It’s time we address the root causes of housing instability

It’s no secret the COVID-19 pandemic exposed significant scarcity and fragility in our economic and social systems.

We discovered just-in-time delivery isn’t the best approach when unexpected shifts in demand or accessibility disrupt markets – remember trying to find toilet paper and hand sanitizer last April? We also realized millions of Americans were living on the edge of housing instability – one missed paycheck from being unable to pay the rent or mortgage.

Nationally, nearly 1 in 4 renters spend 50% of their monthly budget on maintaining adequate shelter. In Kent and Ottawa counties, our numbers are similar, and some communities are seeing more than 30% of renter households spending half their income on rent.

It’s time to take stock of what it means when a neighbor has to choose between spending half their income on rent or abandoning the idea that housing is a priority. It’s estimated 1 in 3 households in West Michigan wonder whether they can afford to remain housed.

Let that sink in for a moment.

Now, let’s think about how this impacts the emotional and physical well-being of those neighbors. Consider the last time you were faced with two bad choices. How did you show up in the world with that worry on your shoulders? Did prioritizing the smaller issues in your life become more difficult?

There are significant costs to our communities when neighbors fall into such drastic instability. For example, housing instability leads to less preventative health care, which leads to more emergency room visits. Having to take on a second or third job to cover housing costs means parents can’t spend time at home to make sure their kids are keeping up in school. To address this, more community resources are needed – and we all pay for these resources.

The problem: We’re so accustomed to paying to treat the symptoms of instability we forget we can address their root causes.

That’s where the Three S Strategy of Housing comes in – supply, stability and subsidies.

Supply

Rents and home prices increase as a result of scarcity. As housing costs rise more quickly than regional wages, renters and new homebuyers are at a disadvantage in the marketplace. As a result, they remain renters longer, competing for an increasingly scarce supply and pushing out low- and moderate-income renters who face very tenuous housing situations. Low- and moderate-income renters are forced to double up with friends or loved ones, accept unsafe or unsanitary housing conditions or resort to temporary housing, no housing or moving out of the region altogether.

More housing is needed at all price points and all sizes. However, the cost to build new housing is expensive and won’t be directly affordable to low-income residents unless it’s subsidized. However, by increasing the amount of available high-quality housing, there will be less competition among renters and first-time buyers, eventually slowing the rate of price increases.

There are two primary tools communities can use to increase housing supply:

• Allow more housing to be built in every neighborhood.

• Encourage alternatives to single family-only neighborhoods – missing middle housing, repurposed older industrial buildings, mixed-use and multi-story buildings along transit corridors, accessory dwelling units and small lot subdivisions. This also may include single-room occupancy, shared equity cooperatives and social housing.

Stability

Nearly 94,000 households in our region spend more than 30% of their income on housing. These households are much more likely to be devastated by what otherwise may be a short-term emergency.

Increasingly, households who spend more than 30% of income on housing is a result of a lack of alternatives. The vast majority of households who are cost over-burdened by housing don’t have a realistic alternative. The average apartment now rents for $960 per month. To be affordable, a household needs to earn roughly $38,000 a year, or $18.45 an hour. The typical single-family home rents for more than $1,200 per month, requiring an annual salary of $48,000, or $23 an hour.

With a lack of available housing supply, some landlords find incentive to end lease agreements with existing tenants when higher-income tenants are prepared to spend more for the same unit. There is little incentive to encourage for-profit property managers to prioritize housing stability for low- and moderate-income households.

Tools communities can use to increase housing stability include:

• Improved mobility options

• Reduced transportation costs

• Just-cause eviction requirements and tenant protections

• Incentives for landlords to cap annual rent increases with inflation

• Preserved naturally occurring affordable housing, or NOAH, and income-restricted units wherever possible

• Homeowner repair and energy efficiency grants

• Streamlined permitting and financing for accessory dwelling units to support low- and moderate- income homeowners

If local governments act collectively as a region to allow enough housing supply to be built to satisfy demand, these stability tools can be enacted as temporary measures to ensure more neighbors don’t fall through the cracks while new supply is on the way.

Subsidies

As market rate rents and home prices continue to escalate, regional wage growth isn’t even close to keeping pace. Workers who earn less than $15 an hour are increasingly priced out of all housing options that are not subsidized. A well-regulated private housing market can serve a large portion of the population, and tenant protections paired with rental housing preservation can assist even more. But there will always be some families and individuals who are left behind without more support. Some degree of subsidy is essential to ensure every individual has access to safe and clean housing within their means. However, without an adequate supply of housing and robust tenant support and protections, additional public funding will mostly be absorbed into higher rents and construction costs – as is the case with housing supported by a low-income housing tax credit.

Here are tools communities can use to increase housing subsidies:

• Down payment assistance

• Rapid re-housing assistance

• Eviction prevention

• Housing voucher expansion

• Gap-financing for LIHTC

• Missing middle housing

• Permanent supportive housing

If we try to solve our regional housing issues using only one or two of the Ss in our strategy, we fall short. While falling short hurts low-income households the most, our entire community feels the pain. When we don’t provide safe, stable and affordable housing for everyone, our education, health care, workforce readiness and economic development take a hit.

Utilizing the Three S Strategy of Housing and working together as a community – local governments, developers, nonprofits and employers – we can remove barriers to the creation of housing at all price points and solve our region’s housing instability challenges.

To learn more about the Three S Strategy of Housing, pick up a copy of Shane Phillips' book The Affordable City: Strategies for Putting Housing Within Reach (And Keeping it There). Check your local library or favorite bookstore for a copy.