HOUSING STUDY SHOWS RECORD 5.3 MILLION HOUSEHOLDS - INCLUDING GROWING NUMBERS OF WORKING POOR - NEED HOUSING ASSISTANCE

NOTE: Also see table on affordable housing needs in 43 metropolitan areas and related fact sheets on the America's Affordable Housing Crisis page (www.huduser.org/publications/affhsg/rha_main.html).

WASHINGTON - Despite America's booming economy, a new report issued today says a record 5.3 million households with very low incomes - including growing numbers of working poor and suburban as well as urban families - have a desperate need for housing assistance because they face a crisis of unaffordable rents and substandard living conditions.

"The report presents clear and compelling evidence of deep and persistent housing problems for working families and other Americans with the lowest incomes," Housing and Urban Development Secretary Andrew Cuomo said. "The report makes it clear that the federal government must significantly enhance its efforts to create more affordable housing opportunities."

Cuomo said the HUD report to Congress documents the need for a series of initiatives that President Clinton has requested in his proposed 1999 federal budget to increase the supply of affordable housing, including: $585 million for 103,000 new rental assistance vouchers, 50,000 of which would help welfare recipients get and keep jobs; $135 million for increased funding for homeless grants; $50 million for additional HOME program grants; $11 million for a new HOME bank to finance affordable housing; and a substantial expansion of the Low-Income Housing Tax Credit to create as many as 180,000 units of new affordable rental housing over the next five years.

"The story of housing in the 1990s is a story of prosperity without progress," Cuomo said. "The strong economy that has brought prosperity to millions of Americans has not reduced the affordable housing crisis for millions of others. President Clinton has long recognized the need to provide housing opportunities to more families. This report backs his position."

The report, called Rental Housing Assistance - The Crisis Continues (www.huduser.org/publications/affhsg/rental3.html), lists four major findings:

• Economic prosperity has failed to ease the affordable housing shortage. The number of American households with crisis-level rental housing needs grew by nearly 400,000 from 1991 to 1993 to reach 5.3 million, and held steady through 1995.

• The supply of low-rent housing has decreased, but Congress has rejected requests to give more people housing assistance. The number of apartments affordable to families with very low incomes dropped by 900,000 from 1993 to 1995.

• There has been a sharp increase in the number of working poor families needing housing assistance, with the total jumping by 265,000 - 24 percent - from 1991 to 1995.

• The affordable housing shortage, once concentrated principally in the cities, is also affecting the suburbs. The number of suburban households with critical housing needs jumped by 146,000 from 1991 to 1995 - a 9 percent increase.

"Our report shows that growing numbers of men and women who serve the fast food we eat, who clean the offices where we work, who watch our children in daycare centers, and who perform many other low-wage jobs aren't paid enough to house their families in safe and decent conditions," Cuomo said. "Without housing assistance, they live on the edge of homelessness, struggling desperately each month just to put food on the table and to keep a roof over their families' heads."

"Our report also shows that the days when the affordable housing crisis was confined to our cities are history," Cuomo said. "Minimum wages and maximum rents are creating a new nightmare in suburban America - a growing shortage of affordable housing that is literally leaving more and more hard-working parents and their children with nowhere to live."

POLICY IMPLICATIONS

The HUD report says its findings "have significant implications for federal housing policy," showing that Congressional action is needed to:

• "Provide greater support for federal housing assistance - by expanding both tenant-based rental assistance as well as programs that create and rehabilitate more affordable housing units." The report says adding 103,000 rental assistance vouchers, the HOME program, the HOME Bank and the Low-Income Housing Tax Credit are examples of steps to increase the affordable housing supply.

• Continue using most housing assistance to help families facing the most severe housing crises. This point supports the Clinton Administration position that legislation being considered by Congress to make housing assistance available to additional moderate-income and middle-income households - and to fewer low-income households - would be harmful.

"The poorest of the poor are most in need of housing assistance," Cuomo said. "We should be careful to not lock them out of public and assisted housing by moving too aggressively to attract moderate and middle-income families to this housing. The Clinton Administration strongly supports the transformation of public and assisted housing into mixed-income communities - but not to the extreme point where we literally leave the poorest families out on the streets."

DETAILS OF MAJOR FINDINGS

Here are more details on the major findings in the new HUD report:

The report says 5.3 million impoverished American households have "worst case" rental housing needs. Such very low income households earn less than 50 percent of the area median income and either pay over half their incomes for rent, live in severely substandard housing, or both. These households are one-seventh of all renters in the nation.

The 5.3 million households with worst case needs are made up of an estimated 12.5 million people - including 4.5 million children, nearly 1.5 million senior citizens and between 1.1 million and 1.4 million adults with disabilities. These families qualify for HUD housing aid, but they can't get it because the Department doesn't have the funding to help them.

Overall, despite an increasingly prosperous national economy, the number of households with worst case needs grew by nearly 400,000 from 1991 to 1993 - an 8 percent increase. The number of such households remained unchanged from 1993 to 1995 at the record level of 5.3 million, the HUD report found. The report is based on 1995 statistics, the most current available.

The HUD report found that households with extremely low incomes - below 30 percent of the area median - remain at greatest risk of having worst case housing needs. In all, nearly 4 million of the 5.3 million households with worst case needs have extremely low incomes.

On a national average, extremely low incomes are defined as less than $13,590 for a family of four and $10,872 for a family of two. Almost 70 percent of such households that are not receiving HUD assistance pay more than half their income for rent or live in severely inadequate housing. As incomes rise, fewer households experience such problems - for example, only 5 percent of renters with incomes between 51 and 80 percent of the area median.

The HUD study found that the affordable housing shortage was caused in part by mounting losses of low-rent apartments from the private market. From 1993 to 1995, the number of such apartments affordable to families with very low incomes dropped by 900,000, to 9.5 million - a 9 percent decrease. The number of units affordable to families with extremely low incomes dropped by 16 percent. At the same time, Congress has rejected requests to increase the number of HUD housing assistance vouchers since 1995 - ending a six-decade bipartisan tradition of steady increases in the number of households receiving housing assistance.

Today, HUD provides housing assistance from all its programs - primarily tenant-based and project-based Section 8 rental vouchers, along with public and Indian housing - for a total of about 4.5 million households, made up of about 10.2 million individuals. The number of households with worst case needs is greater than the number of households now assisted by HUD.

"The shortage of affordable housing has created an overwhelming unmet need for housing assistance," Cuomo said. "More than 1 million families are on waiting lists for HUD housing assistance nationwide, forcing families to wait years before getting assistance."

For example, when the waiting list for HUD rental assistance in Chicago was opened for two weeks last summer, 100,000 applications poured in. Three-quarters of all applicants were told they will have to wait more than five years for assistance.

Between 1991 and 1995 the largest increases in worst case needs occurred in the Northeast and West, the two regions in which shortages of housing affordable to low-paid workers are most severe. The number of households with worst case needs by region in 1991 and 1995 are: Northeast 1.14 million in 1991 and 1.3 million in 1995; Midwest 996,000 in 1991 and 1 million in 1995; South 1.48 million in 1991 and 1.45 million in 1995; and West 1.33 million in 1991 and a record high 1.56 million in 1995. Between 1993 and 1995, the number of renters with worst case housing needs continued increasing in the West, while dropping in other regions. In 1995, the West had the highest percentage of very low-income renters with worst case needs - 42 percent - compared with 32 percent in the South, 33 percent in the Midwest and 39 percent in the Northeast.

The report says the number of families with at least one full-time worker having worst case housing needs skyrocketed by 265,000 - 24 percent - from 1991 to 1995, to nearly 1.4 million, as low-wage jobs failed to keep pace with rapidly rising housing costs. In the economic recovery between 1991 and 1995, worst case needs increased fastest among working households.

"Having a low-paid job is increasingly unlikely to lift a family out of poverty or resolve worst case housing needs," the report says. A family moving off the welfare rolls when a member enters the workforce as a result of welfare reform is likely to still have worst case needs for housing assistance, the report found, because such individuals typically begin working at a very low wage level.

The HUD report says 1.8 million suburban households had worst case needs in 1995 - an increase of 146,000, or 9 percent, since 1991. This amounts to about one out of every three households with worst case needs.

WAYS TO INCREASE THE SUPPLY OF AFFORDABLE HOUSING

Here are details of programs in President Clinton's 1999 proposed budget to help HUD increase the supply of affordable housing. The HUD report cites these programs as playing a vital role in efforts to increase the supply of affordable housing.

President Clinton's proposed 1999 budget seeks $585 million in new funds for 103,000 new rental housing vouchers to reduce the number of families with worst case housing needs. HUD has not received funding for new vouchers since 1995.

People receiving HUD rental vouchers or living in public housing pay 30 percent of their income for rent, with HUD subsidies picking up the remainder of their rent.

A total of 50,000 of the new vouchers would be provided through a $283 million welfare-to-work initiative to provide stable housing to families moving off the welfare rolls to join the workforce. These vouchers would go to people who are on welfare or have been on welfare in the past year.

The welfare-to-work vouchers would help more poor people - many of them unable to get to jobs because they lack cars - to rent housing on the private market and live closer to available jobs, Cuomo said. Currently, about two-thirds of new jobs are being created in the suburbs, but three out of four welfare recipients live in rural areas or central cities.

"Targeting new vouchers to help families move from welfare to work is an intelligent investment," Cuomo said. "It rewards men and women who are willing to work hard to climb out of poverty under their own power."

Under the President's proposal, the new vouchers would be awarded on a competitive basis to local housing authorities around the country. Housing authorities would have flexibility to decide how to select new voucher recipients from among eligible current and former welfare recipients.

Also as part of the President's budget proposal to create new rental assistance vouchers, another 34,000 vouchers would be provided at a cost of $192 million for homeless people moving from shelter care into permanent homes. This would help homeless people who benefited from HUD's Continuum of Care transitional housing programs obtain stable housing to ease the transition into the mainstream.

In addition, the 1999 budget asks for $60 million to provide an additional 10,600 vouchers available to all categories of poor households and $50 million for 8,800 new vouchers targeted to elderly Americans.

Other programs in the President's proposed 1999 budget that would enable HUD to help more poor people get affordable housing include:

• $135 million in increased funding for homeless grants - bringing total spending on homeless programs to $1.15 billion .

• $50 million of additional HOME grants for a total of $1.55 billion in resources to provide 78,520 units of affordable housing for owners and renters through construction, rehabilitation and acquisition activities.

• $11 million to establish a HOME Bank that will provide $100 million in loan guarantees to enable localities to finance more rental and homeownership developments. HUD would insure loans made to localities, enabling them to leverage up to five times their current HOME grant allocation. The $100 million is expected to generate another $350 million to $400 million in investment for affordable housing.

• A substantial expansion of the Low-Income Housing Tax Credit, which would create as many as 180,000 units of new affordable rental housing for low-income Americans over the next five years. The new units would be created on top of the 75,000 to 90,000 affordable apartments now created each year as a result of the credit.

• $50 million in increased funding to finance capital improvements in public housing, boosting total capital improvement funding to $2.55 billion. Capital funds may be used to upgrade viable housing units, demolish obsolete units, provide continued assistance to displaced families, or build replacement units. In addition, funding for the HOPE VI program, which demolishes and replaces severely deteriorated public housing, would remain at $550 million.

• $25 million in new funds for Homeownership Zones - large-scale revitalization efforts that create neighborhoods of single-family homes, promoting homeownership in inner cities. The proposal would support five to seven Homeownership Zones, bringing major revitalization to the communities while helping to create new homeowners.

• $21 million in additional funds for the Housing Opportunities for Persons with AIDS program, for a total of $225 million - a 10 percent increase. The program helps people with AIDS who need housing assistance because of the high costs of treating their disease or because they have been unable to work due to their illness. The funding would provide assistance for 41,500 housing units and would provide related services to 75,000 people