On March 9, Secretary of Housing and Urban Development (HUD) Julian Castro gave a speech before the City Club of Chicago that was astonishing – for all the wrong reasons.
In his speech, Castro lamented that the nation was experiencing an “affordable housing crisis” and noted that more than 7 million low-income households that are not on government assistance are paying more than half of their income on rent.
“That’s roughly equal to the number of people living in Chicago, Los Angeles and Dallas combined,” Castro said. “We are talking about folks who are spending so much of their precious dollars just to keep a roof over their head that they can’t invest in their children’s education or begin to build up savings.”
Closer to Castro’s new home in the nation’s capital, the absence of affordable rental housing is particularly acute. A study released this month by the D.C. Fiscal Policy Institute found the availability of affordable rentals in Washington is virtually nonexistent. And while low-income families are experiencing significant financial woes in relations to housing – 64 percent of low-income Washingtonians pay half or more of their income to rent – that particular rental market was also creating havoc with the more prosperous residents.
“In 2013, the typical middle-income renters earned $46,000 a year, a gain of $4,000 since 2002,” the study said. “However, this gain was outstripped by rents for moderate priced unites that rose almost $5,000 per year, from $900 to $1,300 monthly. For D.C. households in the middle, typical rents are about 34 percent of average income … Rents also rose for apartments in the upper half of the city’s rental market. But the gains in income were higher than the rent changes. For example, rents at the highest end of the market rose from $2,045 a month to $2,700 an increase of $7,900 a year. Average income for this group rose by $14,000.”
Indeed, the lack of rental units is a problem impacting everyone from the low-income to those that display the outward signs of financial stability.
“We need 300,000 to 400,000 new apartments each year just to keep up with resident demand, yet we’ve chronically under-built for years during and after the Great Recession,” said Daryl Carter, chairman of the National Multifamily Housing Council and CEO of Avanath Capital Management, in a press statement released earlier this month. “For example, in 2013, we completed 186,000 units, which is only about half of what was needed to meet resident demand for that year alone. After bottoming out in 2009, apartment starts have increased nationally almost to the point of meeting annual demand, but the lengthy development process and years of backlog mean that completions aren’t likely to hit the necessary level for a couple of years. This increase of available apartments will also help address affordability challenges that we see in many markets across the U.S.”
What Carter did not say was that multifamily housing is now in great supply because so many people cannot qualify for mortgages thanks to the Dodd-Frank Act. But for low- and moderate-income individuals that would rather leave their rentals and their own homes, the stagnation in wages and the miserable nature of the post-2008 recovery (with its wealth of poorly-paying jobs) is making homeownership all but impossible at this time.
But back to Castro. In his speech, he acknowledged that there was a $26 billion backlog in repairs needed to the nation’s public housing and that 10,000 public-housing units were disappearing annually due to disrepair. And what can HUD – and, by extension, the Obama Administration – doing to fix this crisis?
“The cold, hard truth is that federal dollars are scarce and won’t be able to fully address these issues any time soon,” Castro said.
Uh huh. Let’s get this straight – after being in power for a little over six years, the Obama Administration’s initial promises of fixing the U.S. economy and improving the lives of the American people has resulted in a housing situation that the HUD secretary calls a “crisis,” but the White House is not taking any leadership role to fix this mess because they insist that there is absolutely no money to devote to this matter? Not one dollar? Nada, zilch, naught?
At no point since January 2009 has the Obama White House made any effort to show leadership in housing policy. While Castro deserves some degree of credit for admitting that the state of rental housing is a disaster, the fact that he cannot or will not agitate for the delivery of something resembling a solution is a testament to his irrelevance as a bureaucrat and his superior’s incompetence as a president.
About The Author
Phil Hall has been (among other things) a United Nations-based radio journalist, the president of a public relations and marketing agency, a financial magazine editor, the author of six books and a horror movie actor. Also, as you will discover, he is not shy about stating his views.