By Casey Quinlan, Michigan Advance
Voters in Colorado approved a statewide affordable housing initiative in November; while voters in nine cities across the country OK’d measures to finance the construction of affordable housing, preserve existing rental properties and support renters. But as housing costs soar, analysts and advocates say more needs to be done and argue that federal action is needed.
Robert Silverman, a professor at the department of urban and regional planning at the University at Buffalo, said the affordable housing crisis we’re seeing today has been many years in the making.
“It’s a structural problem with the housing market, where housing prices keep going up, costs of construction have increased, and incomes haven’t necessarily kept up with that part of the market,” he said. “It’s been something that’s been brewing for a couple of decades now. And the policy response, although there has been some, hasn’t been large enough to really wrap its arms around the entire problem.”
Higher building costs, a shrinking supply of low-cost rental units and more people with higher incomes choosing to rent rather than buy are driving the increase in higher-priced rentals and corresponding decline in low-cost units, according to a 2020 report from the Joint Center for Housing Studies of Harvard University.
Over the past five years, rent increased on average 5.8% year-over-year but saw the steepest increase — 14% — from 2021 to 2022, according to Credit Karma’s analysis of rental data. Meanwhile, the Census Bureau’s five-year survey shows that 40% of renters put 30% of their income toward housing. Higher home prices — the median sales price for a home in the third quarter was 10.6% higher than a year ago — and high interest rates are also combining to keep people from buying a home.
In response, voters across the country showed their concern about the lack of affordable housing by saying yes to millions of dollars in housing bonds and grants to address the issue.
Among the measures passed:
- Colorado voters passed Prop 123, which will allow 0.1% of the state income tax rate to go toward a number of grants and programs to increase affordable housing, assist unhoused people or prevent eviction, and provide rental assistance, among other provisions.
- In Buncombe County, N.C., voters agreed to a $40 million bond for affordable housing. While voters in Charlotte approved a $50 million bond package for the city’s housing trust fund to provide financing for affordable housing projects. Charlotte needs 32,000 affordable housing units, according to the city government’s website.
- Palm Beach, Fla,, voters approved a $200 million bond to build 20,000 new units of both discounted and market-rate units by 2032.
- A $50 million affordable housing bond intended to create 2,000 units was approved in Kansas City, Mo. It will focus on housing that would cost between $550 and $750 in rent each month.
- Columbus, Ohio, voters OK’d $200 million to go toward the building of more affordable rentals, efforts to house and assist the homeless and the preservation of existing affordable housing, as well as funds to make homeownership more affordable in the area.
“These bond issues are one way to address [affordable housing], but they’re also a political indication of the degree to which voters recognize there’s a problem that has to be solved,” said David Dworkin, president and CEO of the National Housing Conference. “When we look at the broad range of proposals that have been approved, I think we also can see a signal that people get it. There’s a problem. And we’re going to have to pay to help fix it and it’s not going to fix itself now.”
Carlie Boos, executive director of the Affordable Housing Alliance of Central Ohio, said that inflation has created an “immediate need” for the affordable housing bonds. People are overcrowding their apartments to cover rent and the length of stay in homeless shelters is getting longer as families have nowhere to go, Boos said.
“The way that inflation is pinching everybody’s budget is making construction and building for housing demand harder and harder to do. So there’s an immediate need,” she said.
IMPACT Community Action, an anti-poverty organization based in Columbus, told an ABC affiliate that there were 2,000 evictions filed in September for Franklin County. The annual point-in-time count for Columbus and Franklin County’s unhoused population in January, 2022, was 1,912 people, with 342 people completely without shelter. Community Shelter Board, the nonprofit that organized the count, cautioned that the numbers did not paint a full picture because the Omicron surge made counting more difficult.
The preservation of affordability in housing is also key to tackling the crisis, Boos said.
“We know that there’s maintenance issues and rehabilitation issues and there’s properties that are affordable naturally, but it’s because they’re substandard naturally,” she said. “We don’t want people to have substandard housing because it’s the only thing they can afford.”
But Columbus residents won’t feel the effects of the bond measure overnight, she said, which is why she said state leaders should use pandemic relief funds from the American Recovery Plan Act to support the housing infrastructure in Ohio.
The Coalition on Homelessness and Housing in Ohio has called on Ohio Gov. Mike DeWine and the Ohio General Assembly to support spending $308 million in American Recovery Plan Act funds to build more affordable housing and improve current housing, among other housing efforts.
Moving into homelessness
Andy Paul, one of the founders for Asheville for All, a group that advocates for “housing abundance” in Asheville, the county seat of Buncombe County, said the affordable housing problems facing the city are similar to many areas of the country. Paul said that tourism and retirees have created more housing demand, and that Asheville’s expected population growth necessitates building more homes.
He said he hopes that affordable housing bonds can help meet some of that need in the coming years. Buncombe County’s residents are expected to increase by 80,000 people by 2045, according to two firms, the French Broad River Metropolitan Planning Organization and Woode & Poole Economics.
The annual count of unhoused people in Buncombe County in 2022 was 637 people, a rise of 21% over last year’s count. The majority of unhoused people — 57.8% — became homeless while living in Asheville.
“We don’t blame people for wanting to move here. The solution is to just solve the problem. But that does create pressure,” Paul said. “And it means people can bid up land value. They can bid up home prices. And so it absolutely causes displacement of people that maybe grew up in Asheville.”
Peter LiFari, executive director at Maiker Housing Partners, a public housing authority in Adams County, Colorado, said that Congress often treats housing an “afterthought,” by keeping funding for housing affordability low. According to a 2021 report co-authored by LiFari and Evelyn Lim, from Common Sense Institute, an organization that provides research on Colorado’s economy, the state has to provide 54,190 new housing units each year over a five-year period to make up for lack of building during the Great Recession and to address future housing needs.
LiFari said he is “bullish on” Prop 123, which moves money from a general fund to a fund dedicated to affordable housing and allows local governments the right to opt in. But he added there will be challenges. If not enough governments enroll, there is some possibility that state lawmakers could direct the funds elsewhere. Local governments have until Nov. 1, 2023, to opt in so that their projects can benefit from the fund. By December 2026, the state’s housing division will begin to analyze whether local governments have met their growth targets.
How the federal government could help
Dworkin, with the National Housing Conference, says that there is much more governments can do to address the affordable housing crisis. Localities could reduce regulatory barriers, like zoning restrictions, that make it harder to build high-density housing. But he added that Congress also needs to act.
He pointed to a Nov. 28 letter from a bipartisan group of more than 50 members of Congress to House Speaker Nancy Pelosi and Minority Leader Kevin McCarthy that stressed the need to once again boost the Low Income Housing Tax Credit. The credits, which the federal government issues to states, are then awarded to developers of affordable rental housing to be used for financing. In 2018, Congress boosted the tax credits by 12.5% but that increase expired in 2021.
The letter also advocated for lowering the test of funding a development with 50% private activity bonds to 25%, which would allow states to fund more projects. Both strategies would make it easier to increase the affordable housing stock.
Members of Congress have been focused on coming to an agreement on various tax issues before the end of the year, including bringing back certain business tax breaks and expanding the child tax credit, but it’s unclear if the issue will be settled by the time the new Congress begins.
Silverman, with the University at Buffalo, said the Housing Choice Voucher Program, also known as the Section 8 program, also could be much larger to meet more people’s affordable housing needs.
“Half of the households that are eligible for vouchers aren’t even on the waiting list. And so there’s a lot of demand for housing subsidies for renters nationally out there and just expanding those programs would do a lot to meet some of the affordable housing needs that are already out there,” he said.
HUD programs addressing affordable housing issues have only had incremental increases over the years that just don’t keep up housing demand, he said.
The Biden administration announced a Housing Supply Action Plan in May, including a call for Congress to provide billions in HUD grants to increase affordable housing units, pressing states and localities to use American Rescue Plan Funds to build more housing, and leaving federal properties to affordable housing developers for reuse. In November, several White House officials, including Domestic Policy Advisor Susan Rice, National Economic Council Director Brian Deese, and American Rescue Plan Coordinator Gene Sperling had a meeting with advocates and experts in housing policy to talk about rental affordability and tenants rights.
Dworkin, who attended the meeting, said, “I think the White House is very focused on identifying bipartisan opportunities to make progress on this issue.”
LiFari said policymakers at all levels of government need to prioritize this issue immediately.
“The housing shortage now, the homelessness crisis, is acute. It’s horrible. It’s a humanitarian crisis,” he said.