In the absence of enough affordable units, households pay more money than they can afford and are constrained from meeting expenses for other basic needs such as medical care, childcare, and food. High cost burdens affect 43 percent of all renters, and half of these pay more than 50 percent of their income for their housing costs. This problem becomes more acute at the lowest end of the income scale, where there are even fewer dollars left after the rent check is paid: two-thirds of all extremely low-income renters (those whose income is below 30 percent of the area median) pay more than 50 percent of their income for their housing costs. In the US, 30 percent of median income is $16,950.

The problem of substandard housing conditions is the cumulative result of the huge gaps between housing cost and household income. Families pay more than they can afford and are paying nowhere near fair market rent, the price at which standard housing and adequate housing conditions are expected to be available in their communities. Property owners collect rents at the level that the market will bear and try to maximize the bottom line or at least minimize their losses. In a tight market, decent housing conditions become a scarce commodity that no one thinks they can afford or expect. One in eight rental households has either moderate or severe physical problems in its housing unit, and half of these have high cost burdens and/or are overcrowded as well.

Historically, the federal government has provided rent subsidies, tax credits, and block grants to increase the availability of affordable housing. The annual federal investment in housing assistance has never come close to the subsidy provided to homeowners through federal income tax deductions for mortgage interest and local property tax payments. In 2001, the mortgage interest deduction provided a subsidy of $65.8 billion to primarily upper-income homeowners, more than twice the amount of HUD's entire budget.

Housing units are generally considered affordable if they rent for no more than 30 percent of household income for a low- or very low-income household. The federal 30 percent standard of affordability was established in 1982 (increased from 25 percent, the level created when the notion “a month’s rent should not exceed a week’s pay” was the prevailing wisdom).

Federally assisted affordable housing includes subsidized housing like Section 8 projects, public housing, and units supported by the Low Income Housing Tax Credit. Although increasingly rare, some unsubsidized affordable housing units exist in the private market in some communities. Because this housing receives no assistance, these units are not income-restricted.

Overall, the availability of affordable housing units is eroding, as subsidies and nonprofit ownership dwindle, operating agreements expire, and communities gentrify. Contracts governing more than one million units will expire in the next couple of years. Between 1997 and 1999, some 200,000 affordable units were lost from the private market alone. For renter households whose income is below 30 percent of the nation’s median, the shortfall between the need for affordable housing and supply is two million units.

Sources and Additional Information:

National Low Income Housing Coalition: “Out of Reach” and “Low Income Housing Profile” - www.nlihc.org

Millennial Housing Commission: “Meeting Our Nation’s Housing Challenges” - http://govinfo.library.unt.edu/mhc/

Enterprise Community Partners - www.enterprisefoundation.org

Local Initiative Support Corporation - www.lisc.org

National Congress for Community Economic Development - www.ncced.org

Fannie Mae Foundation - www.fanniemaefoundation.org

US Department of Housing and Urban Development - www.hud.gov