April 2004

Domestic Policy Watch

Copyright by American Planning Association

Affordable Housing Crisis: The "Silent Killer"

By W. Paul Farmer, AICP
APA Executive Director

A few years back the American Heart Association ran a successful series of public service announcements to raise awareness of the perils of high blood pressure. The spots labeled the disease "the silent killer." Today, the nation faces a public policy challenge that reminds me of high blood pressure: acute, growing, and deadly — yet for most Americans, unknown. The issue is affordable housing.

The nation faces a growing crisis of housing affordability. The National Low Income Housing Coalition's (NLIHC) Out of Reach report found that the national "housing wage" stands at $15.21 per hour or $31,637 per year. The group defines the housing wage as the amount a person working full time has to earn in order to afford a market rate two-bedroom rental unit, while paying no more than 30 percent of his or her income in housing costs. The current housing wage stands at three times the federal minimum wage and is rising at twice the rate of inflation. According to the annual NLIHC studies, the housing wage has increased a whopping 37 percent in less than five years.

In fact, housing affordability is no longer a problem limited to low or very low income families. The congressionally chartered Millennial Housing Commission (MHC) reported that in 1999, one in four families spent more than 30 percent of its annual income on housing. The problem becomes even more acute when one examines rates for the working poor. The MHC report found that one in eight low income families spent more than 50 percent of its income on housing. At the same time, affordable housing is ever harder to find. The MHC noted a 1.8 million-unit gap between low-income need and supply in 1999. We are becoming a nation of the functional poor when it comes to housing.

Despite indications of a frightening trifecta of dwindling supply of affordable housing, increasing costs of affordable units, and growing percentage of income devoted to housing costs, the response from government has been less attention, not more. Although housing accounts for fully one-fifth of total gross domestic product in the United States and is the largest source of wealth generation, the percentage of federal resources aimed at addressing the affordable housing problems actually has been in decline.

In an examination of federal spending patterns, the NLIHC found that while total federal budget authority roughly had doubled from 1976 to 2002, HUD's budget authority actually had declined over the same period. As a percentage of overall federal budget authority in the mid-1970s, housing assistance ranged from five to eight percent. Since 1981, housing has been above two percent of the total only once.

Some might suggest that this limited spending is sufficient to the need. Hardly. The General Accounting Office looked at federal housing spending patterns and found that in all the years since the dawn of federal housing assistance programs, not once has the federal government provided aid to all those who qualified. For example, in 1999, the federal government offered aid to 5.2 million qualified households at a cost of $28.7 billion. During the same year, however, another nine million families qualified for aid but failed to receive any due to insufficient funding. Of those nine million eligible but unassisted families, more than half (4.9 million) spent more than 50 percent of their income on housing. The study noted that historically only about one-third of eligible families receive housing aid. While spending less than $30 billion on housing assistance, last year the U.S. spent $55 billion on non-military aid to Iraq.

The problem is not simply one of dollars committed or our financial priorities, although those are obvious concerns. A further challenge has been the proposed programmatic transformation of federal housing policy. Over the past two years, planners and housing advocates have fought back efforts to eliminate the HOPE VI program. Likewise, considerable energy has been spent keeping local control over Section 8 vouchers in the face of efforts to shift those resources to the states. The main thrust of policy at HUD has been on homeownership — a worthy goal that we have supported in many ways. However, the policy balance has shifted so dramatically in favor of homeownership assistance that we run the risk of forgetting that 36 million households, or approximately one-third of the nation, are renters.

This year's proposed federal budget substantially reduces funding for owners and renters alike. Attendees at the National Planning Conference in D.C. this month can visit an excellent exhibit at the National Building Museum of exemplary examples of recent affordable housing projects from around the country. Ironically, at the opening of the exhibit, Sen. Paul Sarbanes (D-Md.) admonished the crowd to take a hard look at the projects because none could be built today given proposed budget reductions.

In spite of the gravity of the challenge facing us, there is a range of policies that could make an immediate impact. For the last three years, APA has been among the organizations calling for a new federal housing production and rehabilitation program modeled on the many successful state and local housing trust funds. The idea is to dedicate excess revenues from federal mortgage insurance programs to housing. Experts estimate that a program based on trust fund legislation currently pending could result in as many as 1.5 million new and renovated units in the next ten years. The legislation has gained the bipartisan support of 211 members of the House and has been introduced in the Senate with Sen. Sarbanes as a co-sponsor. Passage of this bill would be a landmark step forward.

Other opportunities for progress at the federal level are more modest but no less important. Longtime housing champion Sen. Jack Reed (D-R.I.) just this month successfully added an amendment to legislation tightening oversight of Fannie Mae and Freddie Mac to require that they invest five percent of their pretax profits in building new affordable housing and supporting financing of housing for underserved markets. APA supports this commonsense approach and will work to ensure that the measure is maintained as the bill moves forward.

One of the few areas where President Bush and Senator Kerry appear to agree is on the need for a new tax credit for affordable housing. One of the earliest proposals from the Bush administration in the area of housing was the establishment of a new tax credit targeting homeownership in low-income communities. Senator Kerry introduced the Senate version of this idea. Election year politics likely mean that it will not move, but this is exactly the kind of positive, bipartisan action on housing that is so desperately needed. Further, bipartisan action should be extended to initiatives that support housing cooperatives — an ownership option that is often more affordable, with fewer foreclosures, than more traditional ownership models.

APA is moving to make affordable housing policy a cornerstone of our policy, research, and education programs. Last year, APA released a major PAS report, Regional Approaches to Affordable Housing (PAS 513/514), that received federal funding from both HUD and the Fannie Mae Foundation. The Board of Directors made affordable housing, along with transportation and takings, a primary legislative priority. APA's policy and advocacy efforts have reflected that designation with a focus on many of the budget and legislative issues discussed above. In addition, we are working closely with some key advocacy partners, such as the National Low Income Housing Coalition and Smart Growth America, on common federal housing issues. This year's National Planning Conference has many sessions on housing, including those in the Socially Informed Planning Track.

APA is working closely with HUD on one of Secretary Jackson's signature issues: regulatory barrier reform. HUD has launched an information clearinghouse on the issue and recently began regulatory action to evaluate potential HUD grantees on their efforts to remove regulatory barriers. APA provided detailed suggestions through formal comments. We share the goal of helping communities reform local codes, zoning, and other regulatory structures in ways that help promote housing affordability. However, we also want to ensure that HUD pursues this in a way that supports positive reform without jeopardizing community livability. APA will be developing tools to help communities meet federal guidelines and researching best practices in regulatory reform.

In addition to our policy advocacy, APA is launching a major new research and outreach partnership with the Fannie Mae Foundation. Among the components of this partnership are a series of focus groups across the country to assess the state of planning practice for affordable housing, a web-based compilation of APA resources on affordable housing, a special issue of Practicing Planner devoted to the topic, and a new report outlining key strategies to help planners address the affordable housing challenge. Our new work with Fannie Mae complements other important APA efforts, including recent research on regional approaches to affordable housing and inclusionary zoning practices.

I urge our members to become more involved in issues of choice and affordability in your local communities. A session at our National Conference last year in Denver explored the life and work of one of the giants in the early planning field — Catherine Bauer. Her passion was low-income housing, and she was one of the leaders of the housing movement in the United States during the twentieth century. Today, we need more Catherine Bauers. As I wrote in Planning magazine last July, "While many of our citizens enjoy the best housing in the history of the world, far too many live in deplorable conditions, and some have no shelter at all. That is shameful."

As with many of our most intractable social problems, housing issues are often issues of race. The Harvard Civil Rights Project report "Beyond Poverty: Race and Concentrated Poverty Neighborhoods in Metro Boston" states:

Facing some of the highest housing costs in the country, poor residents of Metro Boston encounter enormous hurdles. Yet even within the poverty population, blacks, Hispanics, and some Asian sub-groups experience the added challenge of residing in neighborhoods of concentrated poverty. Poor blacks and Latinos are over twice as likely to live in high-poverty neighborhoods than are poor whites. Indeed, a substantial share of poor whites reside in largely middle-class, suburban neighborhoods, while most poor blacks and Latinos dwell in much higher-poverty, urban, racially segregated neighborhoods Incredibly, even black and Latino households with incomes over $50,000 per year are twice as likely to live in high-poverty neighborhoods than are white households with incomes less than $20,000.

This only increases our national shame. So, pick up where Catherine Bauer left off and become a leader — local, state, or national — in turning shame into pride.

Affordable housing is a growing policy challenge that threatens the health of our communities and our nation. It is, however, a challenge that we can, and must, meet. Planners must help make sure that the lack of affordable housing is a "silent killer" of communities no more.