NLIHC Releases Annual Housing Affordability Report
The National Low Income Housing Coalition (NLIHC) recently released the 30th anniversary edition of the Out of Reach report. The report documents the gap between renters’ wages and the cost of rental housing throughout the U.S. The national Housing Wage–the hourly wage a full-time worker must earn to afford a rental home at HUD’s fair market rent without spending more than 30 percent of his or her income on housing–is $22.96 for a modest two-bedroom rental home and $18.65 for a one-bedroom rental home.
According to the report, a full-time worker with a standard 40-hour work week earning the federal or prevailing state minimum wage cannot afford a two-bedroom rental home at fair market rent in any U.S. county and can afford a one-bedroom rental in fewer than 99 percent of counties (28 out of more than 3,000 counties) nationwide. On average, a worker earning the federal minimum wage of $7.25 an hour must work 127 hours every week (three full-time jobs) to afford a modest two-bedroom rental home ($1,194/month) or 103 hours every week (2.5 full-time jobs) to afford a one-bedroom rental home ($970/month).
The report notes the inability of the private rental market to serve the lowest-income renters, as landlords in strong markets have incentives to upgrade their properties and charge higher rents to higher-income households, while landlords in weak markets have no incentive to maintain their properties once revenue from rent is lower than operating and maintenance costs. Among other changes, the report recommends that changes to the tax code could also help renters afford their housing. An income-targeted fully refundable renters’ tax credit for housing cost-burdened renters would help financially struggling families. The credits could be based on the difference between 30 percent of renters’ household incomes and their actual housing costs up to a modest price.
In addition, the report recommends that the LIHTC program be expanded and improved to better meet the housing needs of extremely low-income renters. It notes that LIHTC is the largest production subsidy for affordable housing in the U.S., but the program’s rents are often not affordable to renters with the lowest incomes. The report says this problem could be addressed with a 50 basis point boost in tax credits for developments that set aside at least 20 percent of their housing for extremely low-income renters.
The Out of Reach 2019 report and interactive website are available at https://reports.nlihc.org/oor.