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By Kellie Lunney, National Journal
© National Journal Group Inc.
Friday, Jan. 19, 2007

It's not just the poor who can't afford to live in America anymore.

The cost of renting or owning a home has risen so sharply in recent years that many middle-income earners find it hard to find a place to live. Teachers, nurses, police officers, and firefighters -- vital members of every community -- often can no longer afford to live where they work. "People don't just buy a house," says John McIlwain, senior housing fellow at the Urban Land Institute. "People buy a house that is connected to everything else in their lives."

And yet, in the last decade, housing policy has received little attention in the national political arena. "On the back burner, with the heat turned way down low, you find housing," Steve Redburn, a former chief of the housing branch at the Office of Management and Budget, said at a New America Foundation forum in December.

Some of the neglect stems from the issue's sheer complexity. Housing is one of the country's most regulated industries, and local and regional economic forces largely dictate the real estate market, making the federal government a reluctant mother hen. Massive public assistance programs for housing, including vouchers, have fallen out of favor with many lawmakers, who view them as bloated and out of step with modern housing challenges. Plans for more affordable residential and commercial building are controversial in many communities. "Not In My Backyard" has evolved into "Build Absolutely Nothing Anywhere Near Anyone," particularly at the edge of cities.

And national policy makers, instead of poking a stick at the hornet's nest themselves, usually rely on local government and the housing industry to hash things out. "I don't think our society said it doesn't care anymore," Robert M. Diamond, a partner at law firm Reed Smith, says of building and preserving affordable housing. "I think it has other priorities, and it hasn't found a mechanism to accomplish that goal in this century."

The priority level assigned to affordable housing could change with the new leadership in Congress. House Financial Services Chairman Barney Frank, D-Mass., has had a long-standing interest in affordable housing. In the past few months, he has publicly reiterated his commitment to tackling the issue, from creating a national housing trust fund to raising the loan limits of the Federal Housing Administration's mortgage insurance program. Frank also has said he wants to make low-income tax credits -- currently the method through which most affordable housing is built -- easier to use.

Solutions at the federal level, however, need to target the growing number of "working poor" and families just above the low-income level who are living in the suburbs and are feeling the crunch, says Amy Liu, deputy director of the Metropolitan Policy Program at the Brookings Institution. "Federal policy on affordable housing has become purely about the poorest of the population," she says, contending that the government is building too much affordable housing in the inner cities, where poverty is concentrated. In the 1990s, for example, 2,400 housing units were built in the New Orleans metro area using federal tax credits; more than 40 percent of that housing was in high-poverty neighborhoods, according to an April 2004 Brookings report.

States and major metropolitan areas are ahead of the federal government in grappling with the high cost of housing in their communities and its impact on other aspects of life, from transportation to education. Montgomery County, Md., just outside of Washington, has aggressively focused on building and preserving affordable housing, particularly rental, since the 1970s. The median home value in the county was $466,100 in 2005, according to the American Community Survey. The county's policy on inclusionary zoning, which other jurisdictions have copied, requires developers to set aside a certain number of affordable units -- a model that has produced more than 10,000 units of moderately priced housing since its inception.

Montgomery also has a local housing trust fund -- one of more than 170 in the country. The fund contains tax revenue and other money for building and preserving affordable housing. The region has low vacancy rates in part because farm-preservation laws limit space for building. Overcrowding, as a result, is a problem, says Joe Giloley, chief of the county's division of housing and code enforcement. "In a two- or three-bedroom apartment, you could have two or three families sharing." Safety is the county's biggest concern, he says.

Localities such as Montgomery are looking at ways to create more housing for workers. If employees can't afford housing, businesses suffer. "Groups that seem to be picking up on this are the chambers of commerce," McIlwain says. So are operations that are permanent fixtures of the community and can't outsource their functions, such as hospitals and schools.

New York City Mayor Michael Bloomberg has launched an ambitious, $7.5 billion housing initiative [PDF] that aims to provide affordable homes for 500,000 New Yorkers by 2013. It includes a financing program targeted at the middle class, a citywide housing trust fund, plans to rezone portions of the city for residential and mixed-use development, and the creation of a land bank, for which the city would acquire property from the private sector.

Officials in metropolitan regions like Washington and New York know they have to think regionally about their housing and transportation policies, because the lines between cities, suburbs, and exurbs are blurring. However, it's difficult to get local government to look at the bigger picture, McIlwain says, which is why the federal government needs to step in. As Giloley puts it, "We can't afford to figure out how to pay for Metro here, let alone housing." [an error occurred while processing this directive]

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