Lingering Impact of the Great Recession To add insult to injury, the last recession served to exert enormous pressure on an American middleclass struggling for decades to purchase housing they could comfortably afford. From the early- to late-2000’s, the only way many first-time buyers were able to get into the housing market was through highly leveraged mortgage products. After they purchased their homes, which they thought would continue to increase in value, these families believed that they had arrived, that they were now living the American Dream—only to be rudely disappointed when the downturn came. As of June 15, 2015, as a result of the 2008 housing collapse, 5.1 million households owed more on their mortgages than the current value of their homes, according to Corelogic. Worse yet, since 2004, more than 7 million families have already lost their homes to foreclosure (with an additional 1.4 million still in the foreclosure pipeline) and are now forced to rent— or in the worst-case scenario, are homeless! From 2004 to the second quarter of 2015, homeownership rates have fallen from a record high of 69.2 percent to 63.4 percent, the lowest level of homeownership since 1967, according to a study by Harvard’s JCHS and Enterprise. Consequently, there are more renters now than at any other time in U.S. history, which places greater stress on an already short supply of affordable rental units. This does not paint an encouraging picture for a middleclass that’s continually being hollowed out by low-paying jobs, stagnant wages and high housing costs. Conclusion It is our strong belief that social inequality cannot be resolved without fixing our housing crisis. The question is: How do we resolve this affordable housing crisis ? • Build support among public and private sector leaders for increased funding. Because the private sector is focused more on profits than affordability, and governments at all levels are cutting back their funding for affordable housing assistance programs, a new financial commitment must be made by both the federal government and not-for-profit donors to solve the critical housing needs of people of low to moderate income. • Re-engage the philanthropic community. Not-for-profit affordable housing developers also provide services that improve the quality of tenants’ lives. However, this critical activity which directly attacks social inequality has become a herculean financial struggle because funders have abandoned resident service providers in recent years. It is an important enhancement of housing that requires a renewed focus and financial commitment from an enlightened philanthropic community. • Everyone needs to see this housing crisis for what it is—i.e., a root cause of social inequality. If we don’t, we will continue to see the supply of affordable housing erode, even for the middleclass, dampening the cherished American dream of upward mobility. As a nation, we need to recognize these facts and politically commit to larger dollar allocations through a more rational and targeted housing policy. Affordable housing for all should be a national priority. Congress and philanthropic institutions must become aware that without providing additional financial and program support, the unaffordable housing crisis, a root cause of social inequality, will only go from bad to worse.
Originally published by Affordable Housing Finance, November 18, 2015
Unaffordable Housing: A Root Cause of Social Inequality
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