Affordable Housing in Crisis

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In September, as Bush administration officials and economists touted the impending rebound in the U.S. economy, thanks in large part to the strength of the country’s housing market, the Census Bureau reported that the ranks of poor in the U.S. increased to 34.8 million in 2002. The percentage of people living at the poverty rate (a gross understatement of the cost of living in the U.S.) now stands at 12.4 percent and is adding fuel to the growing fire of this country’s affordable housing crisis. Currently in the U.S., a family of four making less than $18,400 is considered poor, regardless of whether the family lives in high-cost areas, such as New York city or San Francisco, or on a farm in Kansas. 

The National Association of Realtors valued the median price of a home in the U.S. at $168,900 in April 2003. Research shows that, in most areas of the U.S., it takes roughly double the federal poverty level to provide a family with basic necessities like food and housing, according to the National Center for Children in Poverty. The future of poverty in the U.S. is bleak. Over 20 percent of children under the age of five live in poverty—the highest child poverty rate of any fully industrialized nation. 

Also in September, the Mortgage Bankers Association of America— the real estate industry’s leading Washington lobby—reported that the rate of default on federally assisted mortgages to low-income households reached a record 12.59 percent. Delinquencies and foreclosures of Federal Housing Authority-backed loans generally result in low-income families losing their homes and their credit standing, thereby ensuring added difficulty in securing future housing. The rate, a 12-year record, highlights the growing divide between the rich and poor. Finding adequate housing and keeping it, has increasingly become a daily burden for families in the U.S. 

A lack of affordable housing is the root cause for homelessness in the U.S., according to the National Coalition for the Homeless. Affordable housing advocates estimate that 14.4 million families in the U.S. have critical housing needs, meaning that they spend over half their income on paying for rents and mortgages. As of 2000, 3.5 million people in the U.S. were homeless and the number—a gross underestimation—is steadily growing.  

The history of federally-backed housing initiatives dates back to the 1920s and reached a highpoint during the New Deal era. Back then, government and private investment in social programs such as housing was seen as “for the greater good” of society. The mainstream stigma now attached to public housing programs, housing projects, and low- income neighborhoods gained speed in the late 1950s and1960s when the idea of “urban ghettos” became popularized. 

Ghettos, which had once served as transitional neighborhoods for immigrant groups, became associated with inner city crime and poverty. Around the same time, European influence on architecture in the U.S. gave way to luxury high rise apartments and homes. Construction costs began to rise. The federal government detracted money away from housing programs during decades of recession. Public and affordable housing initiatives have steadily lost govern- ment backing (and real estate industry interest) since. 

The erosion of federal housing assistance has helped perpetuate the cycle of poverty in this country, according to the North Carolina Low Income Housing Coalition. Under- funding by the government has been accompanied by a trend towards de-federalizing the entire program of affordable housing assistance. Under the Bush administration, this de-federalization in favor of state-run housing programs has escalated. Critics of a state-run policy of helping low-income and poor families secure housing point to inequity and unaccountability issues that would likely arise. Wanting to avoid a firestorm of negative publicity surrounding many of its initiatives, the Bush administration has created a seamless PR machine replete with “feel good rhetoric,” according to Rep. Maxine Waters, a California Democrat. 

Reflecting the traditional disconnect between what the Bush administration says and what it does, the president has proposed massive cuts to federal housing programs even as it aggressively pushes forward with its public relations campaigns promoting minority home ownership and housing affordability. Mockingly labeled Blueprint for the American Dream, and America’s Home Ownership Challenge, these campaigns have consisted of nothing more than a series of press releases and church and community hall appearances by Department of Housing and Urban Development officials touting growing housing opportunities. Housing activists doubt the sincerity of the Administration and its housing arm HUD. The “challenge” and the “dream,” which share the goal of increasing the number of minority-homeowners by 5.5 million by the end of the decade, have been lambasted by affordable housing advocates as unachievable in the wake of Bush’s policies. 

Under this Administration, HUD has been reluctant to share information and work with community-based and national organizations in relieving the housing problem in the U.S., advocates say. “We’ve never come across a HUD so tight-lipped about its policies,” says Kim Willis, a policy analyst with the National Low Income Housing Coalition. Willis says that HUD hasn’t even detailed how much money it has in its coffers and repeatedly refuses to do so. The unnecessary secrecy surrounding HUD even translates into its communiqués—its spokespeople are forbidden from allowing their names to appear in news stories. 

Why would an agency dedicated to fostering community-building and improving the quality of life of people in the U.S. take such a contentious stance in sharing information while simultaneously lauding its own efforts? The answer is simple. Many of the Administration’s housing policies are not being implemented. Meanwhile, the Bush PR machine promotes the image of his “compassionate conservatism” by showing a ruling class government that pretends to be interested in the working class. 

Congress and housing advocates are quick to point out that despite the PR-blitz surrounding the Administration’s commitment to the fight for affordable housing, not one new home buyer has been created from the campaigns. 

Since President Bush took office, the home ownership gap between whites and African Americans increased from 26.1 percent to 27.3 percent and from 26.4 percent to 28.3 percent between whites and Hispanics, according to Census Bureau statistics from early 2003. 

The Administration has yet to implement two of its key housing-assistance initiatives. Two and a half years after the government authorized a bill allowing low-income families to use housing vouchers to pay for a down-payment on their homes, there is no federal record of this plan in action. HUD, in true form, insists that the program is up and running, according to the House Financial Services Committee in a June 2003 report. The Single Family Tax Credit, which would offer home builders tax incentives to develop in low-income communities, has been systematically excluded from Bush’s tax cuts. This, despite the fact that it was Bush who proposed the idea in 2002. 

Further Cuts Proposed 

Bush plans to escalate his assault on public housing next year. For its proposed 2004 housing budget, the Administration wants to eliminate HOPE VI, a demolition and revitalization program for the country’s most decrepit and dangerous public housing units. While a controversial program because families are displaced while their homes are torn down and rebuilt, HOPE VI’s benefits have prompted even its harsh critics to rally support for its inclusion in the HUD budget. The government has spent about $4.5 billion on the program over the past decade, a small amount when compared to the $1.3 trillion in tax breaks the president has enacted. 

President Bush also wants to slash the funding allotted to a popular housing assistance program, Section 8 housing vouchers. Housing vouchers are intended to bridge the gap between the cost of housing and the incomes of low wage earners. Bush’s proposed cuts to the housing voucher program represent the first time in the program’s 29-year history that an Administration would break the federal government’s longstanding commitment to renew all vouchers in use, according to the National Low Income Housing Coalition. Currently, 1.7 million low-income families use housing vouchers to help pay for their homes. 

“The Administration is under funding such programs in order to dismantle them,” Willis says. According to her organization’s estimates, Bush’s proposed $12.55 billion for housing vouchers represents a shortfall of $1.26 billion and would put 180,000 families at risk of losing their homes. 

“The Administration’s proposed FY2004 HUD budget represents a 63 percent reduction since the last year of the Ford Administration,” according to the National Coalition for the Homeless. 

In addition to the proposed cuts, Bush has proposed major changes to the organization of the program, wanting to move it from a federal to block grant program with spending for it at the discretion of states. Critics argue that since housing costs have increased much faster than the rate of inflation, block granting the voucher program would almost certainly result in devaluing it. 

While the Bush administration and HUD rationalize the cuts in housing programs as necessary to fund its wars, affordable housing advocates say it is Bush’s deep tax cuts of 2001 that are shrinking federal resources. The Bush administration’s tax cut on dividends would render housing programs like the Low Income Housing Tax Credit under-funded. The housing tax credit grants breaks to developers who build affordable housing and is responsible for the preservation of 110,000 affordable housing units every year. Without incentives to build, investment in housing production that relies on the low income housing tax credit will dwindle, says Sheila Crowley, president of the National Low Income Housing Coalition. The issue of these tax credits solidifies the fact they will help only the wealthiest people in the U.S. 

The fate of Hope VI, vouchers, and the entire $31.8 billion proposed HUD budget now lies in the hands of Congress. Both Congressional Democrats and Republicans have vowed to fund HOPE VI and have proposed more money than the Administration for the housing voucher program. 

“The hypocrisy of the Bush administration is just staggering,” said Rep. Waters in June after the Administration marked it National Home Ownership Month. “Feel good rhetoric about the importance of home ownership is being used as a smokescreen to hide the fact this Administration is starving federal housing programs.” 

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Chhandasi Pandya is a journalist based in New York.