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ATLANTA, Georgia, Dec 23 2009 (IPS) - The number of housing units affordable to extremely low-income (ELI) families in the U.S. has declined over the last year, even as the number of families needing those units has increased, according to a new report by the National Low-Income Housing Coalition (NLIHC).
NLIHC analysed data from the 2008 American Community Survey. It found that the shortage of homes affordable to ELI families grew from 2.7 million in 2007 to 3.1 million in 2008 – about 400,000 units.
ELI families are defined as those earning less than 30 percent of the Area Median Income.
According to the report, released earlier this month, the number of all renter households in the U.S. increased by 2.4 percent between 2007 and 2008, but the number of ELI renter households increased even more, by 3.5 percent.
“It’s a lot of people going through foreclosures entering the rental market, the result of the current economic situation,” explained Megan DeCrappeo, a research analyst for NLIHC. “People are sort of being pushed out of home ownership.”
The number of ELI households has increased because people’s incomes are decreasing, DeCrappeo told IPS.
“For every 100 extremely low income renter households, there were 39 rental housing units affordable and available for them in 2007. By 2008, the number of affordable and available units had declined to 37,” the report said. “A scarcity of housing that the poorest families can afford is the principle cause of homelessness in the United States.”
During the same period, the supply of all rental homes increased by 2.2 percent overall. However, the increase in supply was experienced by every income category except the ELI group. For ELI households, the supply of affordable rentals decreased by 1.8 percent.
“In general, we’ve noted this kind of a trend for years. New housing generally is built in other income groups, not for ELI households,” DeCrappeo said. “While the demand grows in that sector, the supply doesn’t keep up because it can be expensive to construct and operate housing for ELI households.”
“There have been all these foreclosures and increase in vacancy rates, but these [vacant units] are not at levels affordable to people of ELI groups,” she added. “They’ve had to take other measures, cut out food or health care costs, doubling up with friends and family, things like that.”
DeCrappeo said that some people with higher incomes are also moving into the units affordable to ELI households.
“We’re all kind of competing for low-cost housing,” she said.
Asked if landlords raising rents has been part of the problem, DeCrappeo said NLIHC has observed a decrease in rents overall, but not enough to reach the poorest households.
Ironically, even as the number of families needing affordable housing has grown, there is also an increase in vacant housing, including foreclosed homes as well as vacant upscale condominiums and apartments.
So why don’t the owners of the condos just lower their rents? “The reason why so much housing for ELI households needs to be subsidised by the government is it’s difficult to operate the housing [with such small revenues],” DeCrappeo said.
Another factor contributing to the decrease in ELI units is the mass demolition of public housing in cities and counties across the U.S.
“We’ve lost tens of thousands of public housing units over the years and that’s just contributing to the shortage,” Linda Couch, deputy director for NLIHC, told IPS.
As previously reported by IPS, about 100,000 public housing units have been demolished under a controversial programme called HOPE VI and another 100,000 have been demolished under Section 18.
“In Atlanta, where they dumped all public housing, those people on the waiting list for vouchers, well, they need more vouchers. And they shouldn’t have destroyed the public housing they did,” Couch said.
There has been also a slowdown in construction of new subsidised low-income housing, DeCrappeo added.
“This whole shortage is why we at the NLIHC push for this National Housing Trust Fund (NHTF). It’s a fund that would allow states to build and maintain housing for this group that has been underserved in this country,” she said.
In 2008, the U.S. Congress approved the NHTF in what was seen as a grassroots victory for affordable housing advocates. However, the planned funding mechanisms for the Trust Fund have fallen through since then.
“It was authorised last year… it hasn’t been funded yet,” DeCrappeo said. The funding for the Trust Fund was supposed to come from a portion of excess revenue from government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, from the proceeds of new mortgages.
“That fell through, basically because of the difficulties Fannie and Freddie went through, that’s no longer a viable source for the Trust Fund,” DeCrappeo said.
The U.S. government took over the two GSEs after they became fiscally insolvent.
“We’ve backed up their accounts. The House and Senate are starting to figure out the future of the GSE’s. We want them to be big and strong and robust so they can put some money in the Trust Fund,” Couch said.
One possible funding source in the meantime is a new jobs funding package that was approved by the U.S. House last week. The U.S. Senate may take up the bill in 2010.
Out of 75 billion dollars in total funding, one billion is supposed to fund public housing capital improvements and one billion is supposed to support the Trust Fund.
The jobs funding package would be allocated from an unspent portion of the recent financial bailout, or Troubled Asset Recovery Program (TARP), approved by Congress.
However, the Trust Fund is just part of the solution, advocates say.
“We need to preserve every public housing unit we have and we need new vouchers. Every city or town needs some combination of these things – public housing, subsidised housing, and vouchers – to meet the affordability challenges which all cities are going through,” Couch said. “We need it all.”
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