PHADA President Mark Gillett.
The Joint Center for Housing Studies at Harvard University recently released its annual report. The sobering results serve as a stark reminder documenting the tremendous needs of low-income renters while also noting the great shortage of affordable housing units across the country. This comes at a time when Congress is moving to finalize HUD appropriations for the fiscal year that began more than four months ago.
The report covers both subsidized housing and the private market. I focus mostly on the assisted housing aspects below, but interested readers can review the full report here.
Needs at All Time High
The report notes that a record number of people are now experiencing homelessness, reaching roughly 653,000 last year. The number of very low-income renters grew by 4.4 million between 2002-21 while the number of federally assisted households increased by just 910,000.
The Joint Center echoes the industry’s concerns regarding inadequate capital funding, noting the backlog may be as high as $90 billion. The Rental Assistance Demonstration (RAD) has helped many HAs upgrade properties, but Harvard said “many more resources are required to sufficiently address the scope of needed repairs and improvements…” to preserve the stock.
The report points out that the Low Income Housing Tax Credit (LIHTC) program has supported 3.6 million units since its creation in the mid-1980s, but that progress is a bit muted in that owners can opt out of the program. Specifically, the authors note that about 7,000 units are lost prematurely each year when owners opt out after the initial 15-year period.
In a related matter, Congress is presently considering comprehensive tax legislation, which would expand the LIHTC. The bill recently passed the House, but prospects in the Senate are murky. I encourage you to contact your Senators recommending enactment of the tax package. Among other things, the bill would also expand the LIHTC by restoring the 12.5 percent cap increase that expired at the end of 2021, resulting in the preservation and production of as many as 200,000 more units.
The Housing Choice Voucher program has been successful, providing assistance to 2.3 million households in recent years. However, Harvard noted that about 40 percent of the people who receive a voucher are unable to use the subsidy in the amount of time allotted to sign leases. Like many of us, the report laments that inspection, approval, and bureaucratic impediments sometimes deter landlords from participating, especially in hot rental markets.
Increased operating costs are a significant challenge for both private market landlords and subsidized housing providers. The report cites rising insurance costs as a major factor. Not surprisingly, the Joint Center noted that inflation is having a major impact on renters too. The number of cost-burdened households – those spending more than half their income on housing – is at an all-time high of more than 12 million in 2022. That is 1.5 million more than pre-pandemic levels.
The report concludes that “absent increased affordable housing production and subsidies… more renters – especially those with lower incomes – will strain to make ends meet as so many already are.”
What We (and Congress) Can Do in the Short Term
The challenges and associated costs outlined in the report are daunting. PHADA will remain actively engaged with industry partners and other advocates in the effort to try and overcome those longer-term challenges. In the meantime, we can help make a difference in the short term.
Congress is more than four months late finalizing the 2024 budget. The Harvard report is timely and helps illustrate the need for lawmakers to optimize HUD spending to address operating, capital, and voucher renewal needs. I encourage you to remind your Representatives and two Senators of the findings in the latest Joint Center study and the comprehensive tax legislation. To assist in those communications, PHADA’s suggested talking points are available here, and our FY 24 appropriations Position Paper may be accessed here. In addition, more information on the tax bill is included on page 1 of this edition.