Affordable Housing: The Problem and the Solution
By: Nate Jordan
What comes to mind when you think of affordable housing? Maybe it’s the term Section 8. Maybe the acronym HUD. It might be neither of those things, but if you’re looking to buy a home or rent an apartment in 2023, maybe the idea of affordable housing is a seemingly unreachable goal. The good and (mostly) bad news is the same: you’re not alone.
For many, the combination of increasing real estate prices and higher borrowing costs is an obstacle to home ownership too difficult to overcome. What’s the solution? If there’s a roof over your head now, whether you rent it or own it, maybe you have the option of staying put and biding time until real estate values and interest rates come down. Who’s to say how long you’ll wait, or if those things will even happen at all? And what about those simply looking to find anywhere to call home? The unfortunate reality is that the national supply of affordable housing is woefully insufficient to meet demand.
In its 2023 Gap report, the National Low Income Housing Coalition notes that there is a shortage of 7.3 million rental homes affordable and available to renters with extremely low incomes nationally. These renters are categorized as households with incomes at or below the federal poverty line, or 30% of area median income (whichever is greater). In this context, an affordable unit is one where the cost of rent and utilities is less than 30% of the related household income threshold (i.e., the aforementioned extremely low-income threshold). In North Carolina, only 39% of renter households that exist are affordable and available to extremely low-income renters.
What happens when there is not enough affordable housing? Homelessness continues. The cyclical nature of poverty remains unbroken. Local, regional, and national economies suffer suboptimal growth. The majority of extremely low-income renters who cannot access affordable housing spend more than half of their incomes on housing. For those renters, it’s not about thriving. It’s about surviving. When housing costs dominate your budget to the point that essentials like food and healthcare are an ongoing strain, how can you invest in the future of yourself and your family? What resources does a child have to access education and higher paying work to break from the cycle of poverty?
The solution to the shortage of affordable housing, at every level, seems simple: greater investment from the government sector. That investment should happen through increased funding for rental assistance, larger allocations for financing new construction and rehabilitation of existing affordable housing stock, and more efficient monitoring to ensure the disparity between affordable housing supply and demand is shrinking.
Nathaniel Jordan Principal, CPA
Nate is a principal in our Firm’s Greensboro office with 13 years of audit experience. He is responsible for the planning, performance, supervision, and review of audit work to ensure engagements meet professional standards. Nate works extensively with clients in the affordable housing, non-profit, and governmental industries. He is also heavily involved in the […]
The information contained in this article is for informative purposes only and should not be relied on when making any business, legal, or other decisions. This information may be updated without notice and/or may not contain the most current information that is available related to this topic. Please consult with your advisor to determine how this information applies to your specific facts and circumstances.
Quantitative figures sourced from: https://nlihc.org/gap