Housing Needs Report Shows Crisis Worsening

America is currently experiencing a period of unprecedented prosperity and economic expansion. Building on the success of the President's historic 1993 budget, and through the bipartisan efforts of the Administration and Congress, the Federal Government is experiencing a budget surplus for the first time in 30 years. However, too many Americans have not shared in these triumphs of American productivity and fiscal prudence.

HUD's recent report, Rental Housing Assistance—The Worsening Crisis, documents the continuing, growing crisis in housing affordability throughout the Nation. It contains important new information that is critical to ensuring an informed discussion regarding the appropriate Federal responses to this crisis. The findings in this report make a compelling case for strengthening the Federal Government's efforts to ensure adequate supplies of decent, safe, affordable housing for the lowest income American families.

Worst case needs for housing assistance, already at all-time highs in 1993 and 1995, increased further between 1995 and 1997 despite continued vigorous economic expansion. In the fall of 1997 almost 5.4 million very low-income renter households—containing some 12.3 million individuals—paid more than half of their income for housing or lived in severely inadequate housing. Among very low-income renters, the share with worst case needs remained at 37 percent. These households represent 5 percent of the Nation's population and a disturbing one-sixth of all U.S. renters. Without Federal, State, or local housing assistance, these renting families face severe financial pressures—many are merely a paycheck or unexpected medical bill away from homelessness.

This report contains six major findings:

• Despite continued robust economic expansion, worst case housing needs have reached an all-time high of 5.4 million families (12.3 million individuals), increasing by 12 percent or 600,000 households between 1991 and 1997.

• Families with worst case housing needs are working harder than ever. Between 1991 and 1997, despite a robust economic recovery, worst case needs increased more than three times as quickly for households with full-time earners than for all other very low-income renters.

• The housing stock affordable to the lowest income Americans continues to shrink. The number of rental units affordable to extremely low-income families decreased by 5 percent between 1991 and 1997—a loss of more than 370,000 units. For every 100 households at or below 30 percent of median income in 1997, there were only 36 units both affordable to them and available for rent by them, down sharply from 47 units in 1991.

• The poorest families are increasingly the hardest hit by worst case needs. Between 1991 and 1997 worst case housing needs became increasingly concentrated among households with extremely low incomes. By 1997 more than three-fourths of those with worst case needs had incomes below 30 percent of the area median.

• Worst case needs have become more concentrated among minority households. Worst case housing needs increased dramatically in minority households during the 1990s, whereas needs among non-Hispanic whites were stable.

• Poor families living in the suburbs most frequently face worst case needs. Both very low-income renters and extremely low-income renters remain more likely to have worst case problems in the suburbs than elsewhere.

An effective response to this crisis must combine numerous approaches to overcome different aspects of these problems. The following are among the implications of this report's findings on rising worst case housing needs and diminishing supplies of affordable housing:

• The Federal Government must continue to expand rental assistance. The President's budget for fiscal year (FY) 2001, which includes funding for 120,000 incremental Section 8 vouchers, is an essential step forward to overcome this affordable housing crisis and reduce the number of families suffering worst case housing problems.

• Federal rental assistance is critical for working families with worst case needs, whose incomes are increasingly consumed by rent, leaving them less able to spend on food, medical care, education, or other necessities. By providing 32,000 Section 8 vouchers for use with local welfare-to-work efforts, the President's FY2001 budget will help families find permanent employment and locate decent, affordable housing.

• Federal programs that supply affordable housing—such as the HOME Investment Partnership program, Community Development Block Grants, and the Low-Income Housing Tax Credit (LIHTC)—must be complemented by continued expansion of tenant-based rental assistance to relieve worst case housing needs. Without tenant-based subsidies, the extremely low-income households most likely to have worst case needs can rarely afford the housing created by these programs. The President's FY2001 budget recognizes this reality by providing 10,000 incremental Section 8 vouchers specifically targeted for use in conjunction with the LIHTC and Federal Housing Administration Multifamily Insurance.

• Additional Federal programs that help provide permanent affordable housing for vulnerable populations, including the Housing for People With AIDS and Shelter Plus Care programs, should also be expanded to better meet the continuum of housing needs for extremely low-income Americans. The Section 202 Supportive Housing for the Elderly and the Section 811 Supportive Housing for Persons With Disabilities programs are important vehicles for providing affordable housing and supportive services for these needy populations.

Rental Housing Assistance is based on data from the 1997 American Housing Survey. The body of the report has three parts. The introduction (Chapter 1) explains the background and approach of this report, specifically discussing the procedural and questionnaire changes affecting the 1997 American Housing Survey data on which the report is based and their impact on estimates of worst case needs. Chapter 2 summarizes statistical data from HUD analyses of worst case needs and documents the major findings. Chapter 3 explores the implications of the findings for important policy decisions at the Federal, State, and local levels.

Rental Housing Assistance—The Worsening Crisis is available free from HUD USER. Use the order form.