One of the biggest challenges facing the incoming HUD secretary is how to handle the rental housing crisis that is making housing increasingly unaffordable for too many Americans. The fundamental problem is that over the past decade, rents have risen faster than incomes in almost every part of the country. This increase is primarily the result of widening income inequality: incomes have risen much more slowly for low- and moderate-wage workers than for those in high-skill, high-wage jobs. Rising incomes at the top of the wage ladder put upward pressure on housing prices and rents, forcing them beyond the reach of workers in lower-wage jobs.
The gap between ability to pay and rents in the marketplace is particularly acute for the poorest households. Only one in four low-income households is lucky enough to receive federal housing assistance. Matthew Desmond’s book Evicted: Poverty and Profit in the American City poignantly documents the effects of the crisis on the unlucky majority, who, without assistance, are too often forced to pay as much as 70 to 80 percent of their income for substandard units in the worst neighborhoods. The costs for their children are profound: trauma, instability, hunger, and frequent school transfers that leave them struggling to keep up.
To address the crisis and ensure that all Americans have access to safe, decent housing, the new administration might consider policies that support producing affordable rental units and expand access to opportunity.
In the last Congress, a bipartisan effort in the Senate sought to expand the Low-Income Housing Tax Credit (LIHTC) to increase the ability of housing and redevelopment authorities and nonprofit housing developers to finance the construction of new, affordable units. LIHTC units generally serve the working poor, but if housing agencies can combine these tax credits with project-based Section 8 vouchers, these new units could help address the critical need for housing for even the poorest households. Further, such policies as inclusionary zoning and land banking could help ensure these new units are not built only in the lowest-income neighborhoods, but instead help provide low-income families access to neighborhoods that provide opportunity for themselves and their children.
Current federal programs are not meeting the need, and evidence shows that households who leave assistance face steep challenges in the current rental market, sticking them with high housing cost burdens and putting them at risk for instability and homelessness. House Speaker Paul Ryan (R-WI) has proposed adding work requirements and time limits on housing assistance. But any effort to impose time limits should include graduated reductions and extra supports during the transition period.
A bold proposal to address this situation that has also had bipartisan support is to target housing choice (Section 8) vouchers to the poorest households and create a different strategy for other low-income renters. The Bipartisan Policy Center’s Housing Commission recommends expanding the Housing Choice Voucher Program to guarantee access to all extremely low income households. The new administration could combine this approach with a shallower, time-limited subsidy for less-needy households. A flat, shallow subsidy program that is either time limited or available based on emergencies might help prevent households in crisis from slipping into housing instability. Combining an entitlement voucher program for the poorest families and an emergency cash assistance program for other low-income households would represent a major improvement over today’s assisted housing “lottery.”
Other ideas include using vouchers to promote economic mobility and address intergenerational poverty and testing a renters’ credit to promote equity and to finance the subsidies needed to make housing affordable for the lowest-income households.
As HUD secretary, Carson should take swift action to address today’s worsening rental housing crisis and ensure that all Americans have a decent, safe, and affordable place to live.