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Welcome to. Companion PowerPoint Presentation for the Introduction to Housing textbook. Housing Affordability. Lack of affordable housing is a crisis for both communities & individual households For communities—attracting & keeping employment opportunities; quality neighborhoods

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  1. Welcome to... Companion PowerPoint Presentation for the Introduction to Housing textbook

  2. Housing Affordability

  3. Lack of affordable housing is a crisis for both communities & individual households • For communities—attracting & keeping employment opportunities; quality neighborhoods • For households—self-sufficiency, stability & improves life outcomes for children There is debate on this issue

  4. When is Housing Affordable? • A household should spend no more than 30% of its total income on housing costs, including mortgage or rent payments & utilities • More than 30%: housing cost burdened • More than 50%: severely housing cost burdened • Variety of housing affordability indices exist

  5. 13.4 million renter households & 14.5 million owner households have housing affordability problems Factors influencing affordability: • Income level • Household size • Geographic variation Affordability is tied to a particular geographic area’s median household income & median housing costs

  6. Households and Housing Costs • Median cost of a new single-family home: 1982 $60,300 2002 $187,500 Increase of 170% • Due to: Inflation Increases in cost of materials & labor Increase in land values Regulations & development charges Households’ demands for more space of higher quality

  7. Homeownership and Affordability • Affordability index: relationship between the median income in an area and the median income required to quality for a mortgage • 100 = households with median income could purchase the median priced home • In 2002: 136.4 • But minority, single-parent & low-income households face greater affordability problems

  8. Renting and Affordability • Poor households that rent suffer the most severe housing cost burdens • Supply of low-cost rental housing units has not been sufficient for the demand • Much of that housing is old & located in neighborhoods with little access to jobs & adequate services • Government assistance is available, but is not adequate

  9. Understanding the Shortage Increasing the cost of housing: Additional space & amenities Compared to 20 years ago homes are: • Larger • Have more bedrooms (3-4) • Have more bathrooms (2 ½) • Have at least a two-car garage • But, smaller lot

  10. Increasing the cost of housing: The role of local government regulations Increased government regulation leads to higher housing costs & decreased amounts of new construction • Impact fees • Code restrictions • Growth restrictions • Exclusionary zoning

  11. Increasing the cost of housing: Failure to preserve existing affordable housing • Loss of affordable units to gentrification • Loss of units due to lack of repairs • Too expensive to rehabilitate units under new codes, so are demolished or left to decay

  12. Homelessness • For some families, a failure to find affordable housing leads to homelessness • Homeless—those in shelters or in a public or private place not designed for, or ordinarily used as, a regular sleeping accommodation for people (800,000 each night) • Hidden homeless—living with relatives or friends (doubled up) in overcrowded conditions or living in substandard housing

  13. Who are the homeless? • Families with children (fastest growing segment) • Single adults, often men 30-50; but many women as well • Runaway youths • Suffer from mentall illness • Struggle with substance abuse

  14. Need affordable housing— rental assistance • Need to earn a sufficient wage— living wage • Shelters (day and/or night) • Temporary assistance through nonprofits

  15. Solving the Affordability Problem • Public education efforts—the public must support the need for affordable housing and be willing to provide the necessary support • Land use strategies to reduce the cost of housing --higher density & mixed-use development --inclusionary zoning --Community Land Trust (CLT)

  16. Reduction in building & management costs --streamlined building methods & standardized components --factory-built housing --donated labor & materials --resident labor (sweat equity) • Reduction in finance costs --low-interest loans for constructing or rehabilitating affordable housing --Low Income Housing Tax Credit --HOME & CDBG

  17. Increase resources for housing --to builders to produce affordable housing --home purchase assistance to low- & moderate-income homebuyers --Public Housing & Section 8 vouchers to renters

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