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Out of Reach

Ten years ago, NLIHC produced its first edition of Out of Reach – an effort to estimate the scope of the low income housing affordability problem in every metropolitan area of the nation, and to estimate, state by state, metropolitan housing affordability problems.  Almost every year since then, Out of Reach has been updated, using HUD’s latest estimates of area median incomes and fair market rents as the basis of the analysis.   Each time, we have found that in this, the best-housed nation in the world in most respects, the problem of housing affordability is pervasive and that no metropolitan area is without it for substantial numbers of its residents.

This year, with the cooperation and support of the Housing Assistance Council, Out of Reach for the first time includes not only metropolitan areas but every nonmetropolitan county as well.  In other words, we cover rural as well as urban areas.  One major finding of this year’s study is that renters in rural areas are likely to have even more severe affordability problems than those who live in metro areas.  In the 10 least affordable nonmetro counties, 72-80% of renter households could not afford the Fair Market Rent (FMR) for a 2-BR unit; in the 10 least affordable metro areas, the corresponding figures ranged from 53% to 59%.  Joe Belden, Assistant Director of the Housing Assistance Council is here today and will be pleased to respond to questions about rural housing needs and problems.

The real message of Out of Reach, however, is not the bad news of the “10 worst’s” but the pervasiveness of the housing affordability problem and the impossibility – nationwide – of low wage workers, or elderly or disabled households on SSI, or families receiving TANF support of obtaining housing that they can afford.   In the 10 most affordable metropolitan areas or counties, for example, 28-35% of renter households cannot afford the FMR for a 2-BR unit.  In the 10 most affordable nonmetro counties, 21-29% of renter households could not afford the FMR for a 2-bedroom unit.  Perhaps more significant, in the median metro area as well as the median nonmetro county, 43% of renter households could not afford the FMR for a 2-bedroom unit.

The problem of housing affordability is only partially the problem of housing supply – important as an expanded and improved housing supply is.  It is primarily a problem of low incomes – in many instances, incomes so low that families cannot even afford utilities, let alone rent, at 30% of their incomes.  Thus, even if the housing itself were rent-free, utility costs would make it unaffordable.  Without either raising incomes or providing subsidies, there is no way to provide affordable rental housing for households with extremely low incomes – below 30% of median – or, in most cases, for those very low income households with incomes below 50% of median.

Consider these grim facts:

• In only four of the 3,661 counties and New England towns analyzed could a renter household with an income of 30% of median afford the FMR for a 2-bedroom unit.  But nationally, an estimated 45% of all renter households have incomes below this level.

• In over 3/4 of these counties and towns, households with incomes at 50% of median could not afford the FMR for a 2-bedroom unit.  But nationally an estimated 68% of renter households have incomes below this level.

• A household with one person working at the minimum wage for 35 hours a week, 52 weeks in the year, can afford $235 monthly for rent and utilities.   $235 is just 56% of the lowest state average FMR for a 2-bedroom unit ($417) and is only 41% of the median state average FMR for a 2-bedroom unit ($576).

• If that person works 40 hours a week, 52 weeks in a year, she or he can afford $268 monthly for rent and utilities.  But this is still only 64% of the lowest state average FMR for a 2-bedroom unit and 47% of the median state average FMR for a 2-bedroom unit.

• The federal SSI benefit for an individual living independently is $484, and most states do not supplement this benefit.  So an elderly or disabled individual dependent on SSI for income can afford only $145 monthly for housing – just 43% of the lowest state FMR for a 1-bedroom unit ($341) and 31% of the median FMR for a 1-bedroom unit ($376).

• The median state maximum TANF grant for a mother with two children is $378.  Just paying the FMR for a 2-bedroom unit in any state costs more than this ($417).  Indeed, there are only 3 states (Alaska, Wisconsin and Vermont) where the entire TANF grant is enough to cover the FMR for a 2-bedroom unit.

• That, in general, is the message.  But the primary purpose of Out of Reach is to provide a tool by which to judge housing needs and evaluate housing programs at the state and local level.  This year, state and local governments that receive HUD housing funds will be revising their 5-year “ConPlans”, or Consolidated Plans.  In Out of Reach, they will find the best available estimates of current rental housing costs and family incomes, and – perhaps most important – what people left behind can actually afford for their housing.

For over 60 years, since 1937, the federal government has had programs to provide housing for low income people.  Fifty years ago, Congress adopted the national goal of “a decent home and suitable living environment for every American family.”  In January of 1977, the outgoing Ford Administration submitted to Congress a budget request that would have funded 506,000 additional low income housing units (400,000 Section 8, 6,000 Indian housing, and 100,000 home ownership).  No HUD budget since has proposed a greater increase in the number of incremental low income housing units.

In contrast, to show how far we have fallen from this level, the Administration this year requested funds for 100,000 incremental Section 8 vouchers, and the appropriation bill pending in the House cuts rather than increases this meager request.  Federal low income housing outlays this fiscal year are estimated at $28 billion, or 1.6% of all federal outlays.  In contrast, the cost to the federal treasury of housing-related tax expenditures this year is estimated by OMB at $102 billion.  Only $12 billion of this goes to tax incentives that create or improve additional low income housing units. $82 billion benefits households in the top fifth of the income distribution, primarily in the form of various homeowner deductions.  Ironically, while we are told we cannot afford to provide housing assistance to the millions of families who cannot afford decent, stable housing without it, we are considering even further tax cuts primarily for households in the top fifth of the income distribution, with incomes that average almost $125,000 annually.

We urge the Congress and candidates for political office next year to consider the housing situation presented in this report, and to set us once again on the road to meaningful levels of housing assistance, based on real and urgent housing needs.
 

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