Eve is here. We’ve said for a long time that the United States does indeed have an industrial policy. We can see which sectors are receiving big tax cuts, subsidized loans, and even explicit gimmies. Real estate is one of its alpha beneficiaries. The irony of this complaint post is that the United States once had great affordable housing programs like Section 8 housing. We also built low-income housing, but it was often too intentional and punitively boring. In contrast, in the UK, some social apartment developments such as the Barbican in the City have been converted into market rate housing and are selling for significantly higher prices. This is an extremely unusual value for an American project.
By Algernon Austin, CEPR Senior Researcher. It was first published in common dreams
Affordable rental housing policy has failed to provide enough affordable rental housing for decades, yet policymakers continue to do much the same.Recently appointed as a researcher at the Joint Housing Research Center observed Around 1960 45% The share of renters in the bottom income quintile spends more than 50% of their income on housing costs.Today is about that 65%.Renters below the official poverty line spend on average 78% of their housing income. At what point will policymakers admit that their policies have failed renters?
I don’t understand what it means: Low-income housing tax credits
Affordable rental housing policy currently relies primarily on the Low Income Housing Tax Credit (LIHTC). For anyone interested in addressing the affordable rental housing crisis, LIHTC seems like a pretty bad idea. LIHTC has number of questions, but two of them should be considered fatal flaws. First, LIHTC is not very good at providing rental housing for low-income people.Community Housing Research Center state“LIHTC does not necessarily protect renters from costs.” and that “Low-income renters living in LIHTC units often require additional subsidies to make this housing affordable.” Key Policies to Create Affordable Rental Housing Policy makers are increasingly relying on the policy, even though it has not done a very good job of creating affordable rental housing.
The second big problem is that LIHTC rentals are usually converted to market rates. 30 years later (15 years in some cases). This transition rate might be reasonable if there was a sufficient supply of affordable rental housing, but this is not the case. The National Low Income Housing Coalition estimates that there is a housing shortage in the United States. 7.3 million rental housing units For the lowest income renters. The Joint Center for Housing Research found that the country was defeated. 2.1 million rental units For these lowest income renters from 2012 to 2022. Affordable rental properties are too scarce to be converted into market-rate housing.
The current estimate is that 325,000 LIHTC rental units will transition to market rate by 2029. LIHTC creates rental housing buckets with holes in the bottom. As more affordable rental housing is created through LIHTC, the amount of affordable rental housing lost to market conversion will increase over time. The United States is already not building enough affordable rental housing to keep up with demand, but policymakers have created a system that will accelerate the loss of affordable rental housing over time. This makes no sense.
Affordable rental policies are working well for businesses and investors
Current affordable rental housing policy makes no sense if the objective is to provide affordable housing. If the goal is to create a favorable market environment for real estate developers and investors, it appears to be working very well.
Public housing is a much more effective way to provide affordable rental housing than LIHTC, especially if adequately funded. The proportion of renters who bear the cost is quite low in public housing—Much lower than LIHTC housing. Because of this fact, Very long waiting list and huge demand For public housing.
From the perspective of the private real estate industry, social housing is a serious threat. “From the beginning, the real estate industry fought hard against public housing of all kinds,” said Richard Rothstein. The Color of Law: The Forgotten History of How Our Government Segregated America. Rothstein added that the industry then worked to structure public housing so that it was underfunded. Today after his passing, Faircloth AmendmentCongress may be able to help people in some cases I’ve been waiting for decades To get into public housing.
In addition to investors increasingly benefiting through tax credits from the LIHTC program, the Joint Center for Housing Research reports that corporate owners are making up an increasing share of the rental housing market. . (Corporate share in rental properties with 5 to 24 units) almost doubled From 2001 to 2021. ) Increase in private equity firms The company is also expanding into the rental housing market. While more renters are shouldering the cost burden, more companies and investors appear to be making a profit.
It is possible to create affordable rental housing policies that are effective for renters. There are good social housing models in Europe and Asia. Social housing is non-profit housing. The European model tends to provide a stronger political and economic base and is not limited to the lowest income households.The good news is that in the US City and state governments are starting to consider these models. In parliament, members. Alexandria Ocasio-Cortez(DN.Y.), corybush (D-Mo.), and becca balint (D-Vermont), Senator. bernard sanders (I-Vt.) and other members of Congress recognize the need to repeal the Faircloth Amendment. If passed, this amendment would allow the federal government to move forward in building affordable, quality public housing.
