Welcome to... Companion PowerPoint Presentation for the Introduction to Housing textbook

Housing Affordability

Lack of affordable housing is a crisis for both communities & individual households ► For communities—attracting & keeping employment opportunities; quality neighborhoods ► For households—self-sufficiency, stability & improves life outcomes for children There is debate on this issue

When is Housing Affordable? ► A household should spend no more than 30% of its total income on housing costs, including mortgage or rent payments & utilities ► More than 30%: housing cost burdened ► More than 50%: severely housing cost burdened ► Variety of housing affordability indices exist

13.4 million renter households & 14.5 million owner households have housing affordability problems Factors influencing affordability: ► Income level ► Household size ► Geographic variation Affordability is tied to a particular geographic area’s median household income & median housing costs

Households and Housing Costs ► Median cost of a new single-family home: 1982 $60, $187,500 Increase of 170% Increase of 170% ► Due to: Inflation Increases in cost of materials & labor Increase in land values Regulations & development charges Households’ demands for more space of higher quality

Homeownership and Affordability ► Affordability index: relationship between the median income in an area and the median income required to quality for a mortgage ► 100 = households with median income could purchase the median priced home ► In 2002: ► But minority, single-parent & low-income households face greater affordability problems

Renting and Affordability ► Poor households that rent suffer the most severe housing cost burdens ► Supply of low-cost rental housing units has not been sufficient for the demand ► Much of that housing is old & located in neighborhoods with little access to jobs & adequate services ► Government assistance is available, but is not adequate

Understanding the Shortage Increasing the cost of housing: Additional space & amenities Compared to 20 years ago homes are: ► Larger ► Have more bedrooms (3-4) ► Have more bathrooms (2 ½) ► Have at least a two-car garage ► But, smaller lot

Increasing the cost of housing: The role of local government regulations Increased government regulation leads to higher housing costs & decreased amounts of new construction ► Impact fees ► Code restrictions ► Growth restrictions ► Exclusionary zoning

Increasing the cost of housing: Failure to preserve existing affordable housing ► Loss of affordable units to gentrification ► Loss of units due to lack of repairs ► Too expensive to rehabilitate units under new codes, so are demolished or left to decay

Homelessness ► For some families, a failure to find affordable housing leads to homelessness ► Homeless—those in shelters or in a public or private place not designed for, or ordinarily used as, a regular sleeping accommodation for people (800,000 each night) ► Hidden homeless—living with relatives or friends (doubled up) in overcrowded conditions or living in substandard housing

Who are the homeless? ► Families with children (fastest growing segment) ► Single adults, often men 30-50; but many women as well ► Runaway youths ► Suffer from mentall illness ► Struggle with substance abuse

► Need affordable housing— rental assistance ► Need to earn a sufficient wage— living wage ► Shelters (day and/or night) ► Temporary assistance through nonprofits

Solving the Affordability Problem ► Public education efforts—the public must support the need for affordable housing and be willing to provide the necessary support ► Land use strategies to reduce the cost of housing --higher density & mixed-use development --inclusionary zoning --Community Land Trust (CLT)

► Reduction in building & management costs --streamlined building methods & standardized components --factory-built housing --donated labor & materials --resident labor (sweat equity) ► Reduction in finance costs --low-interest loans for constructing or rehabilitating affordable housing --Low Income Housing Tax Credit --HOME & CDBG

► Increase resources for housing --to builders to produce affordable housing --home purchase assistance to low- & moderate-income homebuyers --Public Housing & Section 8 vouchers to renters