As Trump administration official toured Los Angeles, in survey of the region's efforts on homelessness, US Rep. Earl Blumenauer released a housing report reflecting on the historical role played by the federal government in housing policy for more than two centuries. In "Locked Out: Reversing Federal Housing Failures & Unlocking Opportunity", the executive summary to which TPR presents below, the Oregon congressman outlines the federal government's historic role in providing housing for some, often at the expense of others and the current grab bag of tax incentives, loan programs, and direct investments that make up federal housing policy today to provide context for today’s crisis and the appropriate federal response to the nation's affordable housing shortage.
Rep. Earl Blumenauer
"To make up for decades of inaction and centuries of discrimination, we must take immediate steps that are bold and transformative."—Rep. Earl Blumenauer
NOTE FROM CONGRESSMAN EARL BLUMENAUER
Perhaps the greatest challenge communities face is the provision of affordable, accessible housing. Like roads, bridges, transit, and water, housing is integral infrastructure in any livable community.
It has been more than 70 years since the United Nations recognized that housing is a human right.
Unfortunately, the United States has failed to live up to that standard. From growing wealth inequality to the climate crisis and structural racism, our most daunting societal challenges are inextricably linked to housing.
I have been involved in housing policy my entire public life. I witnessed firsthand the public sector’s steady retreat from providing affordable, accessible, and safe housing. The federal government must reassert its partnership to become a constructive force for equity, accessibility, and opportunity in solving the housing crisis.
The federal government has played a role in housing policy for more than two centuries—providing housing for some, often at the expense of others. The consequences of these actions continue today. Since the Great Depression, Washington has provided targeted programming to address particular aspects of housing policy but generally reduced its commitment to all Americans having a safe and affordable place to live.
The federal government has never had a comprehensive vision to provide a range of affordable housing choices. Instead, a grab bag of tax incentives, loan programs, and direct investments provide the context for today’s crisis and a hint at possible solutions. It is past time that Washington gets back in the game of housing policy and realigns its priorities to serve low- and moderate-income Americans, provide wealth-building opportunities for all, and help right past wrongs.
This report is an attempt to synthesize some of these challenges and suggest approaches. These solutions may seem to be radical or interfere with the “free market.” The fact is that you will look in vain for a “free market” for housing in the United States. It is profoundly influenced by zoning decisions, governmental housing programs, and the tax code. We must put it all on the table by understanding how we got here and thinking broadly about what tools we have to remedy this situation.
This won’t be easy but we can’t afford to think small. Every community needs to commit to a massive public effort with homeowners, renters, and advocates to craft winning solutions.
I’m committed to being your partner in Washington. I look forward to working with you as well as citizen advocates, landlords, realtors, developers, and homebuilders to create more livable communities where housing is safe, affordable, and accessible.
Communities large and small are facing a housing affordability crisis. It’s not a crisis that suddenly manifested by itself. Rather, it is the result of decades of deliberate choices from policymakers who scaled back the federal government’s partnership on housing in favor of other priorities.
From President Franklin D. Roosevelt’s New Deal to President Lyndon B. Johnson’s Waron Poverty, the federal government was an active partner in investing in housing programs to provide a home for struggling Americans, particularly if they were white. As poverty rates declined for white families, so did federal assistance for housing communities of color that remained in poverty. Congress and the Nixon, Reagan, and, to a lesser extent, Clinton administrations all worked to systematically shift federal housing policies to be smaller, focused on rental assistance rather than construction, and ultimately less impactful.
These deliberate choices led us to today’s crisis: middle class families struggling to buytheir first home, renters who can barely make rent, chronic homelessness, and lingering effects of centuries of institutionalized racism.
In one of the wealthiest countries on Earth, more than 550,000 people experience homelessness every night1 and nearly half of renters are paying more than 30% of their income in rent.2 The United States has a shortage of seven million rental homes available to extremely low-income renters and there isn’t a single state that has an adequate supply of affordable rental homes.3 Affordable housing is too often out of reach, particularly for workers earning around the minimum wage. We all know people or families who have to stretch their budgets to pay one- third or one-half of their income for a home. That is unacceptable.
We need a reset. This report details suggested solutions for five of our most vexing housing policy challenges:
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- Public Housing: Once a major source of affordable housing for low-income Americans, Congress has artificially capped the construction of new public housing for the past 20 years.
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- Homelessness: Most of the country’s “successful” communities have thousands of people experiencing homelessness due to astronomical rent increases, job loss, eviction, or mental illness.
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- Renter Relief: Rental prices have skyrocketed at a much faster pace than incomes, leaving millions of renters pinching pennies just to get by.
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- Equitable Homeownership: The federal government’s largest housing expenditure is the Mortgage Interest Deduction, which is targeted at the wealthiest Americans, while there are minimal tools for helping traditionally marginalized communities buy their first home.
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- Fair Housing: Centuries of discrimination left communities segregated and unequal. The federal government has not established the support structures to remedy the burden it caused.
INTRODUCTION
There is a housing crisis in virtually every community across America, even the most “successful” cities. One of the main causes of the crisis has been federal housing policies, or lack thereof.
In one of the wealthiest countries on Earth, more than 550,000 people experience homelessness every night4 and nearly half of renters are paying more than 30% of their income in rent.5 Nationwide, individuals have to earn $18.65/hour to rent an average one-bedroom home and meet the Department of Housing and Urban Development’s (HUD) affordability standard of paying less than 30% of income toward housing.6
It’s not that we aren’t spending money subsidizing housing. The federal government spends more than $30 billion a year on the Mortgage Interest Deduction alone7 and billions more on various housing tax incentives for developers and landlords. The problem for everybody else is that these subsidies are concentrated to those who need help the least.
It is clear to anyone who studies the painful facts and history, that the federal
government has been active in housing and land development since taking away land from Native Americans by force and treaty (which was often the same thing). The United States allocated vast tracts of land to mostly white settlers starting with the Northwest Ordinance, continuing on to the Homestead Act, and beyond.
In times of special need, the federal government actually provided direct investment in housing construction, like for workers during World Wars I and II, and for veterans returning from World War II. Usually, however, the policies and behaviors of the federal government reflected the overt and institutional racism of the times.
These actions had profound economic consequences for generations of African American families who were denied the opportunity to accumulate wealth through homeownership. Meanwhile, whites accumulated generation after generation of wealth.
There is no single federal policy, program, or local action that created this crisis. However, generations of increasingly restrictive housing and zoning policies in addition to a systematic reduction in federal funding for new construction had significant consequences. The decades-long federal decline in affordable housing programs occurred as rents outpaced wage growth, communities recovered unequally from the recession, and affordable housing supply declined. The federal government can no longer ignore the affordable housing crisis.
Today’s primary challenge in housing policy for all demographic groups is affordability. Every two years, HUD releases a report on “worst case” housing needs for renters with very lowincomes. The latest report found 8.3 million very low-income renters with “worst case” housing needs, the vast majority of which due to affordability. Rental affordability is a serious concern across income levels and geographic locations. The HUD definition of affordability is thathousing is considered “affordable” if it costs no more than 30% of a household’s income. Nearly half of renters are “cost burdened,” paying more than 30% of their income in rent.10 Nearly aquarter of all renters are “severely cost-burdened,” paying more than 50% of their income in rent. In 2017, 83% of renter households with incomes below $15,000 were cost burdened and 72% were “severely cost burdened.”
While new rental and privately-owned homes are constantly being built, the private sector is heavily focused on higher-income households and higher rents. In 2016, 40% of new construction rental homes cost more than $1,500 per month and an additional 25% cost between $1,100 and $1,499 per month.13 The construction cranes you see on nearly every block are not affordable housing. The private sector is focused on where the most money can be made. Since the housing market turmoil of the late 2000s, the share of renter households has increased and construction has not kept pace, leading to vacancy rates under 7% during the second quarter of 2019 and rising rents. Likewise, the number of low-rent housing stock has shrunk by four million homes since 2011.
As the market fails to produce an adequate supply of affordable housing, the federal government has ceased to be an active part of the solution. During the Great Depression, President Franklin Roosevelt included the construction of public housing as part of his New Deal agenda. Millions of soldiers returning home from war were greeted with new homeownership programs and a second wave of public housing construction that continued into the 1970s. Bear in mind that all of these programs were undercut by blatant discrimination and racism toward African Americans. Shifting priorities in the Nixon and Reagan administrations focused on rental assistance and vouchers, rather than new construction. Decades of federal assistance to renting affordable homes, not constructing affordable homes, combined with federally-constructed homes reverting to market-rate housing has stranded the most vulnerable populations. Communities are ill equipped to provide affordable housing for low-income renters because the federal government dramatically slowed subsidies for new construction.
Finally, the Great Recession from 2007 to 2009 dramatically impacted lower-income Americans, particularly communities of color. History has shown that communities of color are the first to feel the impact and last to recover in economic downturns. For instance, African Americans (who were prevented from accumulating generational wealth in the form of property for more than 200 years) lost a decade worth of homeownership gains during the Great Recession.16While homeownership rates for white, Hispanic, and Asian American households have increased in the last 20 years, the homeownership rate for African American households was nearly identical in 2018 as in 1995.
The future of housing policy faces new challenges of shifting demographics and a changing climate. Single-person households have increased by 6 million, or 22%, since 2000. This is projected to increase, meaning more renters in a housing market that is already struggling to meet renters’needs. By 2030, there will be nearly 47 million heads of households over 65, an increase of 20 million from 2015. Households with heads over 65 have challenges working and greater need for integrated services. Finally, the climate crisis has already made some areas of the world untenable for human inhabitants. This trend will become more pronounced, creating a wave of climate refugees that will put increased pressure for affordable housing in select regions.
We need a reset. While some cities and states are working to pass bond measures, createnew programs, and enact tenant protections, it clearly isn’t enough. The United States has misplaced priorities. We are projected to spend $2 trillion on nuclear weapons in the coming decades.20 We have wasted more than a trillion dollars on the failed war on drugs and just passed the largest transfer of wealth in our nation’s history in the form of a $2.3 trillion tax cut benefitting those who need it the least.
To make up for decades of inaction and centuries of discrimination, we must take immediate steps that are bold and transformative.
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