CP avoids inflation, affordable housing is key to curbing it

Americans are feeling the impact of historic inflation, and rising rents are a primary driver. The price of housing is by far the largest category in the Consumer Price Index and one of the greatest contributors to the inflationary pressure squeezing all households, especially those with the lowest incomes. In restarting negotiations on a major spending package, Congress and the Biden administration have a crucial opportunity to tackle inflation and ensure that America’s lowest-income and most marginalized people can get and stay stably housed. Even before the pandemic, millions of households were struggling to keep roofs over their heads, always just one financial shock away from falling behind on rent and being threatened with eviction, and in the worst cases homelessness. Then came COVID-19. By August 2020, according to the best available data, as many as 12 million households were at risk of losing their homes without immediate governmental action. Many were among those already struggling to pay rent when the pandemic brought sudden job losses, reduced work hours, and higher costs for health care, childcare, and the internet. Advocates sounded the alarm, and federal, state, and local governments took heed, providing unprecedented resources and protections to keep tenants housed. Emergency rental assistance and eviction moratoriums were essential protections. Yet they offered only a temporary patch for the gaping holes in our social safety net. Now, as pandemic-era renter protections expire and resources are depleted, renters are encountering a housing market upended by soaring inflation. Last year, the cost of rent rose on average 14 percent nationally, with some cities seeing rent increases as high as 40 percent. Rents are expected to rise another 10 percent this year. These price increases affect renters of all incomes but threaten the lowest-income renters most of all. Skyrocketing rents are in part a consequence of the severe shortage of affordable homes for renters with the lowest incomes. There is a national shortage of 7 million homes affordable and available to renters with extremely low incomes, and fewer than four affordable and available homes exist for every 10 of the lowest-income households. Not a single state or Congressional district has enough affordable homes to meet the demand. Without affordable options, 10 million of the lowest-income households spend over half their incomes on rent, depriving them of the resources needed to put food on the table, purchase medications, and make ends meet. Renters need an annual income of nearly $50,000 — or $23.96 an hour — on average to afford a typical two-bedroom apartment. In many parts of the country, they need to earn much more. For many working families, seniors, and people with disabilities, incomes like these are completely out of reach. People of color are disproportionately impacted. Black households account for 13 percent of all households but a quarter of all extremely low-income renters and nearly half of people experiencing homelessness. Latino households, who make up 12 percent of the total population, account for 21 percent of extremely low-income renters and 22 percent of people without homes. Native Americans are significantly overrepresented among people experiencing homelessness, and the harms are compounded for women of color. The tragic and preventable results of the housing crisis are visible everywhere you look. Eviction filing rates are increasing throughout the country and, in some communities, surpassing pre-pandemic levels. When America’s lowest-income renters lose their homes, they have few options available to them. Most double or triple up with other families in overcrowded homes. Many become homeless and resort to staying in congregate shelters. And on any given night in America, more than 200,000 people are sleeping in tents, cars, and other areas not fit for human habitation. With rents rising rapidly, homelessness worsening, and millions of families struggling to stay housed, federal investments are desperately needed and long overdue. Congress was close to providing vital funding through the Build Back Better Act passed last year by the House of Representatives. The bill included historic and targeted housing investments, including $25 billion to expand rental assistance to 300,000 new households, $65 billion to preserve public housing for its 2 million residents, and $15 billion to build 150,000 homes affordable to people with the lowest incomes. In December, however, Sen. Joe Manchin (D-W.Va.) announced his opposition to Build Back Better and effectively killed the bill. Now, the White House, congressional leaders, and Manchin have restarted negotiations over a new, scaled-down spending bill that would increase federal revenues by raising taxes on corporations and high-income earners, create savings by reducing the costs of prescription drugs, and use the resources generated to address the deficit, climate change, and inflation. If these members of Congress and the administration are sincere in their desire to bring down inflation, they should ensure the new bill includes robust measures to lower the cost of housing. Congress must retain the essential housing investments included in the Build Back Better Act — in rental assistance, public housing, and the national Housing Trust Fund — in any final reconciliation bill. By doing so, Congress will take an important step toward curbing inflation and ensuring that more of America’s lowest-income and most marginalized people have stable, affordable homes.CP causes massive rise in inflation

Husock 22 (Howard Husock is a senior fellow in Domestic Policy Studies at the American Enterprise Institute (AEI), where he focuses on municipal government, urban housing policy, civil society, and philanthropy. Before joining AEI, Mr. Husock was vice president for research and publications at the Manhattan Institute, 5/24/22, “Biden’s Housing Plan? More Vouchers and Tax Credits Mean Inflation and Dependency”, https://www.aei.org/op-eds/bidens-housing-plan-more-vouchers-and-tax-credits-mean-inflation-and-dependency”, https://www.aei.org/op-eds/bidens-housing-plan-more-vouchers-and-tax-credits-mean-inflation-and-dependency/)//rrm

The news that housing prices have spiraled upward in the last twelve months has reached the White House, prompting it to announce what it calls its Housing Supply Action Plan. According to the Biden administration, the plan will help provide an estimated 1.5 million additional housing units that the United States desperately needs. Unfortunately, its mishmash of subsidies and federal incentives will not close that gap anytime soon, if ever. Worse still, the administration’s most significant near-term change in housing policy, not mentioned in the action plan, will make matters worse — leading to a sad combination of inflation and government dependency. That would be the impact of a vast proposed expansion — by no fewer than 200,000 vouchers — of the housing-voucher program for poor households. Housing policy is overwhelmingly a matter of local zoning and regulation. The Biden administration’s plan, to its credit, acknowledges that — and proposes an original approach to rewarding localities that opt to allow more construction through higher density. Not dissimilar to the Obama administration’s Race to the Top, which dared to reward charter schools, this $1.75 billion competitive-grant program would reward communities that relax zoning barriers. It’s the same idea that was included in the House-passed version of the ill-fated Build Back Better bill. The devil here will be in the details. If the grants are tied to all sorts of social goals — such as school diversity or green energy — we’d be better off without HUD sticking its nose further into local government. We’ve seen that happen before with the Obama-era Affirmatively Furthering Fair Housing program, which sought to influence school location and other traditionally local decisions through the rubric of housing. One wishes here for a less intrusive approach overall — model zoning ideas for municipalities to consider, for instance, rather than grants, with their inevitable complexity. Less ambiguously counterproductive is the administration’s expansion of the Low Income Housing Tax Credit program, which subsidizes private construction of apartment buildings that combine market-rate units with income-restricted ones. Since its inception in 1986, this approach has financed 3 million housing units — through annual tax subsidies of $8 billion. Not only would expansion of such credits be slow to have any effect on the current housing shortage, but the program has long fanned housing-cost inflation. Construction costs have long averaged 20 percent more than non-subsidized counterparts. Indeed, the per-unit costs are eye-popping. In California, they average $480,000 per apartment. The Biden proposal that will have the most immediate inflationary effect is not only bad housing policy, but terrible social policy. The administration’s proposed $71.9 billion HUD budget for fiscal year 2023 would add 200,000 housing vouchers. That’s a 14 percent addition to the nearly 1.4 million vouchers already distributed to local housing authorities. Voucher households are marked by a high percentage of single-parent families (56 percent), compared with those in which children are raised by two parents (8 percent). Because deeper poverty leads to voucher priority, the program effectively rewards single parenthood and likely encourages the formation of such households. In contrast to cash welfare assistance, vouchers come without a time limit. And because rent is tied to income, an increase in earnings leads to higher rent — a powerful disincentive to upward mobility. African Americans, who make up 40 percent of voucher households, are particularly harmed. What’s more, the additional vouchers will inject a wave of new federal funding, juicing demand — and price inflation — for all rental housing. That’s the effect of subsidized demand in a market without much new supply. The move will not diminish inflation; it will increase it. Since the advent of public housing, federal policies have distorted housing markets for the worse. The Biden administration has at least signaled that it understands that regulation discourages construction. More broadly, however, it continues to double down on costly construction subsidies and dependency-inducing housing assistance. If diminishing inflation were really its top priority, it would not be pursuing the housing policies it has embraced.