Tackling the Housing Crisis
The Challenge
America faces an affordable housing crisis. Approximately 73% of U.S. households are unable to afford the nationwide median price of a single-family home,[1] and 46% of renters spend at least 30% of their income on housing. Numerous factors hinder the availability of safe, high quality, affordable homes, including zoning laws, high construction costs, high interest rates, and a decade of under-building relative to population growth.
The affordable housing crisis is widening the wealth gap and exacerbating racial disparities. The homeownership gap between Black and white buyers is becoming larger and increased in 2022 to its widest level in a decade.[2] On average, Black Americans earn less money, have less generational wealth, and have lower credit scores than white Americans, which makes it more difficult to afford a down payment and qualify for a low mortgage rate. Moreover, Black homeowners spend more of their income to own their homes than any other race.[3] In addition, in every state across the U.S., Black, Hispanic, and Native American households have lower homeownership rates than white households.[4]
The housing crisis affects renters as well. Although availability of affordable housing varies across the country, no state has an adequate supply of affordable rental housing for the lowest income renters.[5] The lack of available housing has led to millions of Americans experiencing eviction, homelessness, and housing insecurity.[6] For the reasons mentioned above, people of color are significantly more likely to be renters and have extremely low incomes than white households, which means that they are disproportionately affected by the lack of affordable rental housing.
A few facts:
- Just 33 affordable and available rental homes exist for every 100 extremely low-income renter households nationwide[7]
- In the decade between 2012 and 2022, 15.6 million households were formed, yet only 13.3 million housing units were started and 11.9 million were completed[8]
- Around 30% of Black renters spend more than 50% of their income on rent, representing nearly 2.5 million households[9]
- The typical household income for first-time buyers soared to as much as $90,000 in 2022 from about $70,000 in 2019[10]
- Homeownership rates among Black Americans (44%) is almost 29% behind that of white Americans (72.7%), which is the largest Black-White homeownership rate gap in a decade[11]
- Black Americans are denied mortgages at a higher rate, with 20% of Black and 15% of Hispanic loan applicants denied mortgages, compared with about 11% of white and 10% of Asian applicants[12]
Why It Matters
High housing prices can slow down a local economy, but affordable housing can create opportunities for people across income levels. Affordable housing increases discretionary spending, which can lead to more money spent in local economies. Affordable housing also creates job opportunities through construction in the short term and societal growth in the longer term.
Significantly, housing is also a social determinant of health and education. Housing instability resulting from unaffordable housing costs is linked to low school attendance, poor academic achievement, and lower levels of psychological well-being. Moreover, families without stable housing are less likely to have a primary care doctor and more likely to rely on expensive emergency medical services.
Multi-family housing can address affordability challenges by increasing the supply of homes available for renters. An increase in both single-family and multi-family supply is needed to return balance to the housing market.
A few facts:
- Affordable housing is the most cost-effective strategy for reducing childhood poverty in the U.S.[13]
- Children who moved to lower poverty neighborhoods saw their earnings as adults increase by approximately 31%, an increased likelihood of living in better neighborhoods as adults, and a lowered likelihood of becoming a single parent[14]
- It is estimated that affordable housing decreases emergency department expenses by 18% and primary care costs by 20%[15]
- The shortage of affordable housing in major metropolitan areas costs the American economy about $2 trillion a year in lower wages and productivity[16]
Uplifting’s Response
Uplifting Capital recognizes the importance of housing and invests to create and preserve safe, sustainable, and affordable housing for low and moderate-income households.
[1] https://www.nahb.org/blog/2023/03/pyramid-illustrates-housing-affordability-crisis#:~:text=The%20nationwide%20median%20price%20of,this%20median%2Dpriced%20new%20home.
[2] https://www.nar.realtor/research-and-statistics/research-reports/a-snapshot-of-race-and-home-buying-in-america
[3] https://www.nar.realtor/newsroom/more-americans-own-their-homes-but-black-white-homeownership-rate-gap-is-biggest-in-a-decade-nar
[4] https://www.jchs.harvard.edu/blog/nearly-every-state-people-color-are-less-likely-own-homes-compared-white-households
[6] https://www.americanprogress.org/article/the-rental-housing-crisis-is-a-supply-problem-that-needs-supply-solutions/
[8] https://www.cnn.com/2023/03/08/homes/housing-shortage/index.html
[9] https://www.nar.realtor/newsroom/more-americans-own-their-homes-but-black-white-homeownership-rate-gap-is-biggest-in-a-decade-nar#:~:text=More%20than%20half%20of%20Black,representing%20nearly%202.5%20million%20households.
[10] https://www.bloomberg.com/news/articles/2023-03-02/will-home-prices-fall-first-time-buyers-face-a-costly-housing-market
[11] https://www.nar.realtor/newsroom/more-americans-own-their-homes-but-black-white-homeownership-rate-gap-is-biggest-in-a-decade-nar#:~:text=While%20the%20U.S.%20homeownership%20rate,rate%20gap%20in%20a%20decade.
[12] https://www.cnn.com/2023/03/02/homes/race-and-home-buying-nar/index.html
[13] https://www.sciencedirect.com/science/article/abs/pii/S1051137713000600
[14] https://scholar.harvard.edu/hendren/publications/effects-exposure-better-neighborhoods-children-new-evidence-moving-opportunity
[15] https://nlihc.org/resource/study-finds-affordable-housing-reduces-health-care-costs#:~:text=Researchers%20attribute%20these%20savings%20to,quality%20of%20care%20to%20residents.
[16] https://nlihc.org/explore-issues/why-we-care/problem#:~:text=Research%20shows%20that%20the%20shortage,earnings%2C%20causing%20slower%20GDP%20growth.
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