Low Income Housing Crisis?

According to a news story this morning, Pennsylvania, especially the southwestern part of the state, is facing a crisis stemming from a shortage of affordable housing for low income people. A group called Housing Alliance of Pennsylvania says Allegheny County needs 21,545 affordable units, with most western counties having unmet needs as well.

The group’s analysis becomes somewhat muddled at this point. The group argues that for a very low income person affordable housing means $861 per month in rent. In the Pittsburgh region, the average apartment rents for $907 per month. Thus, they reason, low income people are priced out of the market. But averages include very high priced units which make using the figure to determine affordability questionable.

A better measure would be the median rental rate, or better still a look at the number of rental properties available at $860 or less.

It is ironic that in the Pittsburgh region-where home prices are far below the national average-a problem with housing affordability has become an issue. What do low income people in places such as San Francisco face? Home prices, and presumably rental rates, in that city dwarf those in the Pittsburgh region: ditto DC, New York, and Boston.

But here’s the real fundamental issue. If developers and rental property owners are not building a lot of affordable units, there must be a reason. Most likely the answer is that they cannot make an adequate return on housing for very low income people. A number of factors could be at play; competition from government provided or subsidized housing holds prices too low, maintenance costs are very high compared to other housing, insurance costs, liability and lawsuit protection, payment defaults, local and state regulations, and property taxes are all simply too onerous to foster lower priced, affordable new construction.

If the Housing Alliance wants to see more affordable units it should help with legislation that will reduce the burdens on owners and work for lower property taxes.