Photographer: David Paul Morris/Bloomberg

It's Getting Harder to Pay the Rent in America

A senator's plan to build 400,000 affordable units over 10 years is just a drop in the bucket.

It's been more than 15 years since Congress increased funding for the Low Income Housing Tax Credit, the government's primary method for encouraging construction of affordable housing. On Thursday, Senator Maria Cantwell (D-Wash.) is to announce a plan that calls for Congress to spend 50 percent more on the program, enough to build as many as 400,000 homes over the next decade.

That makes the Democrat's plan an ambitious attempt to increase the stock of affordable rental housing, one that comes in the face of potential opposition by a Republican majority, along with the legislative gridlock of a presidential election year. It’s also just a drop in the bucket.

There are 3.9 million low-income households that lack access to affordable housing, according to Cantwell's office. Just as troubling, the number of U.S. households spending 50 percent of their income on rent could increase to 15 million by 2025, according to a study by Harvard’s Joint Center on Housing Studies and Enterprise Community Partners.

Another way to think of 400,000 units is that it’s roughly equal to the number of federally subsidized apartments eligible to be converted to market-rate homes by 2017. It's a big number in terms of the number of families that would get new housing they can afford, but it's a small one in terms of the larger demand. In other words, the proposal, if approved, would probably amount to a wash.

So why hasn't there been a bigger push to increase spending on the program?

Rental housing often gets short shrift from politicians, at least compared with proposals to promote home ownership. The rising share of Americans who rent housing, together with skyrocketing rental prices in big cities, have made affordability an issue with broader reach.

The housing credit program—LIHTC in print and “lye-tech” if you’re chatting with policy wonks—gives tax credits to developers that build housing reserved for low-income renters. In 2013, the last year for which data are available, the program helped build or preserve 110,000 units1, according to Emily Cadik, public policy director at Enterprise Community Partners, an affordable housing nonprofit.

The housing, when built, is reserved for families earning no more than 60 percent of the area's median income. The federal government spent about $19 billion last year on its Housing Choice program, which provides rental vouchers to poor families. LIHTC, which received about $7 billion, is the largest program for building new housing for the poor, Cadik said. 

Democratic presidential candidate Bernie Sanders has arguably been the most active on affordable housing issues, going back to when he was mayor of Burlington, Vt. Meanwhile, a plan released by rival candidate Hillary Clinton in February includes a call to "check the skyrocketing rise of rental costs" with new funding for the LIHTC program. 

In January, Paula Dwyer argued in Bloomberg View that rental affordability is an issue tailor-made for Republicans seeking to address inequality and social mobility. That call seems to have gone unheeded: Republican presidential candidates Donald Trump and Governor John Kasich (R-Ohio) make little mention of affordable housing, and Senator Ted Cruz (R-Tex.) argues for eliminating the Department of Housing and Urban Development and introducing housing policy that is “family-centered, opportunity-inspired, and work-focused.”

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  1. 1 There are different kinds of credits within the LIHTC program, and Cantwell’s proposal calls for increasing funding for part of the program, which is why her 50 percent increase in funding calls for an additional 40,000 apartments a year.