Renters get owned
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In 2012, the federal government spent $240 billion on housing aid, according to a new study by the Center on Budget and Policy Priorities. Despite the fact that 65% of American households are homeowners, 75% of housing aid, or $180 billion, is set aside for homeowners. Not only is federal housing aid disproportionately targeted to homeowners, it’s disproportionately targeted to the wealthiest homeowners. Here’s the CBPP:
The bulk of homeownership expenditures go to the top fifth of households by income, who typically could afford to purchase a home without subsidies… More than half of federal housing spending for which income data are available benefits households with incomes above $100,000. The 5 million households with incomes of $200,000 or more receive a larger share of such spending than the more than 20 million households with incomes of $20,000 or less.
At the same time as housing aid focuses on relatively well-off, home-owning Americans, more renters need aid. HUD data show that the number of renters with household incomes that are 30% or less of the local median income (that’s about $19,000 nationally) has risen from just over 8 million in 1999 to 11.8 million in 2011. A recent Harvard study pointed out that for these 11.8 million renters, there “just 6.9 million rentals affordable at that income cutoff—a shortfall of 4.9 million units”. Affordable, at 30% or less of the local median income, means $375 a month or less. The Harvard study also pointed out that the problem is getting worse: the number of extremely low-income renters is rising, and 2.6 million of the affordable rentals are being occupied by higher-income households.
Felix looked at that data, combined with the “inexorable rise of rents”, and concluded that there “is an unprecedented squeeze on the people who can least afford the shelter they need”. The rest of America is starting to look more and more, he wrote, like San Francisco.
The Washington Post’s Lydia DePillis reports that San Francisco’s unaffordable housing problem is beginning to be taken seriously by at least some of the city’s tech elite. Peter Thiel thinks “the way rent and housing costs have gone through the roof in a number of cities where people go to start companies is a tremendous problem”. Thiel’s solution is to loosen zoning regulations. Surveying housing-related startups, DePillis observes that the focus is “on helping people navigate what’s already a terrible situation, not ameliorating it”.
Emily Badger points to a longer-term demographic shift that may drive even more demand for rentals: baby boomers downsizing. After moving to bigger and bigger houses in further and further afield suburbs and exurbs, boomers are beginning to reverse that trend by moving into smaller urban homes. And they are increasingly likely to be renters: “between 2002 and 2012, the number of renters ages 55 to 64 increased by 80%”. Badger points out that the big unknown is whether anyone will want to buy the McMansions boomers are moving out of. — Ben Walsh
On to today’s links: