'It Is Very Dark': Low-Income Housing Shortage Of 7 Million Units Expected To Worsen With Federal Cuts

As federal budget cuts loom, a prominent affordable housing group is warning that the already severe shortage of units for low-income renters could worsen. 

Of the almost 11 million U.S. renters that are considered extremely low-income across the U.S., there is a shortage of 7.1 million available affordable rental homes for them, according to the National Low Income Housing Coalition's annual The Gap Report, released Thursday. 

Last year's version of the report found the extremely low-income renter segment was facing a shortage of 7.3 million units. While it has come down slightly, NLIHC is concerned about the potential effects of President Donald Trump's cuts to housing assistance programs. 

In recent weeks, reports have emerged that the administration is planning to slash 50% of the workforce of the Department of Housing and Urban Development and close dozens of its field offices. HUD administers programs that provide affordable housing options to more than 4.3 million low-income families. 

"There's this whole kind of war that's being waged on the federal workforce, and that has serious implications for HUD, and HUD's ability to administer these programs efficiently and well," NLIHC Research Manager Dan Emmanuel told Bisnow in an interview Wednesday afternoon.

Wednesday evening, the Associated Press reported that the Trump administration is terminating a $1B HUD program that helps preserve affordable housing units. 

Additionally, the House passed a spending bill this week that NLIHC said underfunds HUD's "vital" programs and would result in the loss of 32,000 HUD-administered housing vouchers.  

"It is very dark," Emmanuel said when asked if there are any bright spots in the housing landscape today. "This is probably the most consequential, serious threat to affordable housing since Richard Nixon's moratorium on federal affordable housing programs in the 70s." 

For every 100 households classified as extremely low-income in the U.S. — those with incomes at or below the federal poverty levels or 30% of a particular area median income — there are only 35 units affordable and available to them, according to NLIHC's new report. 

This extremely low-income segment is made up of those working low-wage jobs, seniors, those with disabilities, students and those that act as single-adult caregivers to children or other household members. There are no states or major metropolitan areas in the U.S. without a shortage of housing for extremely low-income renters.

"What you end up having is the shortage for this income group, and it's remarkably persistent over time and across geographies, so virtually everywhere is impacted by this," Emmanuel said.

For the segment of renters making up to 50% AMI, NLIHC found there are 53 units affordable and available per 100 households. Those making up to 80% AMI have 88 units available per 100 households.

"The private market on its own, without subsidy, just doesn't produce enough units," Emmanuel said. "In a very tight market, when housing gets older and might otherwise become affordable to the lowest income households, there's this economic incentive for owners to rehab housing and charge higher rents for it."

Emmanuel said that some markets, including Boston; Providence, Rhode Island; St. Louis, Missouri and Tulsa, Oklahoma have a less severe housing shortage for extremely low-income renters. 

The markets with the most severe shortages are mainly in the South and West regions, including Las Vegas, Dallas, Austin, San Diego and Houston.

Emmanuel said that the variation could be in part attributed to how HUD-assisted housing units have been dispersed in the past, with states that have been well-settled historically seeing the bulk of the units compared to other regions that have seen population growth in the last couple of decades.

Emmanuel said that if federal funding is lowered — or even capped — it would lead to a more severe situation in the affordable housing space. 

He said that spending caps can be just as costly for the sector because, though they aren't direct cuts, as inflation rises, they essentially are cuts as time persists. He pointed to the Budget Control Act of 2011, which placed caps and annual appropriations on federal programs including through HUD.

"A cap on spending, even if you cap spending at the nominal value every year over time, it might not look nominally, not a cut, but when you account for inflation, it is a cut over time," Emmanuel said.