The REAL Rental Housing Issue

By Alan Mallach

This column was originally published in the National Housing Institute’s Rooflines blog.

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Alan Mallach is a senior fellow at the Center for Community Progress in Washington, D.C. A city planner, advocate and writer, he is nationally known for his work on housing, economic development, and urban revitalization, and has worked with local governments and community organizations across the country to develop creative policies and strategies to rebuild their cities and neighborhoods. A former director of housing and economic development in Trenton, New Jersey, he currently teaches in the graduate city planning program at Pratt Institute in New York City. He has spoken on housing and urban issues in the United States, Europe, Israel, and Japan, and was a visiting scholar at the University of Nevada Las Vegas for the 2010-2011 academic year. His recent books include A Decent Home: Planning, Building and Preserving Affordable Housing and Bringing Buildings Back: From Vacant Properties to Community Assets, which has become a resource for thousands of planners, lawyers, public officials, and community leaders dealing with problem property and revitalization issues. He is a member of the College of Fellows of the American Institute of Certified Planners, and holds a B.A. degree from Yale University.

We know a few things about the majority of very low-income renters: they live in private market housing, not tax credit projects or public housing. They receive no housing subsidies. They are paying far more than they can afford for what is too often substandard housing in distressed neighborhoods.

These statistics are well known, but we don’t think about them as much as we should, and often lose track of the human toll behind them.

Evicted by Harvard scholar Matthew Desmond tells that story. It’s a twofold issue: the most fundamental problem is that the economics of what poor people live on—from public assistance or low-wage jobs—are inadequate to afford what it costs to create or provide minimally decent housing. The 25th percentile rent in the United States—the low-end median rent, where one-fourth of the units rent for less and three-fourths rent for more—is $670 per month, which requires an income of $26,800 to afford. Even the most self-sacrificing landlord can’t pay off a mortgage, pay taxes and maintain a rental unit in decent shape for what a poor family can consistently afford to pay.

The second problem is that our political system has failed to address this issue in a meaningful way. Instead, we have a sort of lottery system in which only a lucky few get housing vouchers. Poor tenants, whose incomes are both low and highly unpredictable from one month to the next, live like refugees in a revolving door of substandard housing, dangerous neighborhoods, rent arrears, doubling up, evictions, and forced moves almost on a yearly basis.

Millions of people are evicted each year, and millions more move involuntarily without waiting for a formal eviction proceeding. Without a stable place to call home, these families live in a constant state of social and economic instability, with their children moving from school to school. This perpetuates the multigenerational poverty that characterizes many inner city neighborhoods and frustrates efforts by CDCs and others to build strong, cohesive neighborhood organizations and stable neighborhoods.

In response, the community development field tends to focus on building tax credit housing. But a recent HUD study has raised tough questions about what tax credit housing means in this context. Although tax credit rents are set at what a tenant at 50 percent of the Area Median Income (AMI) can afford, most tenants have much lower incomes: 45 percent have incomes below 30 percent of AMI, and 19 percent between 30 and 40. Unlike public housing rents, LIHTC rents are not adjusted to family incomes. This means two things: first, many LIHTC tenants make ends meet by using a Section 8 Voucher to make living affordable. Although the HUD data is hard to interpret, at least 36 percent of all LIHTC tenants appear to have a voucher or some other form of rental assistance. An educated guess is that at least one out of every three vouchers in circulation is being used in a tax credit project.

Second, of LIHTC tenants who do not have a voucher, more than 60 percent are paying over 30 percent of their gross income in rent and suffering from precisely the cost burden that affordable housing is supposed to prevent. This probably represents a better option for most than private market housing—the quality of housing is likely to be higher, and in very high-cost areas, tenants’ cost burden may still be less than it would be on the private market. The point, though, is that LIHTC housing is not a solution. What can be done?

This should be the focus of national advocacy efforts. The National Low Income Housing Coalition has done great work, but it is not enough. Rather than advocating for more vouchers, we should look more closely at how to best fill the gap between what poor tenants can afford and what it costs for the private market to provide decent housing—and build a broad coalition around it.

How could we best meet these needs? Over 40 years ago, President Nixon proposed a guaranteed annual income for every American family. Would putting more money into people’s pockets help them find decent housing with fewer market distortions than the Section 8 program? Alternatively, could vouchers become more property- (not project-) based, with a competitive model in which landlords could compete for vouchers based on price and quality? I’m sure there are other models worth examining as well.

In the meantime, this is a critical issue for any organization trying to build stronger neighborhoods. Tenants in private market housing, most of them low- or very low-income, make up half or more of the residents of most lower urban neighborhoods. We must look at how the community development field can better support tenants in private market housing. We have a decent although patchy network of organizations to help homeowners keep their homes, but nothing I’m aware of to help renters keep their homes. Change is long overdue.

Articles in “From the Field” represent the opinions of the author only and do not represent the views of the Community Builders Network of Metro St. Louis or the University of Missouri-St. Louis.