The number of low-income families struggling to afford housing has grown dramatically in recent years, according to CBPP analysis of new Department of Housing and Urban Development (HUD) data. That’s one reason why so many poor children live in households that face major hardships such as falling behind on the rent or mortgage, as my colleague Arloc Sherman recently noted.
About 8.5 million households with very low incomes faced “worst case housing needs” last year, meaning that they had no housing assistance and either paid more than half of their income for rent and utilities or lived in severely substandard housing. That’s 2.6 million (43 percent) more households than in 2007.
Families that pay large shares of their income for rent are much more likely to move frequently or go through periods of homelessness — experiences that can seriously harm children’s health and development.
Many more families would face severe housing problems without federal rental assistance programs like “Section 8” vouchers and public housing, which help close to 5 million households afford decent housing. But, due to funding limitations, rental assistance has expanded only modestly as needs have grown (see graph), and families in much of the country face long waiting lists. If policymakers cut rental assistance programs as part of a major budget deal, even more families could face unaffordably high rents.
To stem and ultimately begin to reverse the growth in severe housing needs, policymakers should:
Avoid cutting non-defense discretionary funding even more than they already have. Policymakers last year cut non-defense discretionary spending — the budget category that includes rental assistance — by about $900 billion over the coming decade, mainly by imposing spending caps in the Budget Control Act. Policymakers have already cut housing assistance funding by $2.5 billion (6 percent) below 2010 levels and will have to squeeze funding for a range of programs — likely including housing assistance — to meet the caps in future years. Further cuts would heighten the risk of major cuts in rental assistance.
Streamline rental assistance programs. Congress could stretch limited funding further by making rental assistance more efficient. One promising bill, the Affordable Housing and Self-Sufficiency Improvement Act (AHSSIA), contains well-crafted, broadly supported reforms that would protect low-income families while saving $2.8 billion over five years, according to the Congressional Budget Office.
Rebalance housing-related tax policies to help low-income renters. The bulk of federal spending on housing goes to tax subsidies for homeowners, which mainly benefit higher-income families. The deductions for mortgage interest and property taxes will cost more than $100 billion in 2012, or about twice as much as all federal low-income housing programs combined. Congress should reform homeownership tax breaks and direct some of the savings to a renters’ tax credit that would ease hardship for families at the bottom of the income scale.