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Affordable Housing Preservation FAQs
Why is affordable rental housing important?
One third of our nation’s households across the income spectrum live in rental housing – some from choice and some from necessity. It is a critical part of any community’s healthy housing mix, ensuring diversity, opportunity and a labor force for essential community services.
Some choose rental housing because it provides an affordable and convenient lifestyle close to neighborhood amenities. But for many working and lower income families, homeownership is out of reach. Rental housing allows these families to live in communities close to work, education, and affordable transportation.
As the current home foreclosure crisis continues to unfold, and credit remains tight, stable rental housing will become ever more important to workers who are critical to our communities, including teachers, police, fire fighters, and other service providers.
But decent rental housing that is affordable to working and lower income families is in short supply. According to the National Low Income Housing Coalition, in no community in the nation can a family afford a modest two bedroom apartment on a minimum wage income. In 2006, nearly half of all renters spent more than 30% of their income on housing, while some 25% (9 million renters) spent more than 50% of their income on housing costs.
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What do we mean when we say our nation must have a balanced national housing policy?
Despite the compelling need for decent affordable rental housing, this issue has dropped from the national policy debate. For many years, our nation’s singular housing policy priority has been advancing homeownership. The federal government spends $155 billion a year on homeownership assistance through tax breaks such as the mortgage interest deduction. These tax breaks disproportionately benefit wealthy Americans.
Meanwhile, only 25% of eligible low income renters receive federal housing aid. This leaves many renters spending far more than they can reasonably afford on housing costs and little money left over to pay for other essential needs such as food, transportation, and healthcare, or for savings and investments that are essential for a more secure future.
Instead of ignoring the nation’s rental housing needs, our government must seek a balanced federal housing policy recognizing the urgent need to safeguard our nation’s limited supply of affordable rental homes.
Recent studies suggest that housing stability is most critical to school performance, not whether the home is owned or rented. Researchers at the University of Iowa recently concluded that homeownership has no statistically significant affect on school performance when factors such as residential mobility and family wealth are controlled for.
What matters most is secure, stable, and affordable housing for families to reach their full potential. Families who lose their housing- whether due to home foreclosure or the loss of affordable rental housing- can experience devastating disruptions.
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What role does our current stock of subsidized affordable housing play in meeting our nation’s housing needs?
From 1965 to the mid-1980s, the government played an essential role in creating affordable rental homes. Partnering with the private sector, the federal government provided critical financial incentives, including below-market interest rates (Section 236), interest rate subsidies (Section 221(d)(3) Below Market Interest Rate-BMIR) and rent subsidies (Section 8), in exchange for a commitment from property owners to keep the apartments affordable to low income households. As a result, there are now more than 1.5 million federally assisted, privately owned affordable homes in nearly every community in the nation. The largest of these programs, the project-based Section 8 rental assistance program, provides affordable apartment homes for more than 1.2 million households.
Because significant government funding has been invested in these properties, this housing is the most affordable housing in our communities. Under these programs, families and seniors live in privately owned housing and pay rents of no more than 30 percent of their income. The federal government contracts with private apartment building owners and makes up the difference between what the tenant can reasonably afford and what the unit could rent for local market prices.
The project-based rental assistance program provides funding tied to the apartment, not the tenant (in contrast to the tenant-based Section 8 voucher program). The owner agrees to keep the property affordable for the term of the contract between HUD and the property owners, ensuring affordability regardless of fluctuations in local housing costs. In tight housing markets with low vacancy rates, project-based rental units are essential as landlords may be unwilling to accept rent vouchers, making it difficult for voucher holders to find housing. In softer housing markets, while it may appear that there is sufficient affordable housing today, future neighborhood changes and gentrification can make that housing unaffordable tomorrow.
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Why is our nation's affordable rental housing at risk? What do we mean by affordable housing preservation?
Many of these contracts between the federal government and private owners are expiring or soon to expire, allowing the owner the option to exit the government program and convert the property to a non-affordable use. Escalating demand to live in cities is driving rents up and giving rental owners the incentive to upgrade affordable units to luxury housing and opt out of federal assistance programs.
Owners of properties in weak housing markets with high vacancy rates may be unable to generate sufficient operating revenue to maintain the property and keep it from deteriorating beyond repair. These properties may similarly be lost to the affordable stock due to deterioration or abandonment.
"Preservation" is when action is taken to ensure the federal subsidy and low-income restrictions remain in place, preserving long-term affordability. This is usually combined with raising new capital to repair the property. Often the property is transferred to a new owner who is committed to the long-term affordability of the property. Preservation is what the National Housing Trust does using the tools of advocacy, financing, and real estate development.
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How is preservation a critical strategy for ensuring a sufficient supply of affordable rental housing?
Preserving affordable housing is the obvious first step to meet our country’s rental supply needs. Our nation builds approximately 100,000 affordable apartments each year. But for every new affordable apartment created, two are lost due to deterioration, abandonment or conversion to more expensive housing. Without preserving existing affordable housing, we fall two steps back for every step we take forward.
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How is affordable housing preservation cost effective? How does it save taxpayer dollars?
Preserving an existing home is significantly less expensive than constructing new affordable housing. Restrictive land use regulations common in many communities make it difficult to build rental housing affordable to very low income families and seniors. Replacing every lost affordable apartment is often unrealistic.
Rehabilitating an existing affordable apartment can cost one-third less than building a new apartment. In more expensive communities with high land costs, the cost of building new affordable housing could be as much as double the cost of preserving existing housing.
Preservation protects the billions of taxpayer dollars already invested in affordable rental housing. Preservation, in these challenging economic times, is also the most cost-effective investment that the public sector can make in ensuring that its citizens have decent and affordable places to live.
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How does preserving affordable housing play a key role in achieving regional equity and maintaining access to opportunities for low income families?
Housing is fundamental to accessing opportunities. In order to thrive, lower income families need housing in healthy neighborhoods with low crime rates, access to quality education, meaningful job opportunities and affordable and reliable transportation options. Affordable housing already exists in many high opportunity neighborhoods. Safeguarding this housing is essential for maintaining access to these vital opportunities.
Building new affordable housing in high opportunity communities is especially difficult considering the costs and political opposition often associated with constructing new rental housing in such places. By saving and improving existing affordable housing in high opportunity neighborhoods, preservation is an important tool for promoting equitable development.
The loss of this housing has serious consequences, not only for those who reside in these homes, but also for the communities that depend on quality affordable housing. Preserving affordable housing means more than simply saving a building—it means preserving the access of low-income families and seniors to choices in employment, in needed services like health care, and in education for their children, all in a stable living environment. It also means enabling employers to fill critical jobs across the spectrum of wages without forcing our poorest workers to shoulder the burden of long and expensive commutes.
In distressed neighborhoods, preserving affordable housing can catalyze the revitalization of an entire community. Saving decent, affordable housing means saving a critical community asset. It also signals the reversal of years of neglect and disinvestments and can spark the public-private investment that is essential for community revitalization.
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Why is it important to preserve affordable housing near transit?
In particular, preserving affordable housing near transit is important for connecting low-income families and seniors to opportunities. As smart growth policies catalyze in-fill development and better transportation options in existing communities and as gas prices remain high, demand for housing near transit will inevitably rise. Preserving this housing now is significantly more cost effective and politically feasible than building new affordable housing near transit, and will ensure that future transit-friendly neighborhoods include opportunities for households with modest incomes, while simultaneously addressing the challenge of climate change.
For more information, click here to visit the transit-connected affordable housing section of this website.
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How is affordable housing preservation fundamentally green?
Preserving affordable housing saves energy in four primary ways- in reusing an existing building, in using existing infrastructure, in preserving green space, and in household energy use.
Building Reuse. Renovating an existing building produces less construction waste, uses fewer new materials, and requires less energy than new construction. Existing buildings have embodied energy: the energy required to derive, deliver, and install the raw materials it takes to construct a building.
Infrastructure. Preserving existing affordable housing does not require new utility or transportation infrastructure.
Green Space. Preserving existing housing does not require developing more land.
Household Energy Use. Since the typical suburban homeowner actually spends more energy commuting than on heating and cooling the home, it is more energy efficient to preserve housing near public transit. Rehabbing existing affordable housing also provides opportunities to integrate “green” technologies that make the buildings energy efficient, healthy for residents, and environmentally sustainable. “Green” technologies can be used to promote energy and water conservation, benefiting owners through lower maintenance costs and lower utility expenses for low income families and seniors. The use of green design and materials, such as chemical-free paints, also provide a healthier living environment.
Click here for a fact sheet demonstrating how preserving affordable housing is fundamentally green.
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How is affordable housing preservation consistent with smart growth development?
As the U.S. population continues to rapidly increase and demand to live in cities returns, low-income families are being pushed to the edges away from jobs and services. This trend is inconsistent with smart growth principles. With the U.S. population projected to grow by 94 million people over the next 30 years, we are basically faced with two options: spread through sprawl, or concentrate people in communities with already built infrastructure.
Below is a summary of how affordable housing preservation is consistent with key smart growth development principles:
|Smart growth principles
||How is affordable housing preservation consistent with smart growth?|
|Create housing opportunities and choices for a range of household types, family sizes, and incomes.
Many affordable homes exist in neighborhoods undergoing rapid transition. Preserving this housing ensures low income households are not displaced and can live in mixed-income communities with access to opportunities.
|Preserve open space, farmland, natural beauty, and critical environmental areas.
Rehabilitating existing housing and maintaining affordability prevents low income families from being forced to move to the suburban fringes and reduces the need for sprawling land development.
|Strengthen and direct development towards existing communities.
Preservation is consistent with smart growth's “Fix-it-First” philosophy, using existing infrastructure and development.
|Provide a variety of transportation choices.
Preserving affordable housing near transit ensures access to low cost transportation options for low income households.
|Make development decisions predictable, fair, and cost-effective.
Affordable housing preservation is cost-effective: The cost of preserving a unit is typically 40% cheaper than building a new unit. Renovating existing affordable housing is sound fiscal policy because it ensures that the public investment made to create affordable housing endures.