Why Housing Affordability Needs To Be Reevaluated

Traditionally, academics and policymakers have determined whether an individual or family can afford to live somewhere by simply dividing their housing costs by their income. If at least 30 percent of a person’s or family’s income goes to housing and related expenses like utilities, then their household is said to be “cost burdened.” The ratio is not determined by economic or social analysis; rather, it is simply the number Congress chose in 1981, which has not been changed nor updated since. Although this approach is easy to understand, it falls short of accurately reflecting the financial burdens people actually experience. This is a problem because many federal housing programs rely on this 30 percent measure to determine rent.

Measuring Housing Affordability

This ratio-based approach breaks down for Americans with extremely low incomes. If wages decline, a middle-class family could potentially downsize its home or related expenses. When people live below the poverty line, however, they must spend above a minimum just to reside in a home that meets the local building codes and meets basic human needs.

“Shelter poverty” analysis provides an alternative to the traditional approach. Shelter poverty is a concept that was first developed by Michael Stone, a professor of community planning, in the 1970s. In this analysis, instead of comparing housing costs to income, housing costs are evaluated in the broader context of the household’s other basic needs, including food, clothing, and transportation. If housing costs are high enough that household’s residents cannot cover these basics from their income, then they are said to be experiencing shelter poverty. The challenge for this method lies in determining how much money must be spent to meet other needs, especially because the federal government no longer publishes such estimates for non-housing necessities.

The Self-Sufficiency Standard, created by University of Washington senior lecturer Diana Pearce in the 1990s, addresses this issue by compiling estimates of basic expenditures from various public and private sources, based on the county of residence, the number of persons in the household, and the age(s) of any children present. This information can be combined with anonymized responses to the American Community Survey, a nationally representative survey conducted annually by the U.S. Census Bureau. The combined data make it possible to determine whether each household in the sample is experiencing shelter poverty. This method also helps determine if, and by how much, households fall short in covering their expenses. That is called the “affordability gap.” Using estimates developed in this way, analysts can extrapolate out to the general U.S. population.

Housing Affordability in Ohio and South Carolina

A shelter poverty analysis was conducted for Ohio renters who responded to the American Community Survey, and for sampled South Carolina renters and homeowners (including both mortgage holders and those who own a home free and clear). In both states, the shelter poverty method generates substantially different results than a basic cost burden analysis. Although overall rates of economic distress are generally similar using the two different measures, the total affordability gap using the shelter poverty measure is substantially larger. Among Ohio renters, it would take over $3 billion annually to address cost burdens using the 30 percent metric, but nearly $15 billion per year to mitigate shelter poverty entirely. The disparity is somewhat narrower in South Carolina, but a similar gap exists.

There are differences in the areas of need as well. In both Ohio and South Carolina, the prevalence of a cost burden measured by the ratio system is higher than the burden of shelter poverty in suburban areas with the highest median household incomes. In economically distressed urban and rural areas in both states, far more households experience shelter poverty than excessive ratio cost burdens. In other words, it appears that current standards of housing affordability overstate the needs of families who are most able to pay and understate burdens for those least able to do so.

Improving Housing Affordability

Overall, experts may not be accurately describing the magnitude and nature of housing affordability challenges in the United States. Those experiencing shelter poverty are found in nearly every community nationwide. In South Carolina, which is not by national standards a particularly expensive state to live in, households experiencing shelter poverty (nearly one-third of all individuals and families statewide) have an average affordability gap of $14,330 per year, or about $275 per week.

Meanwhile, the geographic distribution of shelter poverty suggests that the 30 percent measure distorts the landscape of housing affordability. That distortion happens because there are households that choose to spend more than 30 percent of their income voluntarily and are thus inappropriately categorized as cost burdened. Meanwhile, others spend less than 30 percent on housing costs but still find they do not have enough to make ends meet. Taken together, failure to consider these issues leads decision-makers to understate the level of economic inequality among U.S. households.

It is worth noting that affordability gaps are not only measures of deprivation experienced by less fortunate Americans. These gaps also reflect economic activity that is lost due to the inability of many households to meet basic needs. Ohio renters have about $15 billion less to spend each year as consumers in the state’s economy because they lack access to affordable housing.

Although housing costs have become more politically salient in recent years, the scope and scale of the problem have not been fully articulated. Housing is the single largest expense for most individuals and families, and it is typically regulated at the county and municipal level through zoning codes and related ordinances. Local policymakers must consider whether their policies are harming the welfare of residents and businesses alike by artificially restricting housing supply or preventing construction of subsidized housing.

All Americans have a stake in better measurements of housing affordability – and better solutions to the shortfalls many people face in this vital area. A shortage of affordable homes can have numerous downstream effects. Employers may face high rates of labor turnover if employees cannot find places to live in the vicinity. Longer commuting distances increase the amount of traffic and contribute to urban sprawl, which has a variety of negative environmental, social, and economic consequences.

To find solutions, local officials must engage with homeowners, renters, business owners, and nonprofit groups, as well as housing policy experts in the public and private sectors. To ensure communities across the country have a path toward a prosperous and sustainable future, everyone must be able to find a suitably located and affordable place to call home.

Opinions expressed in this brief are those of the author alone, not the State of South Carolina or any other entity.

Read more in Bryan P. Grady, “Shelter Poverty in Ohio: An Alternative Analysis of Rental Housing Affordability,” Housing Policy Debate 29, no. 6 (November 2019): 977-989.

Protest Movement Turned Into A Commitment to the City’s Homeless


In February 2011, thousands of concerned citizens protested with Wisconsin public employees against Governor Scott Walker and the Republican-led legislature moving to limit public employee rights to collective bargaining. These protests merged into the Occupy Madison (OM) movement, which like many other cities in America was in solidarity with the Occupy Wall Street movement.

Due to city and county ordinances, the OM movement had to move to a new place every night. What OM members didn’t realize at the time was that many who were moving along with them in protest were homeless individuals. The homeless population in Madison had realized that these OM encampments were a safe place where they could get food and shelter. Board member Luca Clemente said that in the beginning of the Occupy Madison movement there was conflict between the activists and the homeless. The homeless felt they were doing the real occupying because many of the activists went home at night. The homeless referred to the activists as “housies” and the activist referred to the homeless as “crashers,” he said.

The homeless realized that OM was protesting for rights that mattered to them too and OM activists realized that OM was faced with the same challenges as the homeless population. Clemente said, “It became clear that people were in real pain.” He said it wasn’t easy, but they got past their differences and worked together. During their two plus year protest, OM advocates spent time and money to build the encampments to meet local laws and city regulations and codes, but in 558 days the encampment was forced to move its location 30 times and the protestors received city and county ordinance citations.

Board member Bruce Wallbaum said, “For years many of the OM members have been fighting for equal opportunity for resources whether you’re homeless or not.” He said in response to the protests and the continued plight of the homeless population, OM became a non-profit organization in 2013. They have advocated with and for citizens in Madison who have and are currently experiencing homelessness. Wallbaum said they have worked together for more shelter space, improved shelter rules, and access to restrooms, showers, and laundry facilities.

Despite their efforts, the homeless shelters remained full and there was no movement by the local government or other non-profits to add any more shelters. According to the Tenant Resource Center, there are approximately 500 chronically homeless citizens in Madison. The coupling of rental rates in Madison at an all-time high and vacancies far and few between (2%) is a problem for many Madison residents. Having a job does not guarantee that you will be able to afford a place to live. Affordable Housing in Madison has long waiting lists (up to a year) and section 8 housing closed its waiting list years ago.

In an effort to help the homeless obtain affordable transitional housing OM became a 501 (c) (3) non-profit and started a project called OM Build. OM board member Bruce Wallbaum said they started building Tiny Houses in June 2013.  Wallbaum said, “The first three homes were built by volunteers and paid for by community donations.” He said that each home costs $5000 in materials and supplies. The houses are 99 square feet and are built on wheels so they can be moved if necessary.

Wallbaum also said due to concern for their property values and a possible increase in crime, 70% of the neighbors were against the purchase of the property for the Tiny Village. After a year of no police incidents and property values remaining stable, they have since come around. He said that Alder Larry Palm has been behind the project since the beginning and the local newspaper did interviews and made a video with the neighbors who now have no complaints.

The Village and the OM Build project is making a big impact and getting a lot of attention.  Visitors from 23 states and several countries have toured the Village in the past year. OM-Tiny Houses & More has a great website with tons of information. Wallbaum said they would love to help start Tiny Villages in other communities, but they are a small group and are 100 % funded by volunteers.

OM resident and member Russel Albers said that he became involved in 2011 because “I believe in affordable housing for all.” Albers says he was living out of his truck during the OM protests because he lost his job and was having trouble finding a new one. He said he couldn’t afford to pay rent. “Until it happens to you, it’s hard for anyone to understand how fast you can lose everything,” he said.  “If your coach surfing and have no permanent address and you’re living out of your car, employers don’t want to hire you,” he said.

Phase 1 was completed in late 2014, OM purchased an old auto body shop on Madison’s near eastside, and the OM volunteers and board members have tirelessly worked to repair and clean up the property and Phase 1.  He said phase I brought in approximately 80,000 dollars in donations and 1000 volunteer hours. Albers said the first three residents took occupancy in 2015 and Madison’s first micro village of Tiny Houses became a reality.

Albers said, The Tiny Village is now working on Phase 2, which has already seen five more houses built and two new residents. He said, “Tiny Home residents are called stewards, and can be a couple or an individual.” He said future stewards have to put in 500 hours of volunteer work on a house or in the OM store to earn stewardship and residency in the OM Village. Once a steward moves into their Tiny Home they must continue to volunteer on a monthly basis. Albers said, “We have rules that have to be followed such as no drugs or alcohol in the Village and every steward has to participate in the chore wheel.” Albers said they modeled the “sweat equity” after Habitat for Humanity and the “chore wheel” from another Tiny Village in the state of Washington.

Albers took me on a tour and I was able to see one of the unfinished houses up close and personal as well as the workshop, cooperative kitchen, three bathrooms, four large gardens, and a retail store. He showed me where the new community center and the new kitchen were planned to be built as part of Phase 2.

For those interested in duplicating their project, they recommend that you visit their web page www.occupymadisoninc.com where they give you tips on how to start a Tiny Houses Village in your community. You can also like them on Facebook at www.facebook.com/OMBuild or visit the Village in person at 304 North Third Street, Madison, WI 53704.

They encourage everyone to remember, “It takes a village to make a village.”

Helping the Homeless on Skid Row: SRO Housing Celebrates 30 Years of Service

As Single Room Occupancy Housing (SRO) celebrates its 30 years of service, I had the pleasure of speaking with Mr. Ervin R. Munro, M.S., the Director of Social Services, for the organization. Mr. Munro immediately exuded the warmth, intelligence, and passion that have allowed him to have a long and inspirational career serving others. This has also contributed to SRO Housing’s continued growth and position as the largest provider of affordable housing for homeless and low-income individuals in the Western United States.

SRO Housing provides homes for the homeless in the section of downtown Los Angeles most commonly known as “Skid Row”, and they are the only organization in Los Angeles that offers a complete range of housing from emergency to permanent as well as significant supportive SROservices. As the man in charge of the Social Services Division of SRO Housing, Mr. Munro has a long history of working in the social services field. His professional journey began with a Bachelor’s degree in Education and a Master’s degree in School Psychology from the University of Wisconsin-Whitewater.

He has worked for over 30 years in a variety of social service positions, including as a licensed school psychologist, educator, director of social services, case manager, operations manager, and private consultant and trainer. He has also worked in a variety of settings with diverse populations including homeless, elderly, immigrants, runaway/throwaway youth, substance users/abusers, people with mental illnesses, and persons affected by HIV/AIDS. Some of his accomplishments during this time include Co-founder and first Acting Executive Director of AIDS Project Los Angeles as well as Co-founder and Co-chair of the Case Management Task Force of Los Angeles County.

His responsibilities include overseeing and directing the daily operations and management of all supportive housing social services programs. These programs include case management for homeless and low-income individuals who reside in SRO Housing’s 29 properties throughout the Skid Row area, as well as special services for those individuals with disabilities, HIV/AIDS, veterans, individuals with mental illnesses and/or substance issues, and the elderly. Some of these services include congregate meals and home-delivered meals, transportation, money management, socialization/recreational activities, special events, community activities, and more.

Mr. Munro has been responsible for the development of many programs, trainings, and workshops during his illustrious career, one of which he was kind enough to share with me called “Basic Communication Skills and Problem-Solving Techniques”. It was developed for and is required to be completed by all employees of SRO Housing before beginning work. The basic premise of which is to learn to communicate and problem solve effectively with others so they’ll best be able to serve the individuals they’ll work with. SRO encourages all of its employees to remain open-minded and discover what their clients need rather than make assumptions. This training has been so effective within the organization that Mr. Munro is often asked by outside organizations to train their employees in it.

This program is just one example of the ways in which Mr. Munro and the rest of SRO Housing strive to be a model for client-centered services. They truly understand what their community needs and are responsive to those needs. As a part of this integration into the community, SRO Housing does its best to hire individuals who may have been in SRO Housing’s programs and/or are directly from the community. A college degree is required for most positions within the Social Services Division.

Employees are highly supportive of their clients’ goals and work hard with them to turn dreams into reality. It is this effort to immerse themselves into the community and look for holistic solutions to issues to homelessness which makes this program an exemplar model. On a personal level, there are not enough words to express the admiration I have for and the inspiration gained from having interacted with Mr. Munro and SRO Housing.

Ms. Anita U. Nelson, MBA, SRO Housing’s CEO, had this to say about Mr. Munro, “Erv has a wealth of knowledge and experience that has significantly contributed to SRO Housing’s development and to Skid Row as a whole. He touches everyone’s area; he’s a true team player and clients are always at the forefront. He’s committed and it’s a part of him. He loves his job so much I feel funny calling it a job. He’ll be difficult to replace.”

As we wish a happy 30th Anniversary to SRO Housing and many more years of service, we’d also like to wish the same to Mr. Munro, along with much joy and success in his next venture, which happens to be retirement.

Connecticut Raises Minimum Wage and Provokes Conversations on Homelessness and Affordable Housing

This week, Connecticut Governor Dannel Malloy signed a law that will bring about the highest minimum wage of any U.S. state, and the bill raises the state’s minimum hourly rate to $10.10 per hour. Earlier this year, President Obama raised the federal minimum wage for all federal employees and contractors by executive order, and he is asking Congress to act by raising the minimum wage on for all hourly workers across the nation. However, until Congress is willing to raise the minimum wage, President Obama has called on individual states to act independently and not wait for Congress. Governor Andrew Cuomo of New York State was one of the first governors to respond by cutting a deal to raise the minimum wage to $9.00 per hour.

According to the National Conference of State Legislatures,

  • ctmirrorAs of March 24, 38 states considered minimum wage bills during the 2014 session; 34 states are considering increases to the state minimum wage.
  • Connecticut, Delaware and D.C. have enacted increases so far in 2014.
  • As of Jan. 1, 2014, 21 states and D.C. have minimum wages above the federal minimum wage.
  • 19 states, GU, PR and VI have minimum wages the same as the federal minimum wage of $7.25.
  • 4 states and AS have minimum wages below the federal minimum wage (the federal minimum thus applies).
  • 1 state, New Hampshire, repealed their state minimum wage in 2011, but left the reference to the federal minimum wage.
  • 5 states have not established a state minimum wage.

Lets take a look at The Cost of Living in America. The North Carolina Justice Center conducted a study on this issue back in 2010. The Living Income Standard finds that the North Carolina family of two adults and two children must earn $48,814 annually to afford the actual costs of seven essential expenses: housing, food, childcare, health care, transportation, taxes and other necessities to include clothing, personal care items, household supplies, school supplies and local telephone service. To meet the level, adults in the average four-person family would need to earn a combined $23.47 per hour and work 40 hours a week, 52 weeks a year.

These rates are for NC and not some of the other states with higher cost of living rates such as New York or California. Imagine if this was a family was a single parent household (one parent, one child), the living income standard is estimated to be $11.73 per hour 40 hours a week, 52 weeks a year.

Due to the federal minimum wage being $7.25 per hours, many families fall below the living wage standard, and affordable housing has become another huge issue in today’s society.  While interning at The Carying Place, a transitional housing non-profit organization for homeless families, I encounter families struggling to make ends meet on a day-to-day basis. These people are working full time jobs making $7-$9 dollars an hour because their income is so low, they cannot afford housing let alone, food, clothing, daycare/school expenses for their children and other basic necessities.

Families are being forced to choose between paying a bill or providing a meal for themselves and their children to keep from starving. These are the harsh realities people are dealing with daily. Until some type of change is made, whether it be the raising of minimum wage or the establishment of more Affordable Housing, the struggle will continue.

Communities Build Tiny Homes for the Homeless


In the city of Austin Texas, a group of people have come together and begun to build small mini pod homes for homelessness individuals in the city which has been deemed the Tiny House Movement. There are also homes that have even been called “Dignity Roller Pods” that were built by Gary Pickering, a man who was once homeless himself.

Around the world, there have been other cities that have taken homelessness into their own hands by creating these mini homes. Some of those places include Florida and Utah. These homes, which require volunteer effort, community support, and donations are being coined as the cheapest and fastest way to temporarily end homelessness.

According to The National Coalition for The Homeless 

  • The number of homeless families with children has increased significantly over the past decade.  Families with children are among the fastest growing segments of the homeless population. In its 2007 survey of 23 American cities, the U.S. Conference of Mayors found that families with children comprised 23% of the homeless population
  • On an average night in the 23 cities surveyed, 94 percent of people living on the streets were single adults, 4 percent were part of families and 2 percent were unaccompanied minors.
  • Seventy percent of those in emergency shelters were single adults, 29 percent were part of families and 1 percent were unaccompanied minors.  Of those in transitional housing, 43 percent were single adults, 56 percent were part of families, and 1 percent were unaccompanied minors.

I applaud this movement and the efforts put forth by this group of people. I love this idea and it’s extremely creative. However, I am also saddened. Is this the best America can do collectively to help provide shelter to the millions of homeless citizens within our borders? There are numerous services the homeless can benefit from, but due to the abundance of people who are in need, communities are having to take matters into their own hands to see a real change.

These small pods may help some homeless individuals, but what about food, clothing, warmth, being able to take care of their hygiene, or being able to cook healthy meals? What about the homeless families in need that may have more than just one person who yearns for shelter? They may have young babies or newborns that cannot fit in a small pod altogether. It takes more than just a temporary fix, and more Affordable Housing and Transitional Housing Programs are needed.

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