The need for major federal infrastructure legislation has been labeled a priority by the Trump administration and congressional leadership. Several draft bills have even been released, with the latest version from the House Transportation and Infrastructure Committee chairman Rep. Bill Shuster (R-Pa.) released just last month. Notably missing from these plans is the expansion of affordable housing infrastructure. Affordable housing is a vital component to infrastructure investment. The construction and preservation of our country's affordable housing stock will strengthen productivity and economic growth, promote economic mobility, and provide greater household stability and improved wellness outcomes.
Economic Impact
Congress needs to incorporate significant affordable housing investments in infrastructure reform in order to achieve comprehensive economic impact. The shortage of affordable housing in major U.S. cities costs our economy $2 trillion each year in lower wages and productivity, preventing low-income households from moving to areas with more economic opportunities. A lack of affordable housing access additionally prevents families from increasing their earnings and causes a slower gross domestic product (GDP) growth. A recent study estimates that between 1964 and 2009, the GDP growth would have been 13.5% higher if there were more affordable housing options for families. This translates into a $1.7 trillion increase in income overall and $8,775 in additional wages per worker.
Affordable housing infrastructure additionally helps local economies and creates jobs by leveraging public and private funds to increase earnings, increase tax revenue, and put people to work. Just one year of construction on 100 affordable rental homes can generate $11.7 million in local income and $2.2 million in taxes and revenue, and create 161 local jobs, according to the National Association of Home Builders.
Quality of Life
Access to affordable housing additionally improves numerous aspects of a family's quality oflife. Research shows that when a family has access to affordable housing, there is an increase in their economic mobility. Children also receive numerous benefits from living in an affordable housing community in high-opportunity areas. These children earn 31% more and live in better neighborhoods as adults, and are less likely to become a single parent. Furthermore, these children do better in school and have greater opportunities to learn outside the classroom.
Need for More Affordable Housing
For a struggling family, receiving a housing voucher to subsidize their rent can feel like winning the lottery, but even the 2.2 million households in the United States that receive these vouchers have issues finding affordable housing under current market conditions. Families under the Housing Choice Voucher program have at least 60 days from the date of receiving a voucher to secure an apartment in the private market. The rent for their apartment must fall within the Fair Market Rent guidelines established by the Department of Housing and Urban Development (HUD), but for many communities, the Fair Market Rent threshold allows families to rent homes in only a handful of neighborhoods.
If a voucher holder cannot find housing at or below the Fair Market Rent amount, they are forced to return the voucher. In many markets, this has caused high return rates of the vouchers as families are unable to find affordable housing in their communities. In Dallas, families return almost 60% of vouchers because they cannot find a place to use them, according to MaryAnn Russ, the former CEO of the Dallas Housing Authority. In other hot markets like California, voucher return rates can be as high as 90%, according to federal data. The affordable housing crisis has left low- and moderate-income families financially onedge and has compromised their ability to afford food, maintain a stable environment for their children, and find and retain employment.
There is no community in the United States where a family with one full-time worker earning the minimum wage can afford the local fair-market rent for a two-bedroom apartment. According to HUD, an estimated 12 million renter and homeowner households spend more than 50% of their annual incomes on housing. The problem is likely to exacerbate in thecoming years. Analysts expect that over the next 10 years more than 400,000 new renter households will enter the rental housing market, many of these households being low income. The pace the rental housing industry is developing new units is significantly slower than the number of rental housing needed in the next 10 years, meaning the gap in rental housing supply versus the demand for rental homes is only going to widen.
As affordable housing becomes more difficult to access and rents continue to increase, the creation of more affordable homes is necessary. With the affordable housing crisis affecting every state, county, and city in the nation, it is critical now more than ever for Congress to invest in affordable housing infrastructure. These investments will help communities preserve and build up the country's affordable housing stock, strengthen the U.S. economy, and provide more stability to families.
Heather Voorman is policy director for the National Association for County Community and Economic Development and the National Association of Local Housing Finance Agencies.
