WASHINGTON, D. C. — As the cost of buying and renting homes skyrockets faster than worker salaries increase, state and federal governments need to expand efforts like the Low Income Housing Tax Credit to increase the nation’s affordable housing supply, the head of a Cleveland non-profit housing development group told a congressional committee on Tuesday.
“A safe, stable, affordable place to call home can have dramatic impacts on quality of life, generational wealth, health and wellness,” CHN Housing Partners executive director Kevin Nowak told the U.S. House of Representatives’ Select Committee on Economic Disparity and Fairness in Growth.
Nowak told the committee the U.S. currently faces a shortage of nearly seven million affordable housing units. He said that 83% of Ohio’s extremely low-income households spend more than 30% of their income on housing costs.
Data from the National Low Income Housing Coalition shows that a single parent in Ohio would need to work 74 hours per week at minimum wage to afford a modest two-bedroom apartment, Nowak said.
Inability to buy a home stymies families’ abilities to build up enough wealth to be able to pay emergency expenses and plan for long-term goals like paying children’s college tuition, he said
“Unfortunately, this generational wealth-building tool is out of reach for too many Americans, especially for low-income households and Black and brown households,” said Nowak, whose organization operates programs that use the Low Income Housing Tax Credit to build houses that low-income Cleveland families can purchase through a lease-to-own pathway.
According to statistics provided by the committee, housing has become more expensive relative to earnings since the year 2000. It said that in 2021 dollars, the median asking price for a rental unit leaped by 61.2% in the U.S. from $780 in 2000 to $1,250 in 2021. The real median price of houses sold in the US increased by 49% in the same period, from $271,000 to $404,000. However, real median weekly earnings rose by just 10% in that time.
The committee’s chairman, Connecticut Democrat Jim Himes, said safe and affordable housing plays a critical role in creating “economic prosperity and giving every American the opportunity to achieve the American dream.” He said he’s particularly interested in inclusionary zoning developed in the 1970s in response to traditionally exclusionary zoning and racial segregation. He said inclusionary zoning could leverage private investment to subsidize affordable housing.
“Most of us who have spent any time at all looking at the housing market know that there is a huge role for private developers and the functioning of a free market,” said Himes. “But free-market outcomes, absolute and unconditional free-market outcomes, will not address the nation’s affordable housing problem.
The committee’s top Republican, Wisconsin’s Bryan Steil, agreed that homeownership has become an impossible goal for too many Americans and attributed some of the problems to inflation eating away at people’s ability to save enough money for a down payment on a home, the rising cost of raw materials used to build houses and unnecessary government restrictions on developers.
“We cannot allow inflation to drive the middle class away from building wealth,” said Steil. “We need to find ways to make the housing market and housing, in particular, more affordable. It means bringing down costs. It means getting inflation under control to allow individuals to increase savings and to prevent those savings from being eaten away, and it means increasing supply across the board to bring down prices.”
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