The Publication of Habitat for Humanity International | June / July 2002
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Urgent Issue #1 - Affordable Housing
The Housing Divide
By Nicolas P. Retsinas
Housing 'haves' and 'have-nots' separated by cost, availability of units.

Nowhere in the United States can a minimum-wage worker afford a two-bedroom apartment at Fair Market Rent. The apartments pictured here are located in the Sandtown community of Baltimore.
–Photo by Kim MacDonald

Call it the “housing divide.” Most Americans—the well-housed—live on the sunny side of this street. A majority (68 percent) of households own their own homes—the highest percentage in this country’s history. Those homes, moreover, are bigger and better than a generation ago, with at least two bathrooms, air conditioning and, often, fireplaces.

The housing boom buoyed the economy during this last recession: while the Dow and NASDAQ stock indexes plunged, home sales (and prices) remained strong. For Americans who do not own stock, their home represents their core savings; and even most stock-owning Americans hold most of their personal wealth in their homes. For the seventh year in a row, the increase in home prices outpaced inflation—making a home not just a place to live, but a prime investment as well.

On the other side of the divide, Americans are struggling. According to the federal government, an average family should spend no more than 30 percent of its income for housing. But one in eight families (14 million households) spends more than 50 percent of income on housing.

Consider a head of household who works full time 52 weeks a year. Assume that person has health insurance, a perfectly maintained car, and no financial catastrophes. He or she would need to earn $12.90 an hour to afford a modest two-bedroom apartment in Kansas City, $14.68 in Baltimore or $16.88 in Atlanta. At minimum wage (currently $5.15 an hour), they could not afford that two-bedroom apartment in any county in the United States. Ironically, some renters pay as much in rent as they might pay for a mortgage, but they never can save enough for a down payment.

The gap between income and housing costs reflects the Economics 101 axiom: When demand outstrips supply, prices rise. In the past decade demand for housing has soared and supply has not kept up: the production of multifamily rental apartments in the 1990s fell to half the levels in the 1980s. Communities’ aversion to apartments—whether because those communities did not want sprawl, or did not want lower-income renters—led to restrictive land-use strategies, whose effect, though not intent, was to drive up the cost of existing apartments.

Almost 1.4 million units in multifamily buildings with two to four units were either converted or demolished during the 1990s. In the next four years, another 1 million government-subsidized units will be up for renewal; those owners may well opt out, especially if they will make more money by converting their buildings. Many communities have two-year-plus waiting lists for Section 8 rental vouchers. For others, the list is closed to new applications.

If the reasons for the housing divide are clear, the solutions are less so. Indeed, we need a variety of strategies, all pursued with dogged perseverance.

First, we must maintain the federal commitment. Advocates for the poor may want the federal government to initiate a massive housing program, but in the wake of September 11, a new federal initiative for housing is unlikely. Instead, we must keep the administration and the Congress from retrenching.

Second, state and local governments must be persuaded to use their funds for affordable housing and lobbied to include in their land-use plans an accommodation for affordable housing. The people concerned with sprawl must join forces with people looking for affordable housing to craft land-use plans that accommodate both concerns.

Third, we must draw employers into the discussion. Hospitals, corporations, universities—all have a stake in creating communities that house people with a range of incomes (including their employees). All belong at the decision-making tables.

Finally, community-based organizations—especially Habitat for Humanity—deserve a bow and a boost. Volunteer labor and enthusiasm have propelled thousands of Americans (and tens of thousands of families in 82 other countries) into simple, decent houses. We need to applaud, encourage and expand that commitment.

Today a housing divide separates Americans into housing “haves” and housing “have-nots.” Far too many families are forced to move from apartment to apartment to find a simple, decent place to live. In this land of unparalleled prosperity, I recall the line from the cult movie, Grand Canyon, “It is not supposed to be this way.”

—Nicolas P. Retsinas is director of Harvard University’s Joint Center for Housing Studies and a member of Habitat for Humanity International’s Board of Directors

Making a Difference: Habitat and Scarcity
Before moving into their Habitat house in 1997, Joanna and Ryszard Sojka experienced the frustration of scarce housing availability in Poland: “We were moving from one temporary accommodation to another. I could write a book about the conditions we were forced to live in and the unpleasant ‘surprises’ —contact with police, outdoor toilets, electricity cut-offs...Then we heard of Habitat and the proposed building of houses by Homes of Hope ‘Domy Nadziei’ in Poland. As our vision became a reality, we realized that Habitat for Humanity is a great gift of God. Our dream is a reality today through the countless hands of people of good will.”

Just the Facts

  • 21 million: Number of new housing units required annually in developing countries to accommodate household growth during 2000-2010. (United Nations Center for Human Settlements)

  • 1.1 billion: Number of people worldwide living in inadequate conditions in urban areas. (United Nations Center for Human Settlements)


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