Everything you need to know about America’s affordable housing crisis

By Irene Morse
Sept. 9, 2014

Foreclosure Sign

When I was about 12 years old, my neighbor was evicted; his house was rented out to a group of college guys who removed his painted lawn gnomes and put a glowing Bud Light sign up in the back window. I wasn’t thrilled, mainly because his dogs, who had become my trusty companions, left with him. As the weeks went by, the reality of the situation became clearer to me. I saw him hanging around by the river, where other homeless folks sat together, just a block away from his old neighborhood. I never saw the dogs with him. For awhile, he had his truck, and then I stopped seeing the truck as well. Slowly he shed possessions and with them, the connections he had to his house, to his family and friends, to a normal life.

There is no denying that America is in the midst of a housing crisis. Even the cost of renting has become prohibitive for many. The Department of Housing and Urban Development defines an affordable house as one that costs less than 30 percent of one’s monthly income, including basic utilities. So, say someone works 40 hours per week at the federal minimum wage of $7.25 an hour. They should, in theory, be able to find a home that costs less than $348 per month. Anyone who’s been apartment hunting knows how unrealistic this is, and, in fact, there is no state in the U.S. where a person working 40 hours per week at minimum wage can find affordable housing. All states require a minimum-wage worker to work at least a 70-hour work week to be able to afford housing. The most egregious examples are California, Maryland, New York, New Jersey and Washington D.C., where a minimum-wage worker must work over 130 hours per week to be able to afford housing. Working five days a week, that comes out to 26-hour days, which is…well…literally impossible.

The alternative for low-income households is to dedicate well over 30 percent of their income to housing, which means less money for groceries, medical care, school, car payments and other necessities. It would be easy to blame this shortfall on our country’s ridiculously-low minimum wage, but there are other economic trends at work as well. Especially in metropolitan areas, the cost of housing has risen significantly over time. Research conducted by real estate firms indicates that average rents have increased by 14 percent since the end of 2009. In New York City, rent averaged $3,152 per month, making it the most expensive place to live in the U.S. The result is overcrowding in apartments and an increased willingness to tolerate substandard living conditions. Tenants have little leverage against landlords, because there is so little housing available in urban areas. With demand for housing so high, it makes more sense to shut up and sit tight than to make a scene and risk losing a home.

These rising costs in urban areas result in a vicious cycle of homelessness. The homeless flock to urban areas because they offer more public services and resources, but they are rarely affordable places to turn over a new leaf and start a home. Unfortunately an estimated 12 percent of the homeless are veterans, nearly half of whom served in the Vietnam War. With minimal support systems for reentering the civilian population and lingering mental health issues from the trauma of war, it is not surprising that these men and women end up on the street. And, unfortunately, a life of homelessness often uses more taxpayer dollars than providing homes for the homeless would. When a person is living on the streets, it is difficult for them to find a job, because they have no way to get clean. Living in rough and dirty conditions without sanitation also makes the homeless more susceptible to injury and disease. Without insurance, these individuals end up in the emergency room, rather than receive simple and cheap preventative care or avoid health problems in the first place through basic hygiene. These costs are eventually foisted onto taxpayers, rather than being considered and eliminated systematically. The government has done little to address this vicious cycle with most innovation coming from nonprofits such as the 100,000 Homes Campaign and philanthropic individuals such as Doniece Sandoval.

One reason the government has been so ill-equipped to handle the housing crisis is the internal financial struggles facing facing the Federal Housing Administration. An important part of HUD, the FHA provides a payments to lenders when low-income families stop paying the mortgage. This allows for more flexibility for both the lenders and the home owners: Lenders are more likely to provide loans to low-income families, thus allowing them to achieve home ownership, and low-income families need not fear losing their home immediately if they begin struggling to make payments.

Unsurprisingly, the FHA has been stretched thin since the 2006 housing crisis and in 2013 obtained a much-needed bailout to the tune of $1.7 billion. Unfortunately this bailout was not accompanied by significant structural changes, which left the FHA without a permanent solution for its financial woes. Their policy so far has been to raise mortgage insurance premiums, which allows them to operate in the black as long as lenders continue to provide FHA loans. But this isn’t going quite as smoothly as expected, as lenders have lost faith in an agency that promised to back loans for riskier borrowers and then punished banks for providing these loans after the housing crisis.

If the government cannot help those who lack affordable housing, we have an obligation to do what we can. It’s easy to buy into the stereotype that every guy you see holding a sign on the side of the road is addicted to drugs and simply hasn’t worked hard enough to deserve a home, but before you accept these ideas blindly, do some more digging and think about the situation in context. The homeless haven’t always been homeless — chances are, they had a life much like yours at some point. And if many of them do face drug addiction and psychological disorders, it is likely because of the circumstances of their lives. Veterans serve their country, often in extremely dangerous and traumatizing situations, and are given little support when it comes to readjusting to civilian life. A rising number of LGBT youth are kicked out of their parents’ homes simply for who they are. Families evicted during the housing crisis have been exposed to a life of insecurity they could never have conceived of before. It is no wonder that these people have turned to alcohol and drugs to cope with difficult situations, or that they have suffered psychologically because of them. All these people need is a single person, event, or organization to retie the thread to the more stable life they used to know.

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[Title Image: Jeff Turner/Creative Commons]

Posted by on September 18, 2014. Filed under National Politics,Poverty,Recent News,Social Justice,Top News. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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