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The St Louis Contrarian

Providing Independent and Intelligent Insight on St. Louis Public Policy Issues

Archive for the tag “national low income housing coalition”

Statistics on Lack of Housing Affordability

Everyone knows there is a serious lack of affordable housing in this country. This gap contributes to homelessness, poor school performance, childhood trauma, and mental and physical health problems. The National Low Income Housing Coalition (NLIHC) presents a report every year which documents the housing affordability problems. They compare the minimum wage income to rents and then deduce the level of housing non affordability. They compare the monthly minimum wage income to the median rent in the area and calculate that anyone paying more than 30% of their income for rent is paying too much for housing.

Like I said, I am a big affordable housing advocate and understand the lack of affordable housing. I disagree with the methodology used in this study. Many minimum wage workers are students or retirees and do not expect to live on this income. Others double up with roommates to meet housing costs. Third most minimum wage workers do not stay at that salary level for long. I believe the average tenure at minimum wage is six months. For better or worse, minimum wage was never intended to be a living wage.

A more valid comparison would be between median salary and median rent. This statistic would still tell and alarming story, but the data would be more truthful. I have the highest respect for the National Low Income Housing Coalition. They do great work.

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Mortgage Interest Deduction

The mortgage interest deduction on federal income tax is by far the biggest housing subsidy available. It far surpasses Section 8, LIHTC, or other forms of subsidy. The major problem with this subsidy is because it primarily benefits higher income households. That is because a tax deduction only benefits households who itemize and those with a more substantial tax burden. Most of the benefit of this deduction goes to households earning over $200,000 a year. This program hurts central cities more than suburbs for the following reasons:

1. As stated before, less expensive houses provide less of a deduction to affluent purchasers. The present system actually provides incentives for middle and upper middle income households to buy more expensive homes which are generally located in suburbs.

2. Renters who are more common in the central city receive not subsidy at all.

The National Low Income Housing Coalition has a United for Homes campaign which attempts to rectify the housing tax deduction issue. The policy they advocated would limit deductions to $500000 of interest, and provide a 15% tax credit to households which would much more adequately address the needs of lower income homeowners. The billions in cost savings would be used to subsidize new affordable housing. Check out the website Unitedforhomes.org

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