffers from lack of upkeep. Neglected maintenance results in deterioration and sometimes removal from the housing inventory altogether.
According to The State of the Nation's Housing, 2003, about 705,000 tenants receiving government housing assistance in 2003 lived in substandard conditions. HUD data showed that during the late 1990s more than one million very-low-income residential units were lost as old buildings were torn down or owners opted out of low-income programs; also lost were 750,000 units available to the next income level (30% of area median income).
FACTORS THAT INHIBIT CONSTRUCTION.
Construction of low-income units has been hampered by community resistance, by regulations that increase the cost of construction, and by limits on federal tax credits that make new construction unprofitable.
In his "Dissenting Statement to the Report of the Millennial Housing Commission" (May 30, 2002), Commissioner Robert Rector complained: "It is a simple fact that those cities that have the greatest 'affordability' problems are those that have 'smart growth' or other regulatory policies that severely limit new housing growth. Policies such as restrictive zoning, antiquated building codes, and high impact fees for new construction reduce housing supply and greatly increase costs for everyone in a community."
To many people, the prospect of low-income subsidized housing is synonymous with rising crime, falling property values, and overcrowded classrooms, and it is cause for protest. Resistance to the construction of low-income housing is said to be evidence of a "Not in My Backyard"(NIMBY) way of thinking. From NIMBY to Good Neighbors: Recent Studies Reinforce that Apartments Are Good for a Community, a 2003 report from the National Multi Housing Council/National Apartment Association, summarizes research showing that smart growth may depend on the development of more high-density housing, such as apartments.
Developers complain that there is no profit to be made from building and operating low-income housing. The 1986 Low-Income Housing Tax Credit program gave the states $1.25 per capita in tax credits toward the private development of low-income housing. In "A New Era for Affordable Housing" (National Real Estate Investor, March 1, 2003), H. Lee Murphy reported on National Council of State Agencies' data indicating that construction peaked in 1994, when 117,100 apartment units were built with the credits. Skyrocketing construction costs brought a decline in new construction, which reached a low of 66,900 units in 2000. In 2001 Congress raised the per capita allotment to $1.75 and provided that the formula would rise each year with inflation. The tax credits financed the construction of 75,000 new units in 2001.
Affordable Housing for the Homeless
In testimony before the House Subcommittee on Housing and Community Opportunity, Committee on Financial Services, on June 21, 2003, Nan P. Roman, President of the National Alliance to End Homelessness, spoke about affordable housing and the homeless. She claimed that for 80% of the homeless, "homelessness is a housing affordability issue." Roman also testified that for the remaining 20%—the chronically homeless who suffer from a variety of disabilities ranging from mental illness to substance abuse, HIV/AIDS, and physical problems—200,000 units of supportive housing such as group homes, multi-family units, or individual homes with programs to address their needs "could end chronic homelessness."
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