A Guide to Affordable Homes in the United States
Affordable housing in the United States describes sheltering units with well-adjusted housing costs for those living on an average, median income. The phrase usually implies to applied rental or purchaser housing within the financial means of lower-income ranges specific to the demographics of any given area. However, affordable housing does not include those living in social housing owned by government and non-profit organizations. More specifically, the targeted range for housing affordability sets below 30 percent of a household's annual income, including all applicable taxes, utility costs and home owners insurance rates. If the mean income per household breaches the 30 percent mark, then the agreed status becomes labeled as "unaffordable" by most recognizable financial institutions.
Over 30 million Americans need housing assistance due to the overall cost burdens exceeding 50 percent of their total gross income, overcrowding with the number of people living inside the home far exceeding its structural capacity, and lack of basic utilities, such as running water and electricity. Statistically, one out of seven families live in severe physical deficient housing. In fact, the housing and stock market revealed in July of 2009 that the Great Recession further widened the gap and income disparity between the average, hard-working Americans and the top 1% of wealthy Americans. Edward N. Wolff suggests that the average American produced a massive 36.1% drop in overall marketable assets while the top 1% of wealthy Americans only lost 11.1%. This income gap disparity ensures that ever-increasing need for affordable housing as the economic crisis worsens.
Before the Great Recession occurred in late 2008, the shortage of low-rent, affordable housing reached a record high in 1995. According to the Center on Budget and Policy Priorities, the number of low-income renters far exceeded by supply of affordable rental units by 4.4 million, which totaled to a ratio of two low-income renters per low-cost unit. The latest economic crisis has only compounded the shortage problem with the increase in unemployment and skyrocketing foreclosure rate. Ben Tracy of CBS News reports that nearly 6 million foreclosures took place three years since the start of the housing market downfall.
The U.S. federal government subsidizes rental units to create housing affordability. Mortgage interest tax deduction and other housing subsidy programs help to provide the necessary financial relief. Housing subsidy programs rose to $120 billion per year nearing 80% of all federal housing assistance funding. Federal housing subsidies can be categorized into three branches: tenant based subsidies, project based subsidies, and public housing. Tenant-based subsidies are given to individual private households through a Section 8 program. Project-based subsidies require the owners to rent out homes to lower-income families at affordable rates. Public housing refers to government operated housing projects managed by subcontracted private agencies. Other various grants can be obtained for financial aid in housing affordability.
The United States affordable housing market has taken a beating in the past 16 years, especially since the beginning of the subprime mortgage crisis that sparked the Great Recession of 2008-2009. The ever-growing unemployment and foreclosure rates will further compound the affordable housing shortages that were already existent. The declining of the middle-class and increasing of the wealth gap continues to raise the question over income inequality and racial disparity. Bright minds have to wonder when the government will step in to curtail the problem spiraling out of control.