By Alex Schwartz and Kirk McClure
Even before 2020, the U.S. faced an acute housing affordability crisis. The COVID-19 pandemic made it a whole lot worse after millions of people who lost their jobs fell behind on rent. While eviction bans forestalled mass homelessness – and emergency rental assistance has helped some – most moratoriums have now been lifted, putting a lot of people at risk of losing their homes.
One solution pushed by the White House, state and local lawmakers and many others is to increase the supply of affordable housing, such as by reforming zoning and other land-use regulations.
As experts on housing policy, we agree that increasing the supply of homes is necessary in areas with rapidly rising housing costs. But this won’t, by itself, make a significant dent in the country’s affordability problems – especially for those with the most severe needs.
In part that’s because in much of the country, there is actually no shortage of rental housing. The problem is that millions of people lack the income to afford what’s on the market.
Where the crisis hits hardest
Renters with the most severe affordability problems have extremely low incomes.
Nationally, about 45% of all renter households spend more than 30% of their pretax income on rent – the widely recognized threshold of affordability. About half of these renters, 9.7 million in total, spend more than 50% of their income on housing, greatly impairing their ability to meet other basic needs and putting them at risk of becoming homeless.
Nearly two-thirds of renters paying at least half of their income on housing earn less than US$20,000, which is below the poverty line for a family of three. Renters with somewhat higher incomes also struggle with housing affordability, but the problem is most pervasive and most severe among very-low income households.
For a household earning $20,000, $500 per month is the highest affordable rent, assuming the affordability standard of spending no more than 30% of income on housing. In contrast, the median rent in the U.S. in 2019 was $1,097, a level that’s affordable to households earning no less than $43,880.
And homes that rent for $500 or less are exceedingly scarce. Fewer than 10% of all occupied and vacant housing units rent for that price, and 31% are occupied by households earning more than $20,000, pushing low-income renters into housing they cannot afford.
A pervasive problem
The problem of housing affordability doesn’t affect only a few high-cost cities. It’s pervasive throughout the nation, in the priciest housing markets with the lowest vacancy rates like New York and San Francisco, and the least expensive markets with high vacancy rates, such as Cleveland and Memphis.
For example, in Cleveland, with a median rent of $725, 27% of all renters spend more than half of their income on rent. In San Francisco, with a median rent of $1,959, 18% of renters spend at least half their income on rent. And it’s even worse for the poorest residents. In both cities, more than half of all extremely low-income renters spend at least 50% of their income on rent.
In fact, there is not a single state, metropolitan area or county in which a full-time minimum wage worker can afford the “fair market rent” for a two-bedroom home, as designated by the U.S. Department of Housing and Urban Development.
Even the smallest, most basic housing units are often unaffordable to people with very low incomes. For example, the minimum rent necessary to sustain a new a 225-square-foot efficiency apartment with a shared bathroom in New York City built on donated land is $1,170, affordable to households earning a minimum of $46,800. That’s way out of reach for low-income households.
At the heart of the nation’s affordability crisis is the fact that the cost to build and operate housing simply exceeds what low-income renters can afford. Nationally, the average monthly operating cost for a rental unit in 2018 was $439, excluding mortgage and other debt-related expenses.
In other words, even if landlords set rents at the bare minimum needed to cover costs – with no profit – housing would remain unaffordable to most very-low-income households – unless they also receive rental subsidies.
The subsidy solution
Covering the difference between what these renters can afford and the actual cost of the housing, then, is the only solution for the nearly 9 million low-income households that pay at least half their income on rent.
The U.S. already has a program designed to help these people afford homes. With Housing Choice Vouchers, also known as Section 8, recipients pay 30% of their income on rent, and the program covers the balance. While some landlords have refused to accept tenants using vouchers, overall the program has made a meaningful difference in the lives of those receiving them.
The $26 billion program currently serves about 2.5 million households, or only 1 in 4 of all eligible households. The current version of Democrats’ social spending bill would gradually expand the program by about 300,000 over five years at a total cost of $24 billion.
While this would be the single largest increase in the program’s nearly 50-year history, it would still leave millions of low-income renters unable to afford a home. And that’s not a problem more supply can solve.
Alex Schwartz is Professor of Urban Policy at The New School, Kirk McClure is Professor of Urban Planning at the University of Kansas.
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Jimbo99 says
But they’re building affordable subsidized housing as apartments as rents continue to rise. The logic is that maintaining the right mix of single unit, duplex, townhomes & apartments is affordable housing solutions that adhere to the diversity of the population & income levels. It’s always been that way. The poor don’t own homes, at best they rent them. Under W Bush this nations real estate crunch became the same scheme a buy here pay here lot is about for used cars. Miss mortgage payments, they’re more than happy to foreclose & evict and resell the property. Biden-Harris is about building back bigger & better ? Same holds for the growth. Many of these properties are being flipped, beats working for $ 15/hour & no benefits. The politicians at all levels lied about this being about affordable housing & healthcare.
The photo shows single unit dwellings, that isn’t what they’re building around me. What I’m seeing being built are duplexes and those generally are rentals. I have a gut feeling the new construction will immediately be over utilized like the older construction is. That is ordinance violators for parking in swales & yards. That’s what Palm Coast would turn into with the relaxation of ordinances. Just a matter of time before those that are the grossest abusers of ordinances start to take over. How transparent was Victor Barbosa running for a seat and then spearheading the effort to relax ordinances that benefit his ordinance violations. He revealed that much of his intentions since being elected. Connect the dots, when someone champions affordable housing, they stand to be the one that usually makes the most money off anything that is anything but affordable.
Dennis says
The question to ask is why are they low income! I’ll almost bet it’s because of poor decisions that made in life. Why should I, or anyone else pay their housing costs because of poor life decisions they made? Most, not all cry poverty because of poor education or a crime background. Too lazy to get an education, stuck in low paying jobs because of it, and cry to others to pay their rent, buy them food, and give them free healthcare. The great American ripoff. Cry poverty, hold your hand out and others will help through their hard earned taxes paid while you pay no taxes. The good life in America is there for ALL who want to work for it. None ever asks the question, why are you poor?
Steve Vanne says
Will said Dennis 👍
Billy C. says
Not too elitist are you? The purpose of community is to co-exist by sharing skills, labor, resources. responsibilities and meeting the needs of all. Looking down your nose at others is an excuse to live selfishly and not care about others. A community looks to solve its collective problems and affordable housing is a glaring one. Sure some people have made bad decisions. Some are indolent, some are disabled and some just can’t grasp the ring of success that you have been able to reach. Your solution is more homeless shelters? Or do you suggest we not shelter them at all? There but for the grace of God go I.
Over It says
You got it at least partially right Billy. Many of the people we are speaking of do want to share our resources and the meeting of their needs. The skills, labor and responsibility part are not on many of these people’s radar. If you dispute that then you are the one who is sheltered.
Billy C. says
I am sheltered because I don’t agree with your assessment? Your statement is just the selfish self-righteousness that I speak of. You’ve got yours and the hell with everyone or anyone else. A society becomes stronger when it tries to instill its values in the lesser of its citizens, not excoriate them and shun them.
Over It says
When America was developing into the world power it became there weren’t these widespread attempts to provide housing, provide food, provide medical etc to the masses. Those types of help were provided through charities, not the government. Today America is in serious decline and provides all of the above to what you call lesser citizens. Do you think that is coincidence? Do you not read about all the labor shortages there are? I think the lesser people you describe aren’t motivated to work because of all the handouts. What made America the greatest nation in the world was the fact that a person could create their own success or failure based on their ambition and hard work. If too many Americans think the way you do then this nation is on a fast train to third world status. All aboard.
The Geode says
I am FAR from an “elitist”. I am NOT part of “systematic stagnation”. I am NOT a “victim” held back by the boogey-man. I am a man who made mistakes and overcame them because I didn’t like my position in life. Nobody held me back. I realized my mistakes were MINE alone and never wanted nobody to “give” me nothing (I also avoid mistakes that are too much for ME to handle alone).
By the “grace of God”, I was there. I didn’t think “God” put too much effort in me and my bad decisions because today, better people than me have died just as worse people than me have prospered. All the while, “God” said “meh”…
Dennis C Rathsam says
Once again Dennis is on the money Owning a home is not a given right, one has to save & make smart decisions.
shy guy says
Bravo Dennis!!!!!!!!!!!!!!!!!!!!!!!
Timothy Patrick Welch says
Not so long ago I was talking with a man at an old-folks home,
He remembered as a child moving to Kansas and living in a sod house. Yep a sod house, can you even imagine the uproar from the non-working poor if they were offered such accommodations.
Timothy Patrick Welch says
Why are so many refugees coming to America?
Lets warn them that they can’t afford to live here.
Live Free, help your neighbor.
FlaglerLive says
The commenter is misinformed. As Roll Call reported last month, “The United States resettled just 11,411 refugees last fiscal year, the lowest number in the history of the current program, falling far short of President Joe Biden’s promised goal of 62,500. The final number is the culmination of a year during which the Biden administration struggled to revamp a refugee resettlement infrastructure that had been largely dismantled under former President Donald Trump.”