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Poor People Can’t Afford Housing. How Can We Fix That?
March 21, 2013
We over at the National Low Income Housing Coalition spend most of our time focused on solving one specific problem: the acute shortage of housing that is affordable and available to extremely low income (ELI) households. This shortage is a primary driver of homelessness, and closing the gap between the number of affordable housing units and ELI households will make a big difference in the ongoing effort to prevent and end homelessness.
Our latest numbers show that, for every 100 ELI households, there are just 30 affordable and available units. This number grows every year. In our annual report Out of Reach (released this month), the authors reveal that nationwide, a household must earn $18.79 an hour (working 40 hours a week, 52 weeks a year) in order to afford a decent two bedroom rental home. This number, which we call the “housing wage,” is even higher in many parts of the country. (You can get data on your own community here.)
While federal programs exist to help make housing more affordable for ELI households, these programs are oversubscribed, and many eligible households go unassisted, even if they otherwise qualify. Low income households desperately in need of housing find themselves on years-long waiting lists, or find that waiting lists for affordable housing in their area are closed entirely. Households on waiting lists for housing assistance have an average wait time of two years.
While households wait for assistance to become available, many of these households may “double up” with family or friends (40 percent) or experience periods of homelessness as they bounce from one untenable housing situation to another (23 percent). We expect these problems to get even worse now that sequestration has gone into effect, as federal housing assistance will become even more limited.
So, you might be asking, what can be done to address this growing problem?
Well, in 2008, the National Housing Trust Fund (NHTF) was established precisely to address the need for additional affordable housing to serve ELI households. Unlike other federal housing programs, the NHTF creates a dedicated pool of funding not subject to the uncertainty of the annual budget appropriations process. The NHTF is designed to serve the lowest income, most vulnerable households, with 90 percent of funding reserved for rental housing and 75 percent of the funds reserved for ELI households.
The NHTF was initially to be funded through contributions by Fannie Mae and Freddie Mac. However, the financial crisis happened shortly after the NHTF was authorized, and Fannie and Freddie went into conservatorship, and the regulator, the Federal Housing Finance Agency, suspended the contributions. Fannie Mae and Freddie Mac have not made a single contribution to the NHTF to date.
Today, my organization is focused on securing funding for the NHTF. We have proposed to fund the NHTF through a modernization of the mortgage interest deduction (MID), converting the MID to a non-refundable 15 percent tax credit and reducing the cap on the maximum mortgage to receive a tax break from $1 million to $500,000. The savings this would produce, estimated at $200 billion over ten years, could fund the NHTF, thereby increasing access to affordable housing for the lowest income households.
Tax reform is heating up on the Hill and now is the time to push for a modernization of the MID to fund the NHTF. We are seeking endorsements of the proposal to show that there is strong support nationwide for expanding the supply of affordable housing for the most vulnerable households. Over 930 organizations have endorsed our proposal to date—including the Alliance-- and the number is growing. Please endorse NLIHC’s proposal today and urge others in your network to do so as well!
Further, Representative Keith Ellison (D-MN) has just introduced legislation that includes the key provisions of NLIHC’s proposal (H.R. 1213 – the Common Sense Housing Investment Act of 2013). Please encourage your member of Congress to co-sponsor Mr. Ellison’s bill. More information on the legislation and instructions on how to contact your Representative are available here.