2016 Affordable Housing Advisory Council Annual Report
Report From The Chair
The Supreme Court of the United States declared in 1921 that housing, like food and water, is necessary for life. Nevertheless, 95 years later the number of people living on the streets, permanently or temporarily, continues to be a stain on the reputation of a wealthy nation. Millions of extremely low-, low-, and moderate-income families and individuals struggle every day to afford a safe, decent, healthy place to call home in our country. In 2017, there is still not enough of what is necessary.
On a single night in January 2016, HUD’s biennial national point-in-time survey counted more than half a million people living on the streets, in cars, in emergency shelters, or in subsidized transitional housing. Of that number, 286,000 were people in families, 358,422 were individuals, and 25% were children. While the count provides a useful snapshot of the problem, the study also reports that 1.5 million Americans were homeless at some point in 2015.
Poverty, low-wage jobs, sudden or chronic unemployment, domestic violence, aging out of foster care, and mental health and substance abuse issues all contribute to the problem of homelessness. But the single greatest obstacle to solving it, according to the U.S. Conference of Mayors, is the severe lack of affordable housing, across the board. We need to produce a lot more housing, not only to bring the homeless indoors but also to ensure that the full spectrum of people now struggling to find or keep a home that is truly affordable are able to do so.
While the homeless are among the most vulnerable Americans, the number of families and individuals experiencing “shelter poverty,” unable to afford the most basic of necessities after paying their rent, continues to rise. Currently one in four families in the U.S. falls into that category, paying more than 30% of their income in rent. Research from the Harvard Joint Center for Housing Studies and Enterprise Community Partners shows that if nothing is done to increase the supply and availability of affordable housing by 2025, nearly 15 million Americans could be spending half their monthly income on rent.
Nearly 13% of existing affordable rental stock disappeared between 2003 and 2013, while only 2.2 million rental units came online in the same decade, the lowest rate of production since the early 1970s. As supply fails to keep up with demand, every single county in the U.S. has a significant deficit of affordable housing. This scarcity in the rental market makes competition fierce, driving up rents while incomes remain flat or down. In real terms, the median income of renters decreased by 10% since 2001, while rents increased by 5%, making for a 15% explosion in un-affordability.
Another factor in the competition for affordable rentals is the historically low rate of homeownership that followed the 2008 financial crisis. While 70% of renters still aspire to homeownership, saving for a downpayment is out of the question for people living in a constant state of shelter poverty. Moreover, for a shrinking middle-class, tight mortgage loan underwriting standards and ballooning home prices in many areas are keeping them in the market for affordable rentals far longer than in prior decades.
With a new Administration and a new Congress in place, even the status quo for policies and programs that the affordable housing industry and its constituencies currently rely on may be in jeopardy. Immediately after the November 2016 election, for example, what had been a robust and competitive LIHTC market slackened in anticipation of large corporate tax cuts to come, creating financial gaps for affordable housing developments. If the tax cuts happen, experts estimate that the foreseeable loss in annual LIHTC equity could translate into more than 16,000 fewer affordable rental homes created or preserved each year.
Proposed cuts to HUD’s budget and the potential elimination of the Community Development Block Grant program and the Federal Historic Tax Credit program threaten to turn an affordable housing crisis into a catastrophe. The National Low Income Housing Coalition (NLIHC) estimates that 200,000 housing vouchers could initially be lost, along with about 10,000 housing units for seniors and another 6,800 units for people with disabilities. Stalled development and cuts to financial assistance for housing also threaten local economies, through lost jobs and reduced tax revenues. If these draconian cuts – the largest since the Reagan Administration – do happen, NLIHC fears that homelessness could rise to a level not seen since the 1980s.
With the national picture increasingly clouded by uncertainty and worry over resources and priorities, one recent bright spot is the effectiveness of some local activism on the housing front in the Federal Home Loan Bank of San Francisco’s district. Recently, voters approved initiatives that will provide substantial new funding and significant policy solutions for addressing housing affordability, supply, and integration of supportive services in the San Francisco Bay Area, Los Angeles and San Diego counties, and other cities and counties in Arizona, California, and Nevada. The success of these initiatives is a good indication that, at least on the local level, the severity of the housing crisis is well understood. It is encouraging that, especially in high-cost-areas of the Bank’s district, innovative approaches to the problem can win widespread support.
In the 11th District, where the economic recovery has been good for those who were already doing well, but not good for those already struggling, the Affordable Housing Advisory Council deeply appreciates the steady support and significant financial resources the Bank provides for affordable housing and community development. Through its Affordable Housing Program and other Community Programs, the Bank plays an important role in developing and delivering affordable housing and economic opportunity solutions for underserved populations and communities.
In 2016, the amount of funding for the competitive Affordable Housing Program was $76 million, a substantial increase over $44.7 million in 2015. Another $12 million was allocated to the WISH and IDEA homeownership programs. The amount of funding for the Bank’s non-mandated AHEAD Program, which focuses largely on economic development initiatives, increased from $1 million to $1.5 million.
The Bank’s Affordable Housing Advisory Council (Council) is pleased to present this annual report, which describes the Bank’s Community Program results and related activities in 2016.