The Center's work on 'Housing' Issues

The Center works with state and local housing agencies and advocates to improve the effectiveness of federal low-income housing programs — particularly the Housing Choice Voucher Program. We also examine the role that well-designed housing assistance programs can play in advancing goals such as reducing the concentration of poverty.


Tax-Credit Bill Would Help Low-Income Families Facing Higher Rents

April 17, 2014 at 2:48 pm

House Ways and Means Committee member Charles Rangel (D-NY) has introduced legislation to establish a new federal tax credit to help low-income renters afford housing.  As we’ve explained, a renters’ credit along these lines would be a valuable tool to address low-income families’ mounting housing needs.

As the graph shows, the typical or median rent has risen much faster than inflation over the last decade, while renters’ median income has fallen in inflation-adjusted terms.

In fact, in 90 cities around the country, a median-income resident would have to pay more than 30 percent of his or her income to afford the median rent, the New York Times reports.  (The federal government and many private-sector landlords and lenders consider housing unaffordable if it exceeds 30 percent of household income.)

As a result, families with incomes well below the median must pay high and growing shares of their income for rent or live in substandard, overcrowded, or unstable housing arrangements.  In 2011, 8.5 million families with incomes under half of the local median received no rental assistance and either paid more than half of their income for housing or lived in severely substandard conditions, according to the Department of Housing and Urban Development — an increase of more than 40 percent since 2007.

And Department of Education data show that 1.17 million school-age children were homeless during the 2011-2012 school year.

Despite these needs, the federal government provides much more help to higher-income homeowners, through tax subsidies like the mortgage interest deduction, than to low-income renters.  Due to funding limitations, Housing Choice Vouchers and other low-income rental assistance programs reach fewer than one in four eligible families.

The Rangel proposal would help address that imbalance by giving states about $5.8 billion in annual tax credits to distribute among low-income renters based on federal income eligibility rules and state policy priorities.  We estimated last year that a credit similar to the Rangel proposal (but with added provisions to ensure that most of its benefits go to the neediest families), capped at $5 billion, would help 1.2 million households, reducing their rent by an average of $400 a month.

The renters’ credit would complement the Low-Income Housing Tax Credit (LIHTC), which Representative Rangel helped enact in 1986.  LIHTC is an effective subsidy for building and rehabilitating affordable housing but doesn’t typically make housing affordable to the poorest Americans by itself.  A renters’ credit could help these households afford rents in developments subsidized through LIHTC and in other buildings.

If the President and Congress move forward on tax reform, they should use savings from scaling back other tax expenditures to establish a renters’ credit along the lines that Representative Rangel proposes.

Obama Plan to Raise Rents on Rural Poor is the Wrong Way to Save Money

April 11, 2014 at 12:30 pm

About 42,000 extremely poor families — 15 percent of those assisted through the Agriculture Department’s (USDA) rural rental assistance program — could face rent increases of up to $600 a year under a proposal in President Obama’s 2015 budget.

Today, families with rural rental assistance must pay 30 percent of their income for rent and utilities.  The President’s proposal would require property owners to charge families a minimum of $50 a month — even if this exceeds 30 percent of their income.  Many of those who would be affected are especially vulnerable to hardship:  64 percent of households with USDA rental assistance have a head (or the head’s spouse) who is elderly or has a disability, and 135,000 children live in low-income families receiving such assistance.

USDA budget documents say that one goal of the proposal is to “encourage financial responsibility in tenants, increasing their opportunity for success on the path to homeownership.”  But there is no evidence that requiring destitute families to pay $50 a month helps them get back on their feet.  To the contrary, a growing body of research shows that extreme poverty — which the USDA proposal would exacerbate — does long-term damage to children’s neural development and education and employment prospects.

A second goal is to save money.  USDA estimates that the policy will reduce program costs by $5 million in 2015 and $20 million annually in later years.  But policymakers could surely find better ways to save $20 million a year than raising rents on some of the most vulnerable people in rural America.

USDA points out that some households with rental assistance through the Department of Housing and Urban Development (HUD) must pay $50 minimum rents.  But no major HUD program imposes a program-wide $50 minimum rent like USDA has proposed.  HUD’s supportive housing programs for the elderly and people with disabilities do not charge a minimum, while the Section 8 Project-Based Rental Assistance program has a $25 minimum rent and state and local agencies administering Housing Choice Vouchers and Public Housing can set the minimum below $50 or have no minimum at all.

USDA has also claimed that a proposed exemption for families who would face hardship from minimum rents — modeled on similar exemptions in HUD programs — would minimize any adverse consequences.  Tony Hernandez, the Administrator of USDA’s Rural Housing Service, told a House Appropriations subcommittee that households with incomes of $2,000 a year “probably would not have to pay because they would be exempted because of the hardship clause.”

But experience in the HUD programs indicates that very few would likely be exempted.  As we’ve noted, the HUD hardship policies have had little impact, partly because they require tenants — many of whom have physical or mental disabilities or very low education levels — to seek out exemptions.  A 2010 HUD study found that 82 percent of state and local housing agencies that chose to impose minimum rents exempted less than 1 percent of affected households.  (Moreover, the minimum rent proposed by USDA would fall almost exclusively on families with incomes close to or below $2,000, so if most of those families were exempted, the policy’s savings would largely disappear.)

Families facing hardship might have an even harder time obtaining exemptions in the USDA rental assistance program, where small rural property owners with limited administrative capacity would be responsible for implementing the hardship policy.  The best way to protect these families would be to reject the President’s proposal.

Ryan Budget Mischaracterizes Housing Vouchers, Then Sets the Stage to Cut Them

April 4, 2014 at 11:02 am

House Budget Committee Chairman Paul Ryan used a faulty number to argue that “Section 8” Housing Choice Voucher program costs have risen excessively.  His budget documents also float a proposed expansion of the Moving to Work (MTW) demonstration that could lay the groundwork for deep, harmful cuts in the voucher program in years to come.  That program, which helps 2.1 million low-income families rent modest units of their choice in the private market, is just beginning to recover from the loss of 70,000 vouchers due to sequestration budget cuts last year.

Rental vouchers sharply reduce homelessness (see chart) and other hardships, lift more than a million people out of poverty, and help families move to safer, less poor neighborhoods, research shows.  These effects, in turn, are closely linked to educational, developmental, and health benefits that can improve children’s long-term outcomes.

Ryan’s budget claims that voucher spending grew by an “explosive” 80 percent from 2005 to 2013.  That’s simply incorrect.  Voucher expenditures rose by 20 to 30 percent over this period, driven largely by rising market rents and congressional decisions to add vouchers to assist homeless veterans and to replace other rental assistance (such as public housing that was demolished, which was funded through a different budget account).  The average inflation-adjusted cost of a voucher is lower today than it was in 2005.

The Ryan budget calls for changes in housing assistance and says that such changes could include expanding MTW, a deregulation demonstration project that now includes 39 of the nearly 4,000 state and local agencies that administer vouchers or public housing.  MTW allows waivers of most laws and regulations governing the voucher and public housing programs and converts voucher funding — and sometimes public housing operating subsidies — to a block grant.

MTW expansion could weaken protections for vulnerable families and cause fewer needy households to receive assistance.  (These risks would be lower if Congress added new safeguards to MTW, but the Ryan budget documents make no mention of such safeguards.)  The Government Accountability Office and the Department of Housing and Urban Development’s (HUD) Inspector General have raised serious doubts about expansion, based on concerns that HUD has not adequately evaluated and monitored the existing demonstration.

Most significantly, a major expansion of MTW block grants would raise the odds of future voucher and public housing funding reductions.  Congress has cut funding deeply over time for housing block grant programs such as HOME, Community Development Block Grants, and the Public Housing Capital Fund, as well as many block grants in other areas.

Two features make block grant programs especially vulnerable to cuts.  First, unlike the current voucher and public housing operating fund formulas, block grants typically don’t account for factors such as the number of families assisted or the cost of assistance.  As a result, it’s more difficult to make a compelling case that policymakers should maintain current nominal funding levels, let alone ensure that funding at least keeps pace with inflation.  Second, because block grants provide broad flexibility in how state or local officials use the funds, federal policymakers can cut funding and claim no harm will ensue, while leaving the tough decisions about how to actually make the cuts to state and local agencies.

The Ryan budget cuts $791 billion over the next ten years from non-defense discretionary programs, the budget category that includes most low-income housing programs.  The budget does not specify which discretionary programs would lose funding, but if policymakers expand MTW to the point that block grants provide the bulk of voucher and public housing funds, it would increase the likelihood of sizable cuts to the voucher and public housing programs — an outcome that would likely lead to more homelessness and housing instability among the most vulnerable Americans.

Don’t Let Affordable Housing Programs Go Begging

March 24, 2014 at 4:16 pm

“[A]t a time when record numbers of families have been caught in the squeeze between rising rents and falling wages — and are at greater risk of homelessness . . . this is the worst possible time for Congress to let affordable housing programs go begging,” the New York Times editorialized yesterday.  The editorial called on Congress to restore all 70,000 housing vouchers lost last year due to sequestration.  We couldn’t agree more.

As we explained Friday, December’s Murray-Ryan budget agreement provided partial relief from sequestration for 2014 and 2015.  To finish the job, next year’s funding must cover all vouchers in use in 2014 plus another 40,000 vouchers.  Congress can do this in ways that also promote other important policy goals, like reducing homelessness.

This map shows the state-by-state impact of last year’s voucher cuts.

Why and How Congress Should Restore Lost Housing Vouchers

March 21, 2014 at 10:48 am

A big question facing the Housing Choice Voucher Program next year, I noted recently, is whether policymakers will provide enough funding to restore all 70,000 vouchers lost last year due to the sequestration budget cuts.  Given the large and growing need for affordable housing, policymakers need to make this a priority.  And, they should accomplish it in ways that also promote other important policy goals, like reducing homelessness, keeping vulnerable families together, and eliminating unnecessary institutionalization of people with disabilities.

More than 2 million low-income families use vouchers to rent modest units of their choice in the private market.  We’ve highlighted research showing that vouchers not only reduce housing instability and homelessness but also reduce poverty, help low-wage workers make ends meet, and give families access to neighborhoods with better opportunities.  They also can reduce the cost of other public services, like health care and emergency shelters.

Unfortunately, only 1 in 4 households eligible for any type of federal rental assistance receives it because of limited funding.  Low-income seniors, people with disabilities, and working families with children eligible for the voucher program often must wait years for assistance.  Sequestration worsened the funding squeeze, cutting the program by nearly $1 billion last year and causing the loss of 70,000 vouchers.

December’s Murray-Ryan budget agreement provided partial relief from sequestration for 2014 and 2015, but in 2014 that relief will enable housing agencies to restore fewer than half of the lost vouchers.  To finish the job, next year’s funding must cover all vouchers in use in 2014 plus another 40,000 vouchers.

The President’s 2015 budget would achieve the first goal but not the second.  Congress should go further, providing funding for the 40,000 additional vouchers targeted to three areas:

  • Reducing homelessness and keeping at-risk families together (30,000 vouchers).  Public housing agencies in every state could compete for these vouchers by showing, among other things, how the vouchers would reduce costs in health, criminal justice, or child welfare systems.  Agencies that had to distribute fewer vouchers last year because of sequestration would receive priority in the competition if they met other requirements.
  • Reducing unnecessary institutionalization of people with disabilities (5,000 vouchers).  The Supreme Court ruled in the 1999 Olmstead case that the unjustified segregation of people with disabilities in settings such as nursing homes and public mental health institutions violates the Americans with Disabilities Act.  At least 13 states are required by Olmstead-related legal action to rely less on segregated institutions for adults with disabilities, and litigation is pending in other states.  These vouchers, distributed through a national competition, would help states to meet these obligations to people with disabilities.
  • Protecting victims of domestic violence seeking emergency transfers (up to 5,000 vouchers).  The Violence Against Women Reauthorization Act of 2013 requires the Department of Housing and Urban Development (HUD) to devise procedures under which victims of domestic violence and related crimes who live in assisted housing can obtain vouchers in order to relocate quickly and safely.  These vouchers would enable HUD to fulfill that directive.