Targeted housing investments are critical to addressing a central driver of inflation – the rising cost of rent. Housing accounts for at least one third of a household’s budget, making it the single largest component of the consumer price index (CPI), a popular measure of inflation. For 7.6 million households with extremely low incomes – those with incomes below the federal poverty limit or 30% or less of area median income – housing consumes close to 60% of their monthly budget. For households with moderate incomes, up to 12% pay more than 30% of their income towards rent. Nationally, the cost of rent rose an average of 14 percent last year, and an additional 10% increase is anticipated. People with the lowest incomes, disproportionately people of color, are most harmed. The fair market rent for a 2-bedroom apartment in Lorain County is now $893. For a minimum-wage worker, that equates to working 72 hours per week at the job/s. A wage of $17.17/hour (at 40 hours per week) is needed to afford that apartment, whereas the average renter hourly wage in Lorain County is $12.66.
We must bridge the gap between income and rent. While charitable organizations have traditionally provided short-term emergency rental assistance, subsidies offer the best opportunity for households to stabilize over time. Rental subsidies help low-income households better afford rent by making up the difference between 30 percent of household income and the cost of rent. In doing so, subsidies reduce homelessness and housing poverty, improve health and educational outcomes, and increase racial equity. However, the program is vastly underfunded and only one in four households who qualify for rental subsidies receive it. Rental subsidies protect these households from the harmful impacts of inflation, preventing housing instability and homelessness, while assuring landlords receive their rent on time and maintain acceptable housing standards.
The stock of affordable rental housing must be preserved and expanded. An adequate supply of deeply affordable housing would help decrease the cost of rent across incomes and relieve inflationary pressure caused by high rent. The United States has an estimated shortfall of 6.8 million rental homes affordable and available to renters with extremely low incomes. Nationally, only 37 affordable and available rental homes exist for every 100 extremely low-income renter households, and there is not a single state in the country with enough affordable homes to meet demand. In Ohio, that number is 43.
The National and state Housing Trust Funds offer solutions to housing affordability. The private market cannot, on its own, build housing affordable to extremely low-income renters, underscoring the central role for federal, state, and local governments in correcting this market failure. In many US cities, even moderate-income renters cannot afford the local market. Preserving decent public housing (including fair market housing units) is key to any strategy to address the affordable housing crisis and reduce inflation, but decades of disinvestment by Congress has resulted in an over $70 billion backlog in unmet capital needs. As a result, our nation loses an estimated 10,000 to 15,000 units of public housing every year to obsolescence or decay, while families living in public housing are subjected to unhealthy and dangerous living conditions. Targeting investments to increase the supply of deeply affordable housing will have a ripple effect, relieving the upward pressure on rent throughout the rental housing market.
United Way of Greater Lorain County Position
United Way of Greater Lorain County supports increased federal and state investments in rental subsidies, public housing / fair market housing, and the state and national Housing Trust Funds.