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Housing: Critical for Working Families and Communities
Rewarding Design and Innovation
Affordable and Green?
Assessing GSE Performance
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Housing: Critical for Working Families and Communities
Soaring housing costs in the United States are putting increasing pressure on the budgets of low- and moderate-income families. The Joint Center for Housing Studies reports that, in 2005, 17 million households spent more than 50 percent of their income on housing, considerably more than the recommended 30 percent.1 Although the lowest-income households bear a greater portion of the severe housing burden, the problem exists across the entire distribution of household incomes. Experts point to several factors contributing to this widening affordability gap: erosion of the housing stock, high housing prices, a drop in real wages, a decline in middle-wage jobs, the expansion of low-wage jobs, increases in transportation costs, expensive development requirements, regulatory constraints, and insufficient housing assistance funds to meet the need.
The Center for Housing Policy (CHP) has used American Housing Survey (AHS) data for its report, The Housing Landscape for America’s Working Families.2 In its analysis, CHP found that, out of 40 million working families in 2005, 5.2 million had critical housing needs, meaning that they were paying more than half of their income for shelter and/or living in severely inadequate housing. These low- and moderate-income families were earning anywhere from an annual minimum wage of $10,712 to no more than 120 percent of area median income (AMI). Although both owners and renters with critical housing needs bore similar housing cost burdens, renters were twice as likely to live in severely inadequate units and overcrowded housing.
CHP's analysis of AHS data found that the total number of working families with critical housing needs increased by 73 percent between 1997 and 2005. During that time, severe housing cost burdens became a greater problem. The number of working families with critical housing needs who fell into the lowest income quintile — below 30 percent of AMI — rose from 14 to 22 percent; those earning between 80 and 120 percent of AMI increased slightly from 14.8 to 16.3 percent, thereby widening the spread across the income distribution range.
Communities across the country are increasingly concerned about the severe housing burdens many working families face, particularly because the quality of a community's workforce affects its economic health. Workers who staff the service sector, teach, provide medical care, fight fires, and enforce our laws are among those who are overburdened by housing costs and cannot afford a median-priced home. When the Brookings Institution analyzed the distribution of jobs and workers in the largest 150 U.S. metropolitan areas, analysts found that about 65 percent of the population and 60 percent of jobs are now in the suburbs, but a spatial mismatch exists between where people work and live. During the 1990s, lower-income suburbs experienced slow job growth but sharp population increases. At the same time, higher-income suburbs saw strong job growth and a need for both skilled and service workers. As a result, residents of lower-income suburbs and central cities increasingly commute to jobs located in higher-income areas. Access to jobs often depends on the distance between home and work, car ownership, commuting costs, and the layout of roads, highways, and transit lines.3
The further away from their jobs workers must live to afford housing, the harsher the toll on families, businesses, and communities. Commuters are unable to participate in the activities that make schools and communities strong, and businesses find that undesirable commutes undermine productivity, workforce retention, and recruitment of skilled workers. Communities find it harder to attract new employers and jobs.
What Are the Solutions?
Many employers assist their employees with housing. Homeownership education, counseling, and financial assistance are often part of employee benefit packages, as are transportation subsidies. Employers may also invest in new construction or renovation projects dedicated to the workforce. State and local governments exercise a number of options to help increase the amount of land available for homes, generate capital and align resources for affordable development, reduce regulatory barriers to affordable housing, and help working families buy and maintain their homes.
Communities are also turning to regional approaches to address the shortage of housing for working families. This is evident in Florida, for example, where the median home price of $230,600 exceeds the national median of $185,200 and 36 percent of owners and 52 percent of renters pay at least 30 percent of household income for housing.4 The housing needs of the labor force are a priority for the state's 12 Regional Planning Councils, as well as for the Florida Regional Stewardship Alliance (FRSA), organized by the Florida Chamber of Commerce Foundation to help design and implement regional growth strategies. FRSA's Southwest Alliance has projected workforce housing needs through 2025 for seven counties and has drafted a strategic plan that specifies roles for the private, public, and civic sectors, and recommends action at the state, regional, and local levels (available at www.swfrsa.org/images/Workforce%20Housing.pdf). Affordable housing as a regional planning priority is the subject of a recent analysis prepared by the American Planning Association for HUD’s Office of Policy Development and Research and the Fannie Mae Foundation. Regional approaches that combine local, state, federal, and private resources in a comprehensive, collaborative effort to make housing affordable can be a successful strategy to help working families and local economies. The report, Regional Approaches to Affordable Housing (www.huduser.gov/publications/affhsg/reg_aff_hsg.html), which describes initiatives around the country, can be downloaded at no cost by those seeking to address their affordable housing challenges.
1. Joint Center for Housing Studies of Harvard University, The State of the Nation’s Housing: 2007 (www.jchs.harvard.edu/).
2. Available at www.nhc.org/index/chp-research-publications.
3. Harry J. Holzer and Michael A. Stoll, “Where Workers Go, Do Jobs Follow?” December 2007, Brookings Institution (www.brookings.edu/reports/2007/1231_cities_holzer.aspx).
4. American Community Survey, 2006 (available at http://factfinder.census.gov).