State’s poorest renters hurt most by affordable housing shortage, report says

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Sixty-one percent of Hoosiers in extremely low-income households can’t find an affordable rental, instead spending more than half of their income on housing with little left for food or other necessities, according to a newly released analysis.

The report from Prosperity Indiana and the National Low Income Housing Coalition, “The Gap: A Shortage of Affordable Homes,” quantifies the affordable housing shortage at 120,796 rental homes for extremely low-income households — meaning families who make 30% or less of their area median income or live below the poverty level.

Roughly one-quarter of renter households are extremely low income, earning less than $26,500 per month for a four-person household.

“Despite an improving state and national economy, this year’s Gap report finds that Indiana is making far too little progress to increase the supply, affordability and habitability of housing to meet demand in all 92 counties,” said Andrew Bradley, the Prosperity Indiana policy director, in a news release. “Indiana’s policymakers at the state, federal and local levels must take advantage of every opportunity to focus efforts on increasing the supply of deeply affordable units; increasing funding for preserving the stock of existing affordable housing and preventing the artificial depletion of supply by strengthening the enforcement of habitability standards.”

Findings from the report

For those making 100% of the area’s median income, or even 80%, the data paints a different story — with slightly more than 100 affordable and available homes for every 100 renters, creating a surplus of 39,223 affordable homes and 16,336 homes, respectively.

But availability sharply decreases as poverty increases, with 76 homes available for those making 50% of the area median income — considered very low income — and just 39 rentals for those with extremely low incomes.

Of those renters, just over one-third are working — at full-time or near full-time hours — while another quarter are senior renters and one-fifth are disabled.

“The housing gap for affordable and available housing in Indiana means that while the highest-earning households have their pick among all rental units, Hoosiers at lower income levels must compete for the remaining available housing stock,” the report said.

The 177,858 households with incomes above the median could afford any of the state’s 813,063 rental units but sometimes choose to rent an even cheaper unit, decreasing the supply for those with lower incomes. While the state has 152,592 affordable homes from extremely low-income households, the spillover of wealthier renters means that there are just 120,796 affordable units available for more than 199,000 families.

Disproportionately, the families in the very low and extremely low brackets are Hoosiers of color, specifically Black Hoosiers. Minorities have long been subject to laws and other hurdles barring them from homeownership, preventing them from accumulating wealth at the same pace as their white counterparts.

Actions in the General Assembly, Congress

The report attributes part of Indiana’s housing problems to landlord-friendly laws, including one that bars tenants from withholding rent or using a receivership should their rental need crucial repairs.

An intensive summer study committee, led by homebuilders, mostly dedicated its efforts to incentivizing construction, rather than addressing the current housing supply. House Bill 1005, the result of that study, would establish a revolving fund to cover infrastructure costs related to housing construction, but primarily in areas with less than 50,000 residents.

Several have criticized the bill, saying it encourages construction in parts of the state where few want to live while simultaneously subsidizing developers. Proponents of the fund argue that the investment is needed to boost economic development.

On the federal level, Indiana Sen. Todd Young, a Republican, and Maryland Sen. Ben Cardin, a Democrat, introduced a $2 billion tax credit proposal to address the affordable housing shortage earlier this month. The federal tax credit would cover the cost between homebuilding/renovating and their sale price, capping their price to ensure they remain affordable.

On his page, Young describes the Neighborhood Homes Investment Act as a way to restore communities and direct private capital into low-income census tracts.

“This legislation also includes important guardrails to ensure that tax incentives target the families that need it most, continuing the work to avoid the negative and lasting consequences that a lack of safe, affordable housing has on Hoosier families,” Young said in a release.

The tax credit is estimated to create $125 billion in development revenue and revitalize 500,000 homes, including 10,000 in Indiana. However, it targets those making less than 80% of the area median income, not just the very low income or extremely low income.

“As this year’s Gap report makes clear, extremely low-income renters are facing a staggering shortage of affordable and available homes,” said Diane Yentel, the president and CEO of the National Low Income Housing Coalition. “In the wake of the pandemic, federal housing investments are more critical than ever for sustaining our communities and helping low-income people thrive.”

The Indiana Capital Chronicle is an independent, not-for-profit news organization that covers state government, policy and elections.

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