The staggering gap between poor families and housing they can afford

The staggering gap between poor families and housing they can afford

When it comes to housing people can afford in Illinois, there’s a serious mismatch.

A new report from the National Low-income Housing Coalition shows that for every 100 “extremely low-income” households in Illinois, only 28 affordable units are available.

Extremely low-income is defined as a household with an income of 30 percent of the state’s median income or less. In Illinois, that means a family of four making less than $21,650 a year. The coalition group defined an affordable unit as one where a family would pay no more than 30 percent of its income in rent, a widely held standard.

Our state is following a nationwide trend, a growing gap between the number of poor folks looking for a place to rent and the number of units they can afford. Meanwhile, the number of units that people at higher incomes can afford is growing.

“The result of the foreclosure crisis  is that many more people are renting, and competition for those few rental units affordable to extremely low-income households has increased, and rents for these households have continued to go up,”  said Bob Palmer, policy director for Housing Action Illinois, a statewide coalition advocating for more affordable housing. The numbers, released in February, come from an analysis of the U.S. Census Bureau’s 2011 American Community Survey.

The coalition’s numbers have caught the attention of national and local housing officials at the U.S. Department of Housing and Urban Development.

“HUD is extremely concerned about the shortage of affordable housing and preserving affordable housing stock is a major focus of Secretary Donovan,” said Laura Feldman, director of public affairs for HUD Region V.

Feldman pointed to one new HUD program. The Rental Assistance Demonstration program targets properties that are under old federal subsidies and at risk of becoming unaffordable or dilapidated. HUD helps convert them to new, long-term Section 8 contracts, keeping them affordable and giving owners access to capital for needed repairs.

Under the program, HUD began working with three Illinois housing authorities as of January: the agencies of Christian County in Central Illinois, Lake County and Elgin. The effort will allow them to obtain private financing to rehab 458 units.

But Palmer points out that the program just preserves existing affordable units, rather than creating new ones. Palmer and advocates at the National Low-Income Housing Coalition want the government to fund the National Housing Trust Fund, established in 2008 as part of the Economic Recovery Act. The money for the trust fund was supposed to come from contributions from Fannie Mae and Freddie Mac, but those sources were suspended when both organizations fell into financial disarray during the recession.

The trust fund would provide communities with money to build housing for very low and extremely low-income families.

The money, according to the coalition’s proposal, could come from changes to the mortgage interest tax deduction, including capping the deduction at $500,000 of a home’s value, down from $1 million, creating additional tax revenue to fund the construction of affordable housing.

“The savings from reforming the mortgage interest deduction and investing those funds in the National Housing Trust Fund would generate $200 billion over 10 years,” Palmer said. He added that Illinois would receive about $9 billion and be able to “fund the creation or preservation of approximately 109,000 units.”

U.S. Rep. Keith Ellison of Minnesota will soon be reintroducing legislation to bankroll the trust fund, according to his press office.

“The challenge of getting it funded through the mortgage interest deduction savings is the competition with deficit reduction,” Palmer added. “The Obama administration has supported funding the trust fund, but their support hasn’t resulted in funding.”

Those 109,000 actually add up to about 45 percent than the current affordable housing deficit in the Chicago metro area alone, according to the coalition’s data. That number is 239,699–the difference between the number of extremely low-income families looking and the number of available and affordable units–and it’s been growing in recent years.

So even if the trust fund gets established–which may be a long shot considering all that’s troubling Congress these days–poor folks in Chicago might still have a tough time finding a place they can hang their hat without hurting their pocketbook.

Photo credit: Shutterstock/housing prices

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