Washington’s Affordable Housing Problem

Source: Department of Housing

The lack of affordable housing has long been recognized as a leading cause of homelessness. In fact, the 2003 Conference of Mayors Report on Hunger and Homelessness again cited a lack of affordable housing a primary reason for people becoming homeless in the United States, especially when they are working in low-paying jobs. 

And Washington, DC is no exception. 

Two of the major problems in the District’s housing market are skyrocketing rent prices and developers that focus on affluent homebuyers. Combining these with the limited funds in federal housing assistance programs has left many low-income singles, families and children out in the cold. 

Experts typically consider housing to be unaffordable if it costs more than 30% of a family’s income. Yet in DC, one in four homeowners and renters spend more than half their income on housing, and that proportion can go even higher in the city’s more fashionable neighborhoods, such as Dupont Circle. 

For people who have jobs that barely pay the minimum wage ($6.15 per hour), finding an affordable home to buy or rent is nearly impossible. In the District, a low-income household earns about $25,500 per year (less than a third of the area’s median income of $84,800). Assuming housing costs absorb no more than 30% of income, this family can afford monthly rent or mortgage payments of $637 or less. In DC, however, the fair market rent for a one-bedroom apartment is $1039 and $1,218 for a two-bedroom apartment. 

The National Low Income Housing Coalition (NLIHC) annually calculates a “housing wage” for cities nationwide. NLIHC determined that for a full-time worker to afford a one-bedroom apartment in DC, he or she needs to earn $19.98 per hour- more than three times the minimum wage. To think of it another way, someone earning minimum wage needs to work 130 hours each week to afford DC housing. 

“It is appalling that here in America, the richest country In the world, we have millions of people working full-time who cannot afford decent, modest rental housing,” NLIHC President Sheila Crowley said. 

Unaffordable housing is quickly becoming one of the nation’s top social and economic problems, especially in cities. The large number of affluent professionals, coupled with tight housing markets in many urban areas, has resulted in rents rising quickly across the country. A recent report on the DC housing market by Fannie Mae Foundation found that the lack of affordable housing for low-income people is most severe in Seattle and Washington, DC. Between 2002 and 2003, rents for two-bedroom apartments in DC increased an average of nearly 22%. 

Both high rents and a lack of affordable rental units are to blame for this housing crisis. While many neighborhoods in DC are experiencing a robust housing market with developers rehabilitating and investing in once over-looked inner-city communities, most of these units are homes for sale, not rent, and targeted to the area’s more affluent buyers. 

This trend contrasts with the area’s housing needs. Nearly 50% of DC households (147,124 households) are renters. Two out of every three of these renters are low income, defined here as having incomes below $35,000 annually. More than 3,500 households have incomes below $10,000 per year. 

In short, DC does not have enough affordable housing for these families. The rental stock available to low-income renters in DC is 13,800 units less than needed, according to the Fannie Mae Foundation. 

The need for more affordable housing units is also growing, as poverty in DC continues to rise and becomes increasingly concentrated in specific communities. This poverty trend over the past decade has been unique to DC. Whereas highly concentrated poverty has declined in cities across the United States, it has nearly tripled within the District. 

The number of city tracts with poverty rates greater than 40% (considered to be extreme poverty) rose from 10 in 1990, to 23 in 2000, according to the Fannie May Foundation’s most recent survey. Most of these tracts can be found east of the Anacostia River. Moreover, the population in these tracts more than tripled from 20,600 to 66,000. 

This trend is of concern to policy makes, because where poverty is concentrated, so are many urban problems that undermine economic development efforts and perpetuate poverty cycles. Poor neighborhoods often have inferior public schools, higher crime rates and more environmental hazards. Together with high unemployment, these factors make it difficult for families to break out of poverty.  

Unable to escape poverty so they can afford DC’s higher rents, where are these families supposed to go? 

It is no surprise that the number of homeless people in DC is also rising, including families and children. The Council of Governments Homeless Services Planning and Coordinating Committee conducted its second annual count of homeless people in the wider DC area and found that the number of homeless people rose from 12,580 in 2001 to 13,982 in 2002 – an 11.1% jump. 

While single adults, especially men, make up the majority of the DC homeless population, 40% are families, and slightly more than 25% are children. 

When it comes to addressing low-income housing needs, federal housing programs provide the bulk of the assistance. Programs range from those that promote home ownership among low-income families to those that assist with rent or fully subsidize rental payments. But as with affordable housing, federal housing assistance programs also fall short of the need. In 2000, nearly 290,000 Washington-area renters had incomes below $35,000, making them eligible for federal housing assistance. Yet only a fraction of these people were helped. 

Further complicating matters, the number of federally subsidized units in the area has been declining as distressed public housing projects are demolished and replaced with market-rate units that often reserve only a fraction for affordable housing. This approach is called “inclusionary zoning.” 

At least 100 municipalities, including Montgomery County, have initiated inclusionary zoning programs, which set aside a select number of housing units in new developments as affordable housing for working families. Combined with legal requirements and financial incentives, such an approach can lead to upscale neighborhoods offering housing for lower-income families. Supporters of this approach state that such initiatives stem the rising tide of economic segregation and uneven development. 

While many policy makes find this approach more sustainable and desirable in the long run, in the short run it is adding to the affordable housing deficit because the original subsidized units are not being fully replaced. Between 1998 and 2000, the District lost 7.6% of its federally subsidized housing, from 20,500 units to 19,000 units. Most of the new affordable housing developments are not geared for families most in need, but rather for families earning between $35,000 and $50,000 annually. 

Research has shown that economic growth is greater in areas of economic diversity. Balanced development can be a “win-win,” according to Chester Hartman, the urban planner who directs the Washington-based Poverty and Race Research Action Council. “Such equity planning is essentially for the future health of urban America,” he stated, “and particularly for high-cost real estate markets like Washington, DC. 

 

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