Dark Before the Storm (.pdf, 131 KB) - National Low Income Housing ...

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Executive Summary This report provides the results of an analysis of new U.S. Department of Housing and Urban Development (HUD) data that use the 2005-2007 American Community Survey (ACS) to replicate indicators of housing need last released using Census 2000 data. More information on this data, the Comprehensive Housing Affordability Strategy (CHAS) data, can be found in Appendix A. The picture of housing need that emerges from this three-year period, which stretches from the very peak of the housing boom to just before the latest recession took hold, is grim. Among the key findings of this report: • Over three-fourths of extremely low income (ELI) and very low income (VLI) renter households in the U.S. had at least one housing problem in 2005-2007. Worse, 63% of ELI renters and 28% of VLI renters paid more than half of their income on rent and utilities. Spending more than half of household income on housing is the definition of severe housing cost burden. • In ten states 65% or more of ELI renter households had severe housing cost burdens. Seven of these states are in the West, with the highest rates in Nevada (71%), Oregon (69%) and California (69%). South Dakota is the only state in the country where fewer than half (49%) of these lowest-income renters had severe burdens. • The U.S. would have needed at least an additional 3,400,000 units of standard 1 rental units that were affordable to ELI households to make up for the shortage of units compared to renters in 2005-2007. Because many of the units affordable to ELI renters were occupied by higher income households, approximately 6,000,000 more standard rental units that were both affordable and available to ELI renter households were actually needed. Some of these shortfalls of affordable and available units could be met by additional project and tenant based subsidies for ELI renters. • Forty-four states and the District of Columbia had absolute shortages of housing affordable for ELI renter households, and every state needed more units that are both affordable and available to ELI renters. Ten of the thirteen states in the West had fewer than 35 affordable and available units for every 100 ELI renter households, making it the most difficult region for an ELI renter to find an affordable home. There were only three states where the number of affordable and available units per 100 ELI renter households was as high as 1 unit for every 2 renter households. Comparisons to NLIHC’s earlier analysis of the 2000 data reveal that the situation in 2005-2007 was far worse than it had been only 7 years earlier. Considering the deep recession that hit the U.S. at the end of 2007, these findings are also an indicator of the gravity of the current situation. As the federal government works to reform the nation’s housing policy and markets and increase opportunity for all, it is imperative that the lack of truly affordable housing for the lowest income households be addressed in a comprehensive and meaningful way. To address the housing problems outlined in this report, NLIHC makes the following policy recommendations: • Provide funding for the National Housing Trust Fund (NHTF) which was established in 2008. Once funded, the NHTF will allow for the production, rehabilitation and preservation of 1,500,000 units of affordable housing over the next 10 years, with 75% of this housing targeted to ELI households. This is currently the only federal program that is specifically focused at producing new rental units for the ELI population. • Make improvements to the current Housing Choice Voucher program by passing the Section 8 Voucher Reform Act (SEVRA) and provide funding for 2,000,000 new vouchers over the next 10 years. • Promote greater equity in federal housing subsidies both along the income spectrum and between homeowners and renters and redirect the savings from these efforts to fund NHTF and Housing Choice Vouchers. 1 A standard unit has complete kitchen and plumbing facilities. 2
Increased Prevalence of Housing Problems Overall for Low Income Renters A previous NLIHC report using the 1990 and 2000 Comprehensive Housing Affordability Strategy (CHAS) data (See Appendix 1 for more information on CHAS data) found that during the 1990s, a decade of strong economic growth, the shares of all renter households with housing problems and severe rent burdens fell slightly in each of the three low income groups examined, 2 but this trend did not continue in the 2000s. Shares of low income renters with at least one housing problem - paying too much for their housing, living in crowded conditions, or lacking standard plumbing and kitchen facilities (See Box 1 for definitions of key terms) - were higher nationally and in nearly every state in 2005-2007 compared to the 2000 data (See Appendix 2, Table A-1). 3 This meant that even before the recession low income Americans had less to spend on non-housing necessities or were making unacceptable trade-offs to put a roof over their head. In the 1990s, housing problems became more concentrated among the lowest income renter households. In 2005-2007, 77% of ELI renters faced a housing problem, compared to 74% identified in the 2000 data (See Appendix 2, Table A-1). However, between the two surveys, these problems moved up the income scale in that VLI renters saw the largest increase in the share of households with at least one housing problem. Looking at the percentage of households with housing problems in each Box 1: Definitions HUD Income Definitions Used for Renter Households Area Median Income (AMI) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Local area median income Extremely Low Income (ELI). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0-30% of AMI Very Low Income (VLI) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31-50% of AMI Low Income (LI) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51-80% of AMI Not Low Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Greater than 80% of AMI Definitions of Cost Burden Cost Burden: The percent of a household’s income spent on housing. Unaffordable Cost Burden: Spending over 30% of household income on housing. Severe Cost Burden: Spending over 50% of household income on housing. Other Problems: In addition to unaffordable cost burden, the CHAS data identify overcrowding (more than one person per room) and substandard housing (lacking complete kitchen or plumbing facilities). 2 Nelson, Kathryn P., Treskon, Mark. & Pelletiere, Danilo. (2004). Losing Ground in the Best of Times: Low Income Renters in the 1990s. Washington, DC: National Low Income Housing Coalition. 3 This report examines national and state data, but it is also possible to observe within state differences by using CHAS county or city data. For an example, see: Mierzwa, E. & Nelson, K. with Newberger, H. (2010). Affordability and availability of rental housing in Pennsylvania. Philadelphia, PA: Federal Reserve of Philadelphia. 3
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Page 7 and 8: While the West has the highest rate
Page 9 and 10: Table 1: Change in Number of Renter
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Page 13 and 14: Conclusion This assessment of the 2
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Page 19 and 20: Appendix 2: Data Tables 2000 to 200
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