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Soaring rents, stagnant wages create housing crisis U.S. households with 'severe rent burden' highest in 50 years Comment By Christopher Burrell GateHouse Media MailTribune.com By Christopher Burrell GateHouse Media Posted May. 3, 2015 at 12:01 AM By Christopher Burrell GateHouse Media Posted May. 3, 2015 at 12:01 AM » Social News Renting a place to live long has been a temporary step toward homeownership or a permanent part of living on a tight budget. When people would sit down to work out a budget, devoting 25 or 30 percent of monthly income to rent was the “affordable” part of still paying the other bills and maybe saving a bit. But the bottom has fallen out of that calculation for millions of people. Over the past decade, the number of households who now must devote more than half of monthly income to rent has jumped nearly 50 percent — to more than 11 million households in 2013. One in four American renters now struggle under what experts describe as a "severe rent burden." For the working poor — earning $15,000 to $30,000 a year — the number is one in three households. The high cost of rent forces people to cut back on food, medicine and child care and puts many on the brink of eviction and homelessness. Pressure on renters comes from two sides: rising rents in the wake of the housing collapse and stagnant wages or underemployment. As home ownership fell to its lowest rate in 20 years, increasing numbers of Americans now rent apartments and homes, squeezing vacancy rates and pushing up rents. For decades, federal public housing programs provided a safety net with low-cost apartments or rent vouchers. Those programs currently help 5.5 million households live in affordable housing, but that’s well below the number of people in need. Congress removed 100,000 rent vouchers in the last two years, and the federal government hasn't added any new public housing units in more than a decade. Experts in affordable housing say families buried under high rents need an expansion of federal rent voucher programs. They also need state and local governments to invest in more affordable housing construction. But for now, the affordability crisis facing renters shows few signs of improvement, even as millions more renters are expected to enter the market in the coming decade. Recession driven Today’s crisis of high rents began in the recession and housing market collapse of 2008. The recession left 8.4 million Americans jobless, with unemployment at 10 percent. Wages fell or remained flat. Millions were underemployed or forced into part-time work. The U.S. housing market also plummeted, losing $7 trillion of home equity. Millions of homeowners owed far more than their homes were worth, and foreclosures soared. More than 3 million homeowners had nowhere to go but the rental market. The portion of renters has increased from 31 percent in 2004 to 36 percent in 2013. Vacancies are scarce, which keeps rents high. Median rent in the Northeast, already a high-priced housing market, shot up 62 percent between 2002 and 2014 to $1,043 a month. Across the country, rising rents are the norm. Median rent nationally in the same time period increased 34 percent from $568 to $766 a month. As rents rose and incomes fell, the portion of households with “severe rent burdens” (more than half of income) hit 27 percent in 2013, the highest rate in 50 years. Among working poor households, 34 percent pay more than half of their income toward rent. Uneven history of success Access to decent housing grabbed national attention more than six decades ago. The return of World War II veterans and the onset of the baby boom quickly led to a housing shortage. In response, the federal Housing Act of 1949 created the Federal Housing Administration, mortgage insurance, and funded the construction of 800,000 public housing apartments. The thrust of the new law was to increase the amount of lower priced housing for average Americans. Over the next 20 years, however, the large public housing complexes became controversial centers of grinding poverty and crime. By 1968, the federal government recognized the downside of concentrating so much poverty in small areas and prohibited the construction of new high-rise buildings for families. In the 1970s, the government created the federal rent voucher system that provides poor households with a rent subsidy to take into the private market. Sheila Crowley, CEO of the National Low Income Housing Coalition in Washington, D.C., said that in those years there was actually a surplus of affordable rental housing. As public housing complexes deteriorated and came under fire politically, federal programs in the 1990s pushed demolition of thousands of apartments. More funds and attention shifted to rent vouchers, which can be used in rural areas, small towns, or big cities, and are now the most common form of federal housing assistance. Vouchers help 2.1 million households — most of them extremely low income — rent apartments on the private market. By comparison, just over half that number of households live in public housing apartments, whose stock has dwindled by 260,000 in the last two decades. Federal public housing assistance is administered by local housing authorities. They distribute assistance, screen applicants and inspect apartments annually. Under the Housing Choice voucher system, tenants pay 30 percent of their income toward rent. The voucher covers the rest up to a limit set by the local housing authority. If the rent exceeds the limit, voucher recipients can pay the difference but only up to 40 percent of their income. Low-income Americans’ need for affordable housing still far outstrips the supply. Between 2007 and 2011, the number of U.S. households eligible for rental subsidies increased 21 percent, growing from 15.9 million to 19.3 million. Only 5.5 million households receive rental vouchers or public housing apartments. As of 2013, more than 10 million households need but cannot obtain federal housing assistance, according to the U.S. Department of Housing and Urban Development. Evictions and homelessness are probably the worst fear for people struggling with high rents. Pinned down by high rents, low-income families usually can’t even afford the two months rent and security deposit to move somewhere else. “They’re literally stuck,” said Gary Allen, a housing lawyer who represents low-income clients in Massachusetts. Jane Mauldon, a professor at the University of California Berkeley who researches poverty and housing issues, said keeping people in their housing is the most important intervention. But across the country, evictions are on the rise: Nevada up 18 percent since 2012, New York up 6 percent and Ohio up 5 percent between 2010 and 2013. The number of homeless children is now at record levels. Last November, the National Center for Family Homelessness counted 2.5 million children whose families were living in a car or a shelter, or doubled up temporarily with relatives or friends. Rachel Williams, a Milton, Mass., full-time hospital worker who's three months behind in her rent, says she lives in constant fear of being evicted. “I’ve done without so much for so long,” she said. “Just having peace of mind, I lost out on that. There’s no peace of mind. You don’t know from one day to the next what’s going to happen.” Help needed Housing advocates, public policy experts and officials at the federal housing agency say solving the affordable housing crisis requires help on three fronts. • Higher wages for the working poor; • More affordable rental housing; • More assistance for low-income renters. Boosting wages and pulling poor Americans out of poverty is a complex goal that has seen only modest progress in recent decades. The U.S. poverty rate stood at 19 percent in 1964 and fell to 15 percent in 2012. By 2013, it had dropped to 14.5 percent, but the number of people still stuck in poverty was unchanged at 45.3 million. Efforts to raise the minimum wage caught hold in 14 states last year, and several cities in the West have set minimum wages higher than state levels or the federal minimum wage, which is $7.25 an hour. Oregon's minimum wage increased this year by 15 cents to $9.25 and is tied to increases in the Consumer Price Index. Barbara Sard, head of housing policy at the Center on Budget and Policy Priorities in Washington, D.C., said higher wages alone are no cure-all, but a start. Higher wages can reduce the amount of income spent on rent, she said, but she also warned that “when the economy heats up, rents also tend to rise.” Reducing severe rent burden also means constructing more affordable rental housing, said Bennett Hecht, author of two books on affordable housing and CEO of Living Cities, a nonprofit working on urban poverty and housing issues. Part of the problem today is that most new construction is for high-end apartments. The recent Harvard University report found that median rents for newly built apartments were affordable only to households earning more than $42,000 a year. Hecht said increasing the stock of affordable housing is the goal of a variety of local efforts across the country, involving nonprofits, philanthropy, fees on local real estate transactions, re-use of public land, zoning changes, and the growth of housing trust funds. About 300 housing trust funds in 37 states subsidize construction and preservation of affordable rentals, he said. Hecht and Sard both called for more federal rental assistance for low-income households. “The gap cannot be bridged without a significant infusion of government subsidies,” Sard said. “You have to help people pay the rent.” The Department of Housing and Urban Development has asked Congress to fund an additional 300,000 housing choice vouchers for next year. Sheila Crowley at the National Low Income Housing Coalition doubts Congress will comply. “At the very best, what we are doing is defending against losses (of vouchers and public housing). We are not doing anything to increase investment,” she said. Another proposal floated for a number of years would overhaul the mortgage interest tax deduction. The idea is to reduce the available deduction and replace it with a 15 percent tax credit for homeowners. Supporters say the increased tax revenue could generate funds for federal rental assistance. Don Williamson, a tax and policy expert and the executive director of American University’s Kogod Tax Center, said the powerful Realtor and homebuilders lobby likely would stop the reform, which they see as reducing the appeal of home buying. The need and political will to do something on a national scale, housing advocates say, should be all the more apparent as the numbers of severely rent-burdened households, evictions, and childhood homelessness continue to peak in communities across the country. “I do think that the spreading of housing unaffordability problems to more areas of the country increases the chances there will be more political salience to meeting this need,” Sard said. “It used to be you would think of places with major housing problems like New York, Boston and San Francisco, but that is increasingly not the case.” Christopher Burrell is a reporter for the Patriot Ledger in Quincy, Mass., who has reported and written local stories about affordable housing. He took one month away from his newsroom to work on this national story and found that the picture throughout the United States was just as bleak.   By Christopher Burrell GateHouse Media MailTribune.com By Christopher Burrell GateHouse Media Posted May. 3, 2015 at 12:01 AM » Comment or view comments Reader Reaction » STAY INFORMED Email NewsLetter Sign Up Today Sign up for our newsletter and have the top headlines from your community delivered right to your inbox. calendar Connect with MailTribune.com Facebook Twitter RSS Back to top Reader Services Reader Services Home Subscriptions Subscriber controls Contact us Submissions Photos Events Letters to the editor Corrections Announcements Obituaries Story ideas Since you asked Alerts Email Alerts RSS Feeds Text Alerts Advertise Media Kit Home Products and services Ad rates Advertising contacts Propel Marketing Mail Tribune Daily Tidings The Nickel Shop Our Valley Blogs Stay Informed Email newsletter Sign Up Today Sign up for our newsletter and have the top headlines from your community delivered right to your inbox. 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