Dreaming of Home

The Kuniholm house and happy half acre: fall 2014

I’ve lived in apartments and houses, duplexes and twins.

In urban neighborhoods, planned communities, green suburban neighborhoods.

On busy roads with my window just feet from the trucks thundering past in the middle of the night.

In a fading baby blue trailer that felt like ice in the middle of the winter.

In a half-rehabbed derelict cottage, with no heat or running water, roughed-in kitchen, unspackled walls.

I’ve slept on rusty metal bunks, cement floors, pine needles, uncut grass.

Two months a rickety cot that folded me in half when I sat up too fast in bed.

Some of that was my choice.

Some definitely wasn’t.

Some of my sojourns left me stronger, calmer, more joyful or courageous.

Some I remember as places of shadow, dark, uneasy caverns during dark, uneasy times.

Even so, I never slept under a highway underpass.

In an alley.

On a bench.

Never landed in a homeless shelter.

Thinking about mental illness for my post last week, I found myself thinking about how mental health is tied to where we live.

It’s hard to be resilient and hopeful when half your paycheck goes for rent on a beat-up apartment in a dangerous neighborhood. 

According to the U. S. Department of Housing andUrban Development: 

An estimated 12 million renter and homeowner households now pay more than 50 percent of their annual incomes for housing. A family with one full-time worker earning the minimum wage cannot afford the local fair-market rent for a two-bedroom apartment anywhere in the United States.

 The National Housing Alliance puts this in even starker terms: 

In the United States, the 2014 two-bedroom Housing Wage is $18.92. This national average is more than two-and-a-half times the federal minimum wage, and 52% higher than it was in 2000. In no state can a full-time minimum wage worker afford a one-bedroom or a two-bedroom rental unit at Fair Market Rent. 

I’ve been helping several friends in a search for affordable housing.

The short answer: there is none.

Chester County, where I live, has a small supply of subsidized housing. The waiting list has been full for years. It was opened for applications on October 21 (year - undetermined) for exactly one day. No one knows when, or if, it will open again.

The Section 8 Housing Choice Voucher Program was designed as another way to help low-income families afford appropriate housing. Affordable Housing Online, a website designed to help families seeking help with housing, explains: 

The program provides rental assistance to low income persons in the form of monthly rent payments based on the renter’s income. Renters find private rental housing in the open market and the Section 8 voucher payment makes the rent affordable.
 The program is extremely oversubscribed meaning that there are many more people in need of the rental assistance than the government is currently funding. This has created the need for waiting lists.
 We are unaware of even one housing authority in the Nation (and there are 2,320 that offer Section 8) that doesn’t have a waiting list. Most of the time, these waiting lists are years long. . . . 

According The Center for Housing Policy:  

Federal housing assistance (such as housing choice vouchers, property-based rental assistance, and public housing) reaches only one in four of those in need, and funding levels in the past few years have reduced their reach even further. . . .  

There are many reasons why the extent of the severe housing cost burden problem should be a concern to a broad set of stakeholders. When a household spends half of its income on housing, there is usually not enough left in the household budget for other necessities. The costs of many of these household essentials—child care, education, food—are also rising at the same time that food stamps, TANF, Medicaid, and other social support programs for lower-income households are targets for budget cuts. This dynamic increases the pressure on lower-income households as they try to make ends meet.

Affordable and stable housing is a platform for other important positive family and community outcomes, such as physical and mental health, educational achievement, and economic development. 

Public interest in the problem of affordable housing appears slim, except among those most severely impacted, under-resourced families and individuals with little energy to research options or attempt to influence policy.

I spoke several weeks ago with a legislative candidate canvassing my neighborhood. My first question was “What would you do about affordable housing?”

Her response: “You’re the first person who has ever asked that question.”

While many voices clamor for smaller government, while each round of budget cuts focuses on aid to the poor, I find myself wondering about the invisible subsidies enjoyed in home-owner neighborhoods: the generous mortgage deductions that have fueled our enjoyment of home-owner debt and funded construction of ever more McMansions.

Here’s a simple quiz: which of these is most likely to be subsidized?

The house on the left, a modest two bedroom, 1 bath rowhome not far from my house, recently sold for $85,000, and will most likely be rented. Given the going rates, the rent will be somewhere between $900 and $1100. The likelihood of subsidy for a renter, given the current waiting list, is fairly close to zero.

The house with the circular drive and backyard pool, twelve miles from the first, recently sold for $4,850,000. If the owners obtained interest at 4.5% and fall in the 33% tax bracket (which seems conservative, given the sales price), the annual interest deduction (a form of hidden subsidy) would be $18,000. (Feel free to check my math)

The cap on debt eligible for interest deductions is $1,000,000. Second homes are included in that total, so assume most second homes are subsidized as well (that’s the house on the lake), a boon for vacation real estate developers, but an odd use of federal money.  If that vacation house had a $300,000 mortgage, the subsidy would be at least $4,000 a year.

And yes, boats can be subsidized too: if an owner spends at least 14 nights on a houseboat, yacht, sailboat or any other kind of recreational vehicle with at least minimal toilet and kitchen facilities, the mortgage can be included in the $1,000,000 limit, and mortgage deductions apply.

Tax deductions are a form of “submerged” or hidden benefit enjoyed by the one-third of American households wealthy and informed enough to itemize deductions.

For upper income families, those invisible subsidies have been shown to encourage purchase of homes far larger than needed,,“as much as 1,400 square feet larger in the Washington, D.C., metropolitan area. . . ." and “at least 800 square feet larger” in Philadelphia, Los Angeles, and New York City. 

They also encourage homeowner to maintain high levels of debt, rather than pay down mortgages.

Most economists agree that the origins of the mortgage deduction are murky, the intent unclear, that it has never fostered home ownership among groups that most need help, and that, from every angle, it's bad public policy.

Lobbyists for realty associations, builders and bankers disagree. 

Invisible housing subsidies currently cost US taxpayers over $100 billion a year, almost three times the amount spent on help to low-income households.

Center on Budget and Policy Priorities

I confess, I’m one of the 27% of Americans who enjoys this invisible subsidy. We own our own home, itemize deductions, and saved about $1600 on our taxes due to deductible interest this year.

Would I give that up to see the billions a year the US loses on this invisible subsidy redirected to housing for the homeless, subsidies for low-income families, affordable homes for the hard-working, minimum-wage poor?

In a heartbeat.

Solutions?

Take time to learn about invisible subsidies - who enjoys them, how much they cost.

Support elimination of the mortgage deduction, and be prepared to explain your reasons. 

Advocate for creative plans to provide funding for affordable housing, like PA Senate Bill 1380 and House Bill 2434 , currently stuck in committees, which would use realty transfer taxes to renovate blighted communities, create low-cost rentals, repair owner-occupied homes, and provide jobs in low-income areas. 

Offer practical support to a homeless or housing-stressed family.

Ask your representatives: What will you do about affordable housing?

This is the seventh in a series looking at specific issues of importance in state and local elections, as an extension of my 2012 series "What's Your Platform?" 

Earlier posts:  

What are Workers Worth, September 1, 2014

Back to School Lament, September 7, 2014

Privatization and Elementary Math, September 14,  2014

Who is Allowed to Vote? September 21, 2014 

Let the People Draw the Lines, September 28, 2014 

A Prayer for the Broken, October 5, 2014 

As always, your thoughts and comments are welcome. Just click on   __comments below to see the comment option.