7.3.13 | I’ve been spending an inordinate amount to time lately looking at real estate. My husband and I toss around the idea of moving somewhere warm since he’s now retired. It’s an exhausting search for that perfect, affordable place. And I stress affordable. Everything “nice” is too expensive, and everything affordable is a dump.
Our search of course falls squarely under the meme “first world problems.” Affordable housing takes on an entirely different dimension when faced with paying half your salary for an apartment with peeling lead paint, roaches, and a broken window, because that’s the best option available.
For far too many families, affordable housing is more than a perk. According to a report by the Bipartisan Policy Center, nearly two-thirds of extremely low-income renters (those with incomes at or below 30 percent of an area’s median income) spend half or more of their income on rent. When half your money is going to the landlord, it’s hard to buy the things that not only make life a smidge nicer, but that can also improve your children’s prospects.
Low-income families like Shenita Simon’s, featured in the “Gotham” column in the New York Times, find themselves in a Catch-22. The 25-year-old works at KFC in Brooklyn for $7.75 an hour. Her husband was laid off, so her meager salary buys clothes and food for her three children, and helps her mother with the rent. They’re trapped in many respects, unable to move out to their own place in a better neighborhood. And with that, they risk putting their children at a severe disadvantage.
The neighborhood children live in can affect many things in their lives, from those they play with to whether they breathe polluted air. Just as innovation can cluster in certain regions like Silicon Valley, luring talent and creating synergies that spur new ideas and products, so too can crime and social disorganization cluster. In his 1987 book “The Truly Disadvantaged,” noted scholar William Julius Wilson proposed a theory for why crime and poverty clustered, and persisted, in certain neighborhoods. Since then, research has expanded our understanding of the connection between neighborhoods—with their unique cluster of advantages or disadvantages—and life outcomes.
Neighborhood forces can shape the type and extent of social networks, which are good sources of leads for jobs, child care, or even a good handyman. The neighborhood environment—everything from exposure to violence or the area’s physical surroundings, down to broken windows and environmental pollutants—can have an impact. The relative isolation of a neighborhood in relation to jobs plays a role, as does a neighborhood’s resources, such as the availability of day care, medical clinics, good grocery stores, and other amenities, including, importantly, schools.
Researchers at the Furman Center for Real Estate and Urban Policy find that poor families in the United States lived near an elementary school that ranked at the 30th percentile in that state on test scores. About one-third of people in public housing and a quarter of those using vouchers from Housing Choice—the largest subsidized housing program—live near schools that are ranked in the bottom 10th percentile for their state on test scores. The schools are more likely to have a student body that is largely poor, and are located in neighborhoods that are more often segregated by race and income.
Breaking the cycle of poverty often starts in the classroom. Moving to a neighborhood with a good school is the goal of nearly every parent because parents know that a good education is a cornerstone of a more secure life. Yet good schools tend to be in “good” neighborhoods, and those good neighborhoods charge higher housing prices and higher rents.
So affordable, quality housing is not an idle concern. These personal successes or struggles in life in turn affect a metro’s regional strength. Everyone left behind leaves a mark on the region’s competitiveness, tax base, and political strength. A recent Rockefeller Foundation study of the resilience of New York neighborhoods after Hurricane Sandy found that those neighborhoods with less overall trust between neighbors and social cohesion have had a more difficult time recovering.
So how can we make housing more affordable? A report by the Center for American Progress suggests leveraging the secondary mortgage market—the market that buys mortgages, packages them, and resells them (yes, the same one that got us into the financial crisis). But the Center’s report offers some carefully controlled options to increase housing options for low- and middle-income families. The National Housing Council further discusses these on its blog.
Other programs are designed to help families manage their housing costs, including the following:
- The Housing Choice voucher program serves 2 million households (and more than 2.5 million children under age 18) and offers tenants subsidies in market-rate housing. Families are responsible for finding their own units, which the owners must agree to rent under the program. The family must pay 30 percent of its monthly gross income for rent and utilities, and if the unit rent is greater than the payment standard, the family is required to pay the additional amount.
- Project-Based Section 8 units serve 1.2 million households in privately owned housing that is subsidized by the federal government. The subsidy stays with the building; when the family moves out, they lose the rental assistance.
- Public housing serves approximately 1.2 million households. It is owned and operated by the local government authorities.
- The Low Income Housing Tax Credit (LIHTC) serves approximately 2.5 million households. The credit is a dollar-for-dollar tax reduction to investors who develop affordable rental housing.
Unfortunately, these programs continually face budget cuts and in many respects, underfunding. As the Center for Budget and Policy Priorities puts it: “The federal government spends 2.8 times as much on tax subsidies for homeownership—more than half of which benefits households with incomes above $100,000—as on rental assistance.”
And even if housing is more affordable, neighborhoods won’t become diversified, by income or race and ethnicity, without direct intervention. See this clever study on discrimination in the housing market. Two couples, identical in every way but the color of their skin, were sent on a quest to find a new home. The result: “Fully 45 years after passage of the Fair Housing Act, minority renters and homebuyers still don’t get the information and access that they would if they were white,” writes the Urban Institute’s Margery Turner, one of the researchers on the study.