In midst of booming economy, U.S. housing gap grows

Rising prices and rents, stagnant wages shrink pool of affordable units

April 25, 1999|By CHICAGO TRIBUNE

COSTA MESA, Calif. -- Plumber Robert Scott, his wife, Pam, and their five children live in a motel room. Their kitchen is a wistful concoction of bathroom sink, mini-refrigerator, microwave and two-burner cooktop -- all crammed amid other precariously stacked belongings.

Behind the pale peach stucco facade of the New Harbor Inn lies a station of last resort for families such as the Scotts, who say they cannot afford anything better than this, lodgings that will accept their $1,400-a-month rent in daily or weekly installments.

The precarious situation faced by the Scott family and hundreds of others like them offers a glimpse of a national dilemma that tends to be obscured by prosperity, particularly in Orange County, an emblem of suburban wealth with its seemingly endless sea of sprawling stucco houses, shopping centers and freeways.

Throughout the nation, the number of people who cannot afford decent housing stands at an all-time high, undiminished by an era of economic prosperity that has simultaneously propelled home ownership to record levels.

Meanwhile, the pool of affordable housing is shrinking.

"This is sort of something hidden under your bed that you don't want people to see," said Linda Couch, legislative director of the National Low Income Housing Coalition, an advocacy organization based in Washington. "It is incomprehensible in a country of such great wealth."

In some ways the strong economy has exacerbated the plight of the poor by pushing up housing prices and rents, to record levels in some regions.

Nationally, rents rose at double the rate of inflation from 1997 to 1998, according to the U.S. Department of Housing and Urban Development.

The wages of the lowest-paid workers in particular have stagnated. As a result, the federal government estimates that about 12.5 million people, a record number, face what it terms "worst-case needs." That is, they live in households earning less than 50 percent of the area median income and either pay more than half of their income for rent or live in substandard housing or both.

The number of "affordable" units, defined by the federal government as those that rent for $300 a month or less, adjusted for inflation, fell by 20 percent from 1996 to 1998, HUD estimates. And from 1973 to 1995, the nation's supply of units that rented from $300 a month, adjusted for inflation, fell by nearly half, according to a study last year by the Center on Budget and Policy Priorities, a nonpartisan research organization.

The gap between the number of low-cost units and the number of renters in need of them is now wider than in any year since the data were first collected, that study concluded.

Though it relied on 1995 data, then the most recent available, a preliminary analysis by the federal government in March concluded that the gap continued to grow.

About a third of the nation's poor receive subsidies, either by living in public housing or by receiving vouchers to subsidize rents. But those, too, have waned. In the mid-1990s, the federal government stopped issuing new vouchers to subsidize rents, marking the first time since the voucher program began in 1974 that it did not expand.

Last year, Congress agreed to issue 90,000 more vouchers, now being sought by city housing agencies.

About half are for families moving from welfare to work. The wait for such vouchers in cities is growing, now estimated at five years in Chicago and 10 years in Los Angeles, HUD officials say.

Waiting lists to enter public housing also extend for years, and many public housing complexes are being dismantled as failed social experiments. At the same time, many apartment owners are opting out of federal subsidy contracts they entered into years ago in order to take advantage of higher rents they can receive in the open market.

Several forces contribute to the widening affordable housing gap. Older housing was abandoned or demolished because of the cost of maintaining it. Other low-cost units were upgraded, as deteriorating neighborhoods gentrified. And virtually no low-cost rental housing is being built because it is not profitable, said Barbara Sard, director of housing policy for the Center on Budget and Policy Priorities. Some regions are beginning to recognize that the lack of affordable housing may put the brakes on their otherwise vibrant economy.

Pub Date: 4/25/99

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