Housing is an essential human need. And most Americans find it challenging to get hold of affordable housing. Housing is affordable when it takes up less than 30% of the earning of a household explains Maxwell Drever. Close to 43 million renter households in the United States are cost-burdened. That means they end up spending over 30% of their earnings on housing. The extremely cost-burdened renters are spending more than a chunk of their earnings on housing.
The absence of affordable housing creates a negative impact on communities. The cost-burdened families witness increased stress owing to the lack of retirement, food security, transportation, health care, and social stability. Maxwell Drever says that an absence of affordable housing close to the job centers results in maximized traffic and a negative environmental impact. And amongst all other things, it can worsen the sprawl and generate a lack of diversity in the communities.
The supply challenges
The conversation associated with affordable workforce housing usually centers on the supply. The Low-Income Housing Coalition evaluates the deficit of the rental units that are affordable to extremely low-income households to about 6.8 million units. At the current pace of production, it’s tough for the supply to cater to the demand.
Land-use regulations, low earning and the “not in my backyard” approach
Do you know what results in affordable housing? The cost and the local land-use regulations are essential factors. In most communities, the local zoning and other related laws make it challenging and impossible to move through the local space and provide the density required to make the project work for an affordable apartment.
Things that generate demand for the affordable housing
Other than concentrating on the supply issue, the affordable housing crisis will not get solved without focusing on the demand. It is essential to find the reason as to why households can’t opt-in for market-rate housing. One must know why close to 20 million renter housing is cost-burdened?
A section of this is because of income and wealth distribution for the last four decades and the middle class shrinking. Today, a huge chunk of the nation’s aggregate income is moving to upper-income households. On the other hand, the chunk that’s reserved for the lower- and middle-income household is continuously falling. According to Maxwell Drever, the percentage of the American adults that reside in middle-earning housing has lessened to 51%, as per 2019 data. The income movement has brought down the percentage of the households that can opt-in for the market-rate rents. Hence, it is contributing to the affordable housing issue by maximizing the demand.
The challenge today is ample housing supply. According to recent estimates, there is a lack of 7 million rental units that are available for single-family houses. The shortage supply for the lower-earning families is close to 3.8 million units. The chances are less that the production pace will cater to the affordable rental units’ demand and the extra resources that the Biden administration proposed. It is also essential to address the affordable housing development at a local level, and here the individual business leaders need to get involved.