This blog post is part of the series “Closing the Racial Gaps: Together We Can,” which highlights efforts across the United States that show promise for closing racial opportunity gaps and creating a more equitable future.
As Living Cities celebrates its 25th Anniversary, it provides a good milestone for us to reflect on the work during that time in support of affordable housing. Let’s face it - over the past 25 years, our country hasn’t always gotten it right, despite our best efforts. While we’ve made some good advances, we are still working hard to determine how to make affordable housing available in all communities, including diverse and low-income neighborhoods.
The Department of Housing and Urban Development paints a clear picture. While their rule of thumb is that a household should pay no more than 30 percent of their household income for housing, today 12 million Americans pay more than 50 percent. A family with only one wage earner who makes the minimum wage cannot afford a two-bedroom apartment anywhere in the US. This sobering statistic is just one example of the struggle many working Americans face as they look to build better lives for themselves and their families.
12 million Americans pay more than 50% of their household income for housing
This is particularly true for low-income and diverse individuals in distressed communities and those seeking housing in neighborhoods of higher economic opportunity –regardless of whether they are looking to buy or rent. Individuals living on the margins still face large disparities with regard to opportunities that will enable them to build economic mobility and chart a path toward a more secure financial future. Meantime, they are facing an increasingly tight supply of rental housing that is affordable in today’s environment of market rate housing and limited subsidies. That’s why we approach this work holistically through partnerships that address the fundamental issues related to poverty, ranging from jobs and education to affordable housing.
Individuals living on the margins still face large disparities with regard to opportunities that will enable them to build economic mobility
As a country, our confidence in the housing sector burst during the financial crisis. An asset previously regarded as security for the future had lost value, and many were forced to acknowledge a collective role in the downturn. While we worked to make improvements, one learning was key: the path forward requires many dimensions - greater education and understanding of finances, public policy adjustments, product innovation and partnerships in order to ensure success for individuals, communities and our country.
That’s why we’ve placed increased emphasis on education and transparency in our products and developed new partnerships to increase financial acumen more broadly. Our new Affordable Lending Mortgage Program is an example of a responsible lending product for individuals who can’t make a large down payment. It includes comprehensive financial counseling for low- and moderate-income homebuyers. We’ve also partnered with online education innovator Khan Academy to develop BetterMoneyHabits.com, an online self-directed financial education resource. The 11 million people who have visited the site have found simple, easy-to-understand information on saving, budgeting, building credit, paying down debt, paying for college, and buying a house to help them make more informed financial decisions.
We recognize affordable home-ownership does not offer a solution for all. Affordable rental options are also key to building thriving, diverse communities. It will take all of us at the table to develop straightforward solutions for these complex challenges. The private sector needs to play a larger role, bringing innovative tools and resources, to help improve opportunities for the economic trajectories of individuals and families. From lending to Community Development Financial Institutions (CDFIs) which provide affordable loans, technical assistance and other resources to those who may not be able to obtain traditional loans to taking advantage of government tax credits to create more affordable housing rental units for individuals, we can leverage public private partnerships to build a better pipeline of housing that meets existing needs.
It’s been a privilege to work with Living Cities on the issue of affordable housing and the critical role this plays in our nation’s economic health and vitality. As we celebrate this milestone of Living Cities’ 25th anniversary, let’s use it as a moment to reset public, private and nonprofit partnerships in order to create a more sustainable approach to housing. Together, we can ensure that more individuals access the stability and opportunity that comes with affordable housing and build better economic futures.