Root Causes: What are the Forces and Influences at Work?

Low-wage employment, unemployment, the high cost of fair market housing, and a lack of affordable housing units have all contributed to the need for states to promote affordable housing options. 

Poverty and Low-wage Employment: Families living in poverty, whether or not they include a full-time worker, struggle to pay for basic necessities, including housing.  According to the Bureau of Labor Statistics, a majority of the occupations with the highest projected job growth for the next decade are in positions that are often considered short-term and require only on-the-job-training (i.e., retail, construction).  These jobs frequently pay very low wages, do not include benefits and are significantly less stable than other jobs.  Workers in these industries struggle to meet their family’s basic needs, and housing is often the most expensive necessity.  In addition, following the recent economic downtown, workers in higher-wage occupations are also struggling to meet their housing costs.

Unaffordable Housing Costs: Since 2000, the incomes of low-income households have declined as rents continue to rise. The cost of fair market rent for a two-bedroom apartment grew by 45 percent from 2000 to 2010. [1] Affordable mortgages and rent are beyond a reasonable cost for many working families. [2]     In 2010, a worker would need to earn an average of $18.44 an hour to afford a two-bedroom apartment at fair market rate. [3] However, the federal minimum wage in the United States is only $7.25 per hour and 9 states either have minimum wages that are lower than the federal minimum wage or do not have minimum wage requirements at all.  Mortgages are also frequently unaffordable; the median home price is $180,000, which requires an annual income of approximately $54,000 to qualify for a mortgage. [4]  However, real median household income in the United States is only $47,000 and has declined by 4.2 percent since 2007.

Lack of Affordable Housing Units: According to HUD’s Worst Case Housing Needs 2009 , a scarcity of adequate, affordable rental units combined with competition from higher-income households means that only 32 rental homes are affordable, available, and adequate for every 100 extremely low-income renters, and only 60 rental homes are available for every 100 low-income renters.  The lack of affordable housing has led to high rent burdens, overcrowding and substandard housing and, subsequently, to housing insecurity for many American families. [5]

Impact of Household Expenses: The direct costs of mortgages and rent are central to the lack of affordable housing; however, transportation, energy and other household expenses are also significant barriers for families, with some households spending more an average of 28 percent of their income on transportation alone. [6]