For people renting homes in America, both luck and money are running out. Across the country, rents are rising much faster than incomes, and around 44% of renters spend more than 30% of their income on housing. That’s far too much, but it’s becoming commonplace because there simply aren’t enough affordable places for people to live.
A new report from the progressive policy research and advocacy organization Center for American Progress posits that is because there just aren’t enough homes, and those that once were affordable have shifted to the very high end amidst market pressures, leaving few places for low-income people to turn. Because this is a nationwide issue, CAP wants to see the federal government help deal with it–specifically by sponsoring a large-scale housing construction program to add an additional 1 million affordable units to the market over the span of five years.
The report, titled Homes for All: A Program Providing Rental Supply Where Working Families Need It Most, reads, in this political climate, as more of an exercise in magical thinking than a practical policy recommendation. Trump is extremely unlikely to authorize the $20 billion in annual funding this program would require to construct and maintain the new properties. Report author and CAP senior analyst Michela Zonta knows this. But the housing shortage in the U.S. will not disappear with a change of administration, and a report of this scope offers a sense of the magnitude of both funding and policy coordination that will be required to solve it.
Fundamentally, Zonta says, housing plays an integral role in the country’s overall economy, and the federal government should be more engaged in the issue than it has been. “When we think about our economy and how it can be competitive, it won’t be as long as workers along all income scales, but particularly low-income workers, face as many barriers to success as they are currently, and housing is a main one,” she says.
The rental housing squeeze has its origins in the Great Recession, which took a toll on homeownership rates. Since 2010, the number of renter households has increased by nearly 1 million a year. As a significant portion of these new renter households are middle or high-income, they’ve begun to occupy a share of the units that used to be affordable to extremely low-income people (defined as those households at or below 30% of the family area median income).
The numbers tell the whole story. Around 8 million renter households (19% of all renters) live on extremely low incomes. Only 4 million units in the U.S. rent at a rate that is affordable to people in this bracket. But only half of those affordable units are occupied by extremely low-income households; half house higher-income people. That leaves a huge gap in the market, Zonta says. Those 6 million extremely low-income households not renting affordable units are either paying rents out of their price range, or “doubling up” in another family’s apartment. Sometimes, they’re forced into homelessness.
The 1 million homes that CAP is recommending, Zonta says, is a conservative figure, given the immense need for affordable units, but it could create ripple effects through the market that open up other opportunities. For instance, the addition of more affordable units could influence overall market rates downward. And these new affordable units could house people currently receiving subsidies to live in pricier units, and those subsidies could shift to other rent-burdened people to allow them to live more affordably.
For Zonta, this is a supply-side issue that the federal government can and should solve. But it would require a large financial and political investment at the national level–something that hasn’t happened since the federal government stopped financing public housing projects two decades ago.
CAP’s Homes for All proposal would direct billions of dollars annually to cities and communities on the basis of current housing need, as well as projected job and population growth numbers. Those funds would go to local nonprofit housing developers to carry out design and construction, ideally, Zonta says, near transit hubs, to emphasize sustainable development. In an ideal world, CAP would like to see funding for this program begin as soon as it is authorized, and last for five years, during which developments would go up, and tenants would move in on an as-completed basis.
The Homes for All proposal leans heavily on the idea of community land ownership to support affordable housing. Zonta recommends that the grant money from the government go toward buying up unused property and establishing Community Land Trusts–parcels of land owned and operated by local nonprofits who ensure that the developments sited on the property remain affordable in perpetuity and manage the property and the intake of tenants after it is built. CLTs are still very uncommon in the United States, and the Homes for All program is designed to dramatically increase their presence as an effective form of long-term affordable housing.
Unlike previous federal housing initiatives, the Homes for All program would not be means-tested–meaning, there would be no income ceiling placed over renters seeking to participate in the program. In that respect, Zonta says, Homes for All mimics more expansive public housing programs in Europe, and those that the U.S. government sponsored in the New Deal years leading up to World War II, which were arguably successful.
That doesn’t mean, though, that there wouldn’t be a way to ensure that those households struggling most in the rental market now get priority. To access a unit under the program, renters would have to prove that they are burdened in their current housing situation–paying 30% or more of their income on housing, or having to live at an inconvenient remove from where they work. Households that currently qualify for federal rental assistance programs would continue to receive and be able to use their subsidies, and by welcoming middle-income tenants into the developments, the property managers would be able to subsidize rents for extremely low-income tenants. The CLT or nonprofit that manages each specific development would set rental rates to correspond with people’s individual means–one of the features of CLTs is that they peg rents to income, not prevailing market rates.
The driving principle behind Homes for All is that the current private rental market has skewed too far toward catering to high-income tenants, who make up a relatively small (though growing) portion of all renters, drawn by the flexibility of short-term leases and–for many who came of age during the housing crisis–wary of homeownership. And because they still often seek out cheaper places to live, we’re left with situations like the one unfolding in Denver, where developers build luxury towers that few people can afford to live in and remain largely empty, while low and middle-income people struggle to find housing. In other words, the wealthy people for whom luxury housing is being built are, in many cases, still opting to rent cheaper units, and as such are squeezing lower-income people out. Homes for All wants to jump-start development specifically for those forgotten middle and lower-income brackets. “Rather than having a filtering-down type of approach–building luxury homes that will filter down to low-income people, I think we have a trickle-up approach of building for those people to begin with,” Zonta says.
Under the Trump administration, which has shrunk support and funding for public programs and insists on market reliance as a societal cure-all, this proposal reads like shouting into a void. Indeed, Zonta says, the report is intended as a theoretical framework. “The political will for this kind of work is not here,” she says, though she’s working on setting up meetings with Hill staffers to inform them of the proposal all the same. “If we’re able to afford tax cuts and all kinds of incentives for the top 1% of people in this country, why can’t we afford to spend $20 billion a year on housing for people who need it?” she says.