Today’s Housing Crisis: The Vacant Issue


Skip Barry

On an evening last autumn, a Seattle survey
found that its area homeless shelters were all operating at over
capacity serving over 2,500 individuals. But due to a lack of
space and resources, they had to turn away over 900 homeless
people needing help. Unfortunately, this mirrors what’s
happening across the country. Nationwide, the U.S. Conference of
Mayors reports that demand for emergency shelter has increased by
over 10 percent, with 8 out of 10 cities reporting that their
emergency shelters had to refuse people, including families, last
year.

Based in Seattle, Washington’s Low Income
Housing Institute (LIHI) strives to break through the silence
regarding this country’s housing crisis and provide help to its
victims. Echoing what much of today’s tenants feel under
President Clinton’s "economic recovery," LIHI’s Jon
Gould states, "Washington’s economy is considered one of
this country’s strongest, but the big question concerns who has a
share in it, as there are lots of available jobs, but with wages
that can’t pay the rent. And the shortage of those jobs that can
pay affordable rents is growing rapidly."

To get an idea about the subtle nature of
today’s housing crisis, consider the following scenario. Most
people can find work in Seattle at $6 to $8 an hour and a single
person can probably find an one-bedroom apartment, if they’re
lucky, at a monthly rent of $450. From what most of us
experience, it seems more or less affordable, doesn’t it? No,
says the Department of Housing and Urban Development. According
to HUD, total housing costs are considered affordable only if
they fall below 30 percent of a household’s income. LIHI’s Gould
observes, "Sure, someone can get a job, but most likely
they’re still an additional $5 to $6 an hour away from getting
affordable housing in Seattle." It’s not so much about being
able to pay the rent, it’s about paying an affordable rent.

But the above numbers could easily be
worse. Since the Fair Market Rent (FMR) of any given locality is
calculated by HUD as the 40th percentile of that area’s rents,
would-be renters searching for an apartment would find 40 percent
of rents below Seattle’s one-bedroom monthly FMR of $535, but
more importantly, 60 percent of rents would be above it. Chances
are that low-income renters would be paying at least another $80
or more monthly. Making things worse, the majority of U.S. cities
have seen their single-room occupancy housing decline by more
than 50 percent during the past 25 years, which only increases
these rents. In most cities, it’s not uncommon to find rooms in
rooming-houses at $350 to $450 per month. If things look bleak
for low-income single people, the situation looks downright grim
for low-income families.

They are among the two out of every three
low-income renters across the United States who do not receive
any form of housing assistance. Without any housing help,
low-income renters are continually confronted with difficult
choices between food, utilities, clothing and rent, not to
mention the ever-present threat of eviction and homelessness.

 

Housing Shortage

Contrary to popular belief, housing
affordability is not just an urban issue or a "welfare"
problem but extends to every geographical region and affects both
working and nonworking households, and it encompasses all racial
and ethnic groups.

Nationwide in 1970 there were 7.4 million
low-rent units with 6.5 million poor renters (with incomes of
$12,000 or less), making a surplus of 900,000 low-rent units. But
by 1993 there were only 6.5 million low-rent units for 11.2
million low-income renters. That means a shortage of 4.7 million
affordable rental units. And this figure has no doubt increased
since then.

The West and the Northeast suffer the
widest affordability gaps. There, almost three low-income renters
vie for each affordable unit. The Midwest and the South fare
better but still have two renters to every affordable apartment.
In Chicago, 260,000 low-income renters compete for 142,400
low-cost rental units. Again, nearly two low-income renters for
every affordable unit.

This shortage reflects what low-income
people already know: that rent increasingly consumes more and
more of their income. At present, 82 percent of low-income
households spend at least 30 percent of their income on housing
costs while 60 percent of low-income households spend at least 50
percent of their income on housing. Breaking it down further, 83
percent of low-income renters in central cities, 87 percent in
suburban areas and 74 percent in rural areas pay at least 30
percent of their income to housing.

Obviously the housing crisis is both a
housing and an economic issue. Since 1977, the percentage of
people living in poverty has increased from 11.6 percent to 15.1
percent in 1995, reflecting in part the declining power of the
minimum wage and welfare cash assistance. At the same time as
people living in or near poverty has been increasing, affordable
housing stock has been decreasing due to decreasing governmental
housing assistance, rising rents, high-end new construction,
condominium conversion, neighborhood gentrification, and
demolition of deteriorating existing units.

 

Housing Assistance

With the dawn of the current housing crisis
in early the 1970s, Congress increased funding for housing
assistance. From 1977 to 1980 HUD provided funds for 290,000
additional low-income units per year. But after 1980 assistance
fell at an alarming rate, falling down to only 15,000 additional
units in 1995. Worse still, the 1996 budget eliminated funding
for any new additional units and for the first time since 1974
Congress allocated zero funding in both the 1995 and 1996 budgets
for new, additional Section 8 certificates. These certificates
allow low-income renters to pay 30 percent of their income to
rent in unsubsidized units on the private market. Due to the fact
that the "one-for-one" rule has been suspended, the
federal government no longer has to provide a new, additional
unit or Section certificate for every unit demolished. In short,
the federal government has abdicated any responsibility for the
creation of new, additional affordable housing.

That the private market refuses to provide
low-cost units can be seen in the growing proportion of low-cost
units dependent on federal aid: in the early 1970s subsidized
units made up 20 percent of all low-cost units, but by the 1990s
the share of government supported housing grew to half of all
low-cost units. Overall, government assistance has not been
increasing, but the affordable private market shrinking,
resulting in a severe loss of affordable units. As the private
market becomes increasingly unwilling to create and sustain
affordable apartments, support and funding for governmental
assistance should be increasing, not decreasing. If not for
governmental assistance over the last 20 years the affordable
housing gap would be 7 million instead of the current shortage of
almost 5 million units. LIHI’s Gould agrees, "Without
government help, there would be more many more people living on
the edge and in the streets than already are."

The Safety Net Delivers, a study recently
released by the Center on Budget and Policy Priorities (CBPP),
confirms the effectiveness of government programs, when properly
supported and adequately funded, in helping people with
low-incomes. Before government help, nearly 57 million people in
1995 fell below the poverty line. But after government
assistance, the number of people living in poverty dropped to 30
million. In other words, government programs lifted almost 50
percent, or 27 million people, above the official poverty line.
And as the study states, "those who remained poor were
significantly less poor than they would have been without
government assistance." If the safety net was stronger, more
would escape poverty and more could pay the rent.

Unfortunately, as another recent CBPP
study, Bearing Most of the Burden, highlights, the deficit
reduction craze of the 104th Congress hit hardest programs for
low-income people. Government funding for low-income entitlements
will suffer an estimated $61 billion worth of cuts from
1996-2002, while non low-income entitlement programs will be
reduced by only $4.1 billion. Though they count for only 23
percent of entitlement spending, low-income entitlements suffered
93 percent of entitlement reductions.

Due to this decreased government spending,
the simultaneous increase of households living in poverty
combined with the decrease of both affordable apartments on the
private market and government-funded subsidized units means that
eligible low-income households may have to spend years on waiting
lists, if the lists are open at all.

Since only those that qualify for a federal
preference have a chance on the waiting list, many eligible
low-income families do not meet the federal preferences. If they
are not paying more than 50 percent of their income towards
housing costs, living in severe substandard housing or subject to
involuntary displacement, they do not have a realistic chance of
ever attaining housing assistance. In other words, those who pay
over 40 percent of their income towards rent but are not living
in substandard housing or were not involuntarily displaced will
not receive housing help in the foreseeable future. And as it now
stands, only 30 percent of low-income people receive housing
help, which condemns most to live one paycheck away from the
streets.

 

Declining Wages

To further demonstrate the essential role
of governmental intervention, consider the power of the minimum
wage. A legitimate consideration given the results of two recent
studies. The Underbelly of the U.S. Economy, by the Council on
International and Public Affairs, documents the
"pauperization" process at work within the economy.
According to the study, from 1979 to 1995 a net loss of 2.2
million jobs occurred within manufacturing while the service
sector generated 29 million jobs. It confirms what most workers
already know: that manufacturing jobs that pay higher wages are
being replaced by service sector jobs that pay below or near the
poverty line. For example, the average weekly income, says the
report, in the retail industry would generate a yearly income of
$11,532; which falls below the official poverty line for a family
of three. Given the fact that "since 1989 the retail trade
sector accounts for more employment than manufacturing,"
minimum wage level employment will unfortunately be increasingly
more common, especially for workers with lack of experience,
training or with limited education. More ominous still, a study
conducted by the Economic Policy Institute projects that if one
million welfare recipients enter the labor market, wages for the
bottom 30 million workers, or those making less than $7.19 an
hour will fall by 12 percent.

The soon-to-be implemented minimum wage of
$5.15 cannot pay affordable rents. In 45 states the minimum wage
would have to be doubled, and tripled in many metropolitan areas,
to pay the rent. For example, in Seattle workers would have to
earn at least $10 an hour to pay at an affordable level Seattle’s
one-bedroom FMR of $535 and over $13 an hour to pay its
two-bedroom FMR of $690. Nationwide employees would have to
receive roughly $10.44 an hour to cover the national median rent
for a two-bedroom unit. The minimum wage increase is too little,
too late.

 

Weakening Welfare

Unfortunately, it only gets worse for
welfare recipients in the Transitional Assistance to Needy
Families (TANF) and Supplemental Security Income (SSI) programs.
In Washington state, for example, the maximum monthly TANF check
of $546 for a family of three falls $82 short of Washington’s
two-bedroom FMR of $630. Not too bad considering Mississippi’s
maximum three-person monthly grant of $120 and Alabama’s $164
maximum three-person monthly grant covers only 29 percent and 38
percent of their respective FMRs. And with the average 3-person
family food stamp allotment only $175 per month, it doesn’t make
much of a dent. In only Alaska and Vermont does welfare
assistance come anywhere close to paying the rent.

Under the new TANF regulations, the monthly
TANF grant will remain fixed until year 2002, and now states are
under no obligations to provide assistance to anyone or to
provide more in times of recession or need. The new welfare bill,
that went into effect October 1, 1996, also reduces food stamp
benefits by 20 percent for all food stamp recipients, including
low-income working people, the elderly and the disabled. Also,
education and job-training no longer count as fulfilling the
"workfare" requirement, further inhibiting welfare
recipients from getting proper paying employment. And given the
fact that four out of five welfare recipients don’t receive any
form of housing assistance, the housing crisis facing most
welfare recipients will only intensify.

The Supplemental Security Income program
(SSI) provides monthly cash assistance to elders in severe need,
and to handicapped and disabled people. On average, SSI
recipients will spend 87 percent of their monthly grant on
housing costs. For example, New Jersey’s monthly one-person SSI
grant of $477 is supposed to pay its Fair Market Rent of $644.
But even these meager grants will be short-lived for potentially
new recipients. The new welfare bill, the Personal Responsibility
and Work Opportunity Act, severely reduces the number of those
(including children) who may receive SSI benefits by restricting
the types of disabilities for eligibility. Under the new bill,
those suffering from multiple disabilities that do not meet the
new eligibility criteria, but prevent them from getting and
maintaining employment, may not receive any financial help, and
so will most likely be left to fend for themselves in ever
tightening housing markets. Most will unfortunately fall through
the cracks. According to the National Coalition for the Homeless,
around 25 percent of the single homeless population suffer from
some form of mental illness. But low-income families, with
disabled or handicapped family members, will be especially hard
hit.

The decrease in government funding of
low-income programs combined with the current trend towards jobs
that pay inadequate wages has forced many with low-incomes to
live in substandard, overcrowded, or unsafe conditions. It’s the
norm, not the exception. As LIHI’s Gould confirms, "Let’s
face it, if it’s affordable, it’s probably of inferior
quality." Take California, for example, where over 80
percent of low-income renters pay too much rent or live in
inappropriate conditions. Nationwide, 65 percent of low-income
renters live in dwellings that are unaffordable, overcrowded or
substandard. In many instances, it’s not about paying an
unaffordable rent, but about children living in dilapidated units
with not enough heat or with too many people or with walls
saturated with lead paint.

 

Solutions

LIHI attacks the housing crisis from
multiple angles. They have set-up a state-wide trust fund that
acts as a renewable source of funding to purchase and build
affordable housing, as well to renovate and weatherize existing
affordable housing stock. Under a self-help model, LIHI
encourages the self-management of these units by low-income
tenants that occupy them.

Their political advocacy, which emphasizes
organizing low-income tenants, helped to win a referendum that
levied a local property tax that resulted in the creation of
1,000 affordable units. They also support the growing number of
"living wage" campaigns across the country that seek to
raise the minimum wage scale to livable standards. And though
Washington state law prohibits the implementation of any form of
rent control, LIHI keeps fighting for it. "For if we don’t
somehow get a lid on housing costs through some form of rent
control, there will always be a housing crisis," says LIHI’s
Gould, "and more housing must come under community control
and out of the speculative market."

Though LIHI stresses the active role of the
community, Jon Gould emphasizes, "There is no substitute for
a federal role in housing. The federal resources are so much
greater than state and local resources, we have to continually
demand they play a role in affordable housing." For without
the federal government, community groups can’t keep up, and the
demand for affordable housing will always be far greater than
availability.

 

Outlook

With real incomes stagnating and home
prices rising, home ownership rates for age groups below the age
of 45 have declined. The increased demand that higher income
renters bring into the renter pool only increases rents, which
only aggravates the plight of low-income renters.

Further clouding the future, recent and
further expected cuts in the Earned Income Tax Credit, Medicaid,
welfare, food stamps and a variety of social services have only
increased pressure on low-income tenants.

Until there is both public consensus and
political commitment in this country regarding the necessity of
safe, affordable and permanent housing as a prerequisite for the
health of both family and community, short-range policies will
only be inadequate. Until access to decent and affordable housing
becomes recognized as a fundamental human right, community groups
such as LIHI will only get overwhelmed in striving to meet
growing demands with ever shrinking resources. And until the
creation of jobs with "livable" wages becomes a
priority, workers will continue to find their rent consuming more
of their pay-checks. Until then, more and more individuals and
families will face difficult choices between clothing, food,
education, child care and the rent. And if any should slip, they
will join the more than one million people who are homeless on
any given night in the U.S., 40 percent of whom are families.
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