Even before 2020, the U.S. faced an acute housing affordability dilemma. The COVID-19 pandemic made it a whole lot worse after millions of people who lost their jobs fell behind on rent. While eviction bans forestalled mass homelessness – and emergency rental assistance has helped some – most moratoriums have now been lifted, putting a lot of people at risk of losing their homes.
One solution pushed by the White House, state and local lawmakers and others is to increase the supply of affordable housing, such as by reforming zoning and other land-use regulations.
We agree that increasing the supply of homes is necessary in areas with rapidly rising housing costs. But this won’t, by itself, make a significant dent in the country’s affordability problems.
In part that’s because in much of the country, there is actually no shortage of rental housing. The problem is that millions of people lack the income to afford what’s on the market.
Nationally, about 45% of all renter households spend more than 30% of their pretax income on rent – the widely recognized threshold of affordability. About half of these renters, 9.7 million in total, spend more than 50% of their income on housing.
Nearly two-thirds of renters paying at least half of their income on housing earn less than $20,000.
For a household earning $20,000, $500 per month is the highest affordable rent. In contrast, the median rent in the U.S. in 2019 was $1,097, a level that’s affordable to households earning no less than $43,880.
And homes that rent for $500 or less are exceedingly scarce. Fewer than 10% of all occupied and vacant housing units rent for that price, and 31% are occupied by households earning more than $20,000, pushing low-income renters into housing they cannot afford.
The problem of housing affordability is pervasive throughout the nation, even in the least-expensive markets with high vacancy rates.
For example, in Cleveland, with a median rent of $725, 27% of all renters spend more than half of their income on rent.
In fact, there is not a single state, metropolitan area or county in which a full-time minimum wage worker can afford the “fair market rent” for a two-bedroom home.
At the heart of the nation’s affordability crisis is the fact that the cost to build and operate housing simply exceeds what low-income renters can afford. Nationally, the average monthly operating cost for a rental unit in 2018 was $439.
In other words, even if landlords set rents at the bare minimum needed to cover costs – with no profit – housing would remain unaffordable to most very-low-income households.
Covering the difference between what these renters can afford and the actual cost of the housing, then, is the only solution for the 9 million households that pay at least half their income on rent.
The U.S. already has a program designed to help these people afford homes. With Housing Choice Vouchers, also known as Section 8, recipients pay 30% of their income on rent, and the program covers the balance.
The $26 billion program serves about 2.5 million households, or only 1 in 4 of all eligible households. The current version of Democrats’ social spending bill would gradually expand the program by about 300,000 over five years at a total cost of $24 billion.
While this would be the single largest increase in the program’s nearly 50-year history, it would still leave millions of low-income renters unable to afford a home. And that’s not a problem more supply can solve.
Alex Schwartz is a professor of public and urban policy at the New School. Kirk McClure is a professor of urban planning at the University of Kansas. Distributed by The Associated Press.
