Thursday, April 28, 2011

A Shortage of Affordable Housing

A new study shows a serious shortage of affordable housing in the US. From WaPo:

The study offers the latest in a series of grim statistics about the scarcity of rental housing, especially for the working poor. The supply has not kept up with demand in part because of a shortage of apartments, a key source of new rentals. Developers cut back on such projects when the economy deteriorated in 2009, which drove down vacancies and boosted rents. Analysts say they expect rents to keep climbing as developers try to ramp up new projects and catch up with demand.

The number of foreclosures has also contributed to the shortage. As people are forced out of their homes, they look for rentals.

Ideally, renters should not spend more than 30 percent of their income on housing, the study said. Low-income tenants have struggled during the past decade to stay within that limit. And increasingly so have renters with moderate incomes, defined as making between two and three times the minimum wage. By 2009, 7.5 percent of moderate-income renters spent more than half their income on rent, twice as many as in 2001.

Naturally as the supply decreases and the demand increases, so do the rental costs. No one is building affordable housing, either.

In a report to Congress, the Obama administration acknowledged in February that financing to build high-end rental properties is more readily available. That helps explain why for every 100 extremely low-income American families, only 32 adequate rental homes are available, the report said.

One solution has been proposed, as Joshua Holland reports in Alternet:

For the past several years, a number of economists have been calling for a “right to rent” measure that would keep homeowners whose properties are deep underwater in their units rather then sending them into the market for existing rentals. Dean Baker, who has led the charge since 2008, called it a way to help homeowners “without throwing money at the banks.” Rather than Washington's ineffective mortgage modification programs, Baker says, “we can simply temporarily change the rules on foreclosure to give people facing foreclosure the right to rent their homes at the market rent.”

Baker went on to say:

This is extremely simple and can go into effect the day after Congress passes the rule change. Judges or the court officers handling a foreclosure would be required to ask the homeowner whether they want to stay in their house as a renter. If they say yes, there would be an appraisal of the market rent of the home, and the homeowner would then have the option to stay in the house for a substantial period of time (e.g. 10 years), paying the market rent.

This would immediately give the homeowners facing foreclosure security in their housing. If they like the house, the neighborhood, the schools for their kids, they would have the right to stay there. It would also end the problem for neighborhoods of empty foreclosed houses. And, it would give banks real incentive to negotiate terms that allow people to stay in their homes as owners.

This is a sensible idea. It doesn't cost taxpayers anything, eases the rental crunch, and prevents whole neighborhoods from dying of foreclosure. Families aren't uprooted and kids can stay in the same school.

The banking lobby hates it. Those same banks we taxpayers bailed out don't want to lift a finger to help us out. Representative Raul Grijalva of Arizona has introduced HB 1548, the the Right to Rent Act of 2011. This bill failed in 2009 and 2010. If you agree with this legislation, please urge your representatives to sign on and support this very common sense approach to a problem affecting low and middle income families across the country.

cross-posted at MainSt/

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