Key to More Affordable Housing: Boost Investment in the Housing Tax Credit Program, Limit Regulation at the Local Level and Invest in Skilled Construction Training
The largest part of Americans’ paychecks goes to housing. Since 2001, rents have increased drastically ahead and out of step with Americans’ incomes. On the flip side, vacancies in affordable housing have barely increased, hurting economic growth as job-seekers cannot afford to live near jobs that pay good wages and salaries.
According to the Bureau of Labor Statistics, about a quarter of the average household income in 2016 was used to pay rent or mortgage. In addition, “Housing prices have risen 38% more than inflation since the end of the last recession in 2009.”
Meanwhile, federal housing subsidy programs have stagnated. This problem may seem complex, but the federal government has the power to enact real change.
First, the government could increase funding for federal housing subsidies.
Between the years 1987 and 2015, the number of low-income renters rose by 6 million. In contrast, only 950,000 more people received federal rental assistance.
- The U.S. Congress could boost the Low Income Housing Tax Credit Program by investing $4.1 billion in the program and create another 400,000 units of affordable housing over 10 years.
- Pulitzer Prize Winning socialist Matthew Desmond suggests a plan guaranteeing housing vouchers to all Americans making less than 30% of the local median income. This proposed investment would cost about $22.5 billion per year. Despite the high cost of this proposed investment, a cost savings would be seen on the side of homeless services. In October 2017, Desmond addressed Monarch Housing Public Policy Forum on the eviction crisis which exacerbates homelessness.
- Second, the government could discourage over-regulation of the construction of affordable housing at the local level.
- During and after the last great recent recession, there was little new investment in the construction of affordable housing.
- But now, there is ample lending and investment available to build new affordable housing units in cities that have the infrastructure to support them.
- However, minimum lot sizes, extensive approval processes, and parking requirements discourages the construction of affordable housing.
U.S. Rep. Ro Khanna (D-CA-17) suggests a “race to the top” for housing policy, where the federal government would award competitive grants to cities that relax their construction codes.
The high costs of constructing affordable housing needs to be addressed and decreased. Developers simply are not building as much affordable housing as they once did because land, labor, and materials are becoming scarcer and costlier.
Further, increased funding in training programs could help developers find more skilled workers to build affordable housing.
All of these potential solutions to addressing the country’s affordable housing are attainable and could make housing in the U.S. more affordable, but they all require the will of the federal government.