The cost of housing has become a contentious topic in recent years, to say the least. Thanks to economic events like the Great Recession and the COVID-19 pandemic, renters and home buyers alike have seen the cost of housing rise dramatically as the supply of homes and rental units has plummeted. According to the National Low Income Housing Coalition, the United States “has a shortage of 7 million rental homes affordable and available to extremely low-income renters.” On average, for every 100 extremely low-income renter households, only 36 rental homes are available or affordable.

Here, we’ll briefly discuss the definition of affordable housing, some of the factors contributing to the lack of housing affordability, and why affordable housing is important.

What Is Affordable Housing?
It can be hard to conceptualize the impact of numbers that large and abstract. However, experts agree that if it isn’t addressed soon, the shortage of affordable housing spells trouble for everyone, not just low-income households. “A shortage of safe and secure affordable housing is costing communities in dramatic ways. An increase in focus towards affordable housing solutions will increase opportunities for residents, attract workers and encourage growth for healthier local economies,” said Jeff Larimore, Executive Director of Midlands Housing Trust Fund.

Of course, depending on your economic situation and other circumstances, affordable housing might mean different things to different people. According to the US Department of Housing and Urban Development, “Affordable housing is generally defined as housing on which the occupant is paying no more than 30 percent of gross income for housing costs, including utilities.”

What Is Causing the Affordable Housing Crisis?
Housing affordability is affected by a complex network of factors. However, the issue largely comes down to supply. Simply put, there aren’t enough houses and apartments to satisfy demand. As of March 2021, a report by Moody Analytics estimated that the annual supply of new housing units was around 100,000 below the demand. When demand significantly outpaces supply, this causes the cost of the units that are available to rise.

As a result, the homes that are available are often well beyond the means of low- and even middle-income buyers and renters. This gap in affordability has been further exacerbated by things like the pandemic (which disrupted global supply chains and drove up the cost of housing materials) and inflation (which has seen cost of living rise more quickly than wages).

Affordable Housing Benefits Everyone
Existentially and economically speaking, no man is an island. Even the people who aren’t directly affected by the lack of affordable housing—such as homeowners and high-income households—are still subject to the indirect repercussions. Here’s why:

• Affordable Housing Reduces Homelessness. Unaffordable housing is the biggest contributor to homelessness. Even individuals or families who can afford housing are often spending more than half of their income on rent each month. As a result, they have less money available for other essentials, let alone savings. Many of them are one unexpected bill from becoming homeless. In turn, higher rates of homelessness have been linked to increased crime, public health problems, and negative economic consequences for the communities in question. Moreover, government spending on shelters, emergency room visits, and jail time for homeless persons is eventually passed on to community members in the form of taxes.
• Affordable Housing Means More Successful Outcomes for Children. Research has shown that stable, safe housing can be an important factor in children’s overall well-being and futures. In particular, low-quality or unstable housing are known to be predictors of emotional or behavioral problems in children. Children who have access to stable, affordable housing also tend to perform better in school, which in turn is linked to economic mobility. Further, parents who aren’t forced to spend most or all of their income on rent and essentials are better able to invest in their children’s future and education.
• Affordable Housing Equals Healthier People. People who live in affordable, high-quality homes are healthier overall. There are a few reasons for this: first, people in low-quality housing are more likely to be exposed to health dangers such as poor ventilation, dirty carpets, pests, and water leaks. On top of that, unstable or unaffordable housing is a big source of stress, which can have major consequences for residents’ physical and mental health. Finally, people who spend a high proportion of their income on housing costs have less money left over for other things. Consequently, they’re less likely to be able to afford healthy foods or medical care when they need it, both of which can cause or exacerbate disease.
• Affordable Housing Creates Jobs. Unemployment is another economic hot topic. The process of building and maintaining affordable housing requires a considerable amount of labor and skill, both in the short- and long-term.

Midlands Housing Trust Fund (MHTF) is dedicated to improving South Carolina communities by expanding access to quality affordable housing. We provide a variety of loan products to housing developers and contractors for the purpose of creating, rehabilitating, and maintaining affordable housing for households earning less than 80% of the Area Median Income. Thanks to flexible lending limits and competitive loan rates, MHTF’s business model presents an attractive alternative to conventional retail banking. Since 2012, we are proud to have provided more than $3 million in affordable housing financing, thereby creating or preserving 512 housing units and improving the lives of over 1,200 individuals.

Contact us today for more information about how MHTF can serve your community, or consider investing in our work.