HUD REPORT SAYS HOUSING NEEDS HAVE DROPPED EIGHT PERCENT

WASHINGTON - The number of very-low-income U.S. renter households that pay more than 50 percent of their monthly gross income for rent or live in severely inadequate housing dropped about eight percent between 1997 and 1999, according to a U.S. Housing and Urban Development report released to Congress today.

HUD Secretary Andrew Cuomo said that the drop by some 440,000 households is a "welcome reversal of a ten-year trend in which the number of worst case needs grew. The decrease is strong evidence of the effectiveness of this Administration's economic and housing policies in helping the very lowest income households."

Though the picture has improved, Cuomo noted that nearly five million renter households still fall into the worse case housing category that most needs rental assistance. Renter households with worst case needs are defined as those that have very low incomes (below 50 percent of their area's median income), do not already receive rental assistance from federal or state programs, and either pay more than half their income for housing or live in severely substandard housing.

"The recent progress can be undone by an economic downturn that would slow or reverse the income growth among very-low-income households," Cuomo warned. "We are also concerned that the progress may be thwarted by substantial shortages of affordable housing."

The report, A Report on Worst Case Needs in 1999: New Opportunity Amid Continuing Challenges (www.huduser.org/publications/affhsg/wc99.html), said that despite the progress in reducing worst case needs, the shortage of affordable housing has worsened. The number of units affordable to extremely low-income renters (those with incomes below 30 percent of the area's median) dropped between 1997 and 1999 at an accelerated rate, and shortages of housing both affordable and available to those renters worsened. With rents continuing to rise faster than inflation, basic pressures for above-average rent increases at the bottom end of the rental stock are further eroding the supply of rental units that are affordable without government subsidies, the report noted.

Cuomo said that the report's findings demonstrate that the private market is not producing enough affordable rental housing to meet existing demand.

"Effective government housing policies are essential to any further progress in reducing worst case needs," Cuomo said. "And an effective housing strategy must continue expansion of the number of Section 8 vouchers, which are a cost-efficient means of reducing worst case needs." Cuomo said it is also vital to continue and expand policies to promote economic growth, to raise incomes among low-income households and the production of more affordable rental housing.

Among the report's major findings were:

• In 1999, worst case needs troubled 14.3 percent of renters, which is 4.7 percent of all U.S. households, the lowest share ever observed. The significant drop in severe housing problems occurred because income growth exceeded rent increases among very-low-income renters.
• The reduction in the number of households with worst case needs for rental assistance all occurred among renters with extremely low incomes (below 30 percent of area median income) as income growth reduced the number of such households. Nonetheless, extremely-low-income renters were much more likely to have worst case housing problems than those with higher incomes.
• Needs fell most rapidly among the elderly, families with children, and "other" families. The drop in worst case needs between 1997 and 1999 was greatest among "other families" (non-elderly households with related family members but no children). Above-average declines also occurred among the elderly and families with children, two groups often helped by rental assistance.
• Regionally, decreases in worst case problems were greatest in the Northeast, where needs fell by a 18 percent, to 1.04 million.
• Nationally and within all regions but the South, needs fell most swiftly between 1997 and 1999 in non-metropolitan areas, the type of location where renters most often already receive assistance. Worst case problems fell least in central cities, the type of location where unassisted very-low-income renters most often had severe problems.
• As was the case nationally, in every region rental housing affordable to extremely-low-income renters was in shorter supply than housing affordable to other income groups.
• Losses of affordable rental units accelerated. The drop in worst case households occurred despite a worsening shortage of affordable and available units. In the U.S., the number of units affordable to renters with extremely low incomes dropped by 750,000 (-13 percent) and the total number of units affordable to renters with very low incomes fell by 1.14 million (-7 percent) between 1997 and 1999.

A Report on Worst Case Needs in 1999: New Opportunity Amid Continuing Challenges (www.huduser.org/publications/affhsg/wc99.html)