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CRS Issue Statement on Housing for Low-
Income Individuals and Families
Maggie McCarty, Coordinator
Specialist in Housing Policy
Libby Perl
Specialist in Housing Policy
Bruce E. Foote
Analyst in Housing Policy
Katie Jones
Analyst in Housing Policy
David H. Carpenter
Legislative Attorney
Todd Garvey
Legislative Attorney
Bonnie F. Mangan
Information Research Specialist
January 14, 2010
Congressional Research Service
7-5700
www.crs.gov
IS40324
CRS Report for Congress
P
repared for Members and Committees of Congress
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CRS Issue Statement on Housing for Low-Income Individuals and Families
here is a broad consensus that the nation faces a shortage of affordable housing. The
congressionally mandated Millennial Housing Commission, in its 2002 final report,
T identified an “affordable housing crisis,” noting the high number of lower-income families
who are paying such a large share of their incomes towards shelter that they have difficulty
meeting other basic needs. In 2007, nearly 18 million households were severely cost-burdened,
paying 50% or more of their incomes towards housing. This trend has been increasing; the
number of severely cost-burdened households increased by nearly 30% from 2001-2007, while
the overall number of households increased by only 5%. Not surprisingly, the poorest families—
who generally rent, rather than own their homes—faced the greatest burdens. Among renters with
incomes in the bottom quarter of the income distribution, over 50% were severely cost-burdened
in 2007; among renters with incomes in the bottom tenth of the income distribution, about 70%
were severely cost-burdened in 2007. While the nation’s housing markets have seen an
unprecedented downturn recently, there is reason to believe that affordability problems will
persist. While home prices have declined in most areas of the country, so have family incomes as
unemployment rates have risen. Further, rising foreclosures have led to more families seeking
rental housing, placing pressure on the supply of affordable rental units.
For many years, the fundamental policy problem has been that, given the cost of land, labor,
material, permitting, and financing, it is difficult, if not impossible, for the private sector to build
housing that is affordable to low-income families, if that housing is to meet certain standards.
These standards are generally set at the local level and include both safety and quality standards,
as well as environmental impact and quality of life standards. Relaxing these standards is often
not desirable, or politically feasible. The public policy solutions to this problem typically involve
finding ways to subsidize the cost of land and financing, and/or supplementing families’ incomes
to allow them to afford the housing produced by the private market.
Although there is a broad consensus about the problem of affordable housing, there is less
consensus about the appropriate role for the federal government to play in solving the problem.
Housing prices are largely a function of local and regional factors (including land prices and
regulatory policies), yet the federal government has played a role in subsidizing housing
construction and costs since the 1930s. That role has varied over time, but has almost always
centered on providing federal funding to state and local entities—in many cases to supplement
their efforts—with varying degrees of requirements attached to those funds. Today, Congress
funds a number of programs to help meet the housing needs of poor and vulnerable populations,
primarily administered by the Department of Housing and Urban Development (HUD), with
some assistance provided to rural communities through the Department of Agriculture. They
include both relatively flexible grant programs to state and local governments to serve the
homeless, build affordable housing, provide assistance to first-time homebuyers, and promote
community development, and more prescriptive direct assistance programs that provide low-cost
apartments and rental vouchers to poor families through local public, quasi-public, and private
intermediaries. The federal government also makes tax credits available to states to distribute to
developers of low-cost housing.
The extent to which these federal programs are effectively and efficiently meeting their stated
purposes and working together to address the affordability problems of low-income individuals
and families has been the subject of much debate in recent years. Industry groups and local
communities have called for the deregulation of many programs they perceive to be
administratively cumbersome and overly prescriptive. However, many of these programs have
had histories of waste, fraud, and abuse, so when Congress considers providing new flexibility,
the benefits of that flexibility are weighed against the need for accountability over federal funds.
Congressional Research Service
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CRS Issue Statement on Housing for Low-Income Individuals and Families
Low-income housing advocates have called on Congress to expand current programs and make
efforts to preserve the existing stock of assisted properties. They cite the high demand for
assistance and note that the current housing assistance programs serve only about one in four
eligible families. However, these requests have come at a time when federal budget deficits are
growing and it is unclear how much additional funding will be available for increases in domestic
discretionary programs. Critics of the existing programs have argued that radical reforms are
necessary. One set of proposals involve converting all or most of the subsidized housing stock to
rental vouchers. Some contend that the “housing affordability” problem is largely an income
problem that should be addressed through initiatives such as the Earned Income Tax Credit,
minimum wage increases, or other income supplements.
New challenges may emerge if the downturn in the economy persists. Many homeowners still
face foreclosure and default. If efforts to prevent foreclosures fail, more families may be in need
of rental housing. Further, renters living in units facing foreclosure are left in an uncertain status
and may be required to move. These new pressures on the rental market may exacerbate the
shortage of affordable rental units. Further, as job losses mount, more families may need
assistance to maintain their housing. Given that existing housing assistance programs serve only
one in four eligible households currently—and that there are many competing priorities for
federal funds—it is unclear how the programs would respond to an increase in demand.
Issue Team Members
Maggie McCarty, Coordinator
David H. Carpenter
Specialist in Housing Policy
Legislative Attorney
mmccarty@crs.loc.gov, 7-2163
dcarpenter@crs.loc.gov, 7-9118
Libby Perl
Todd Garvey
Specialist in Housing Policy
Legislative Attorney
eperl@crs.loc.gov, 7-7806
tgarvey@crs.loc.gov, 7-0174
Bruce E. Foote
Bonnie F. Mangan
Analyst in Housing Policy
Information Research Specialist
bfoote@crs.loc.gov, 7-7805
bmangan@crs.loc.gov, 7-8706
Katie Jones
Analyst in Housing Policy
kmjones@crs.loc.gov, 7-4162
Congressional Research Service
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