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There are two kinds of low-income, rental housing-- subsidized and unsubsidized. Subsidized low-income housing comes though the federal government's Department of Housing and Urban Development, more commonly known as HUD. The HUD housing program with which some of you may be familiar is called the Section 8 program. It provides a monthly housing subsidy for low-income tenants. The subsidy varies depending on the size of the family, their income, and the apartment rent. The subsidies are set up so that no person in the program pays more than one-third of their income for housing. The section 8 subsidy can be in the form of a voucher which can be used with any apartment of the right size that passes an inspection, or the subsidy can be attached to a unit that has been rehabbed using HUD funds. In the latter case, anyone who moves into that unit receives the subsidy. The Section 8 program is a good program, but it is underfunded. The waiting list to get into a Section 8 building or receive a Section 8 voucher is years long. When a family finally gets to the front of the line after waiting years, they often cannot find a unit that will pass the Section 8 inspec- tion, and so all the waiting is in vain. The second type of rental housing is mar- ket rate housing. It is generally produced by housing corporations which see low income housing as their social calling or by individuals or companies which see the low-income housing market as their business niche.
should not pay more than 30% of its total monthly income for housing in order to have enough money left to live. In the city of St. Louis an extremely low-income household earning $19,140 per year (30% of the Area Median Income of $63,800) can afford monthly rent of no more than $479. ($19,140 divided by 12 months = $1,595 X 30% = $479) So far, so good. Two-bedroom units at Neighborhood Enterprises rent for $325 to $400 per month.
low income. Think of the minimum wage worker, for instance, earning $5.15 per hour ($824 per month and $9,888 per year). They can afford no more than $248 in rent per month. ($824 X 30% = $248) Or how about the disabled person on Social Security Disability receiving $579 monthly. $579 times 30% equals a monthly rent of $174. Senior citizens on fixed incomes, single mothers on welfare, laid off workers, can all be substantially below low income and thus in desperate straits when it comes to locating housing.
other side of the problem has to do with the expenses that drive the rents. If you refer to the Investment section of this website, you will see a sample income and expense breakdown for a typical NE property. You will see that the cash flow for a particular year, the money left after
roofs, replace appliances, furnaces, water heaters, windows, plumbing fixtures. Those repairs must be paid for out of the rent that comes in or out of the owner's pocket.
this problem by using the "selective rehab" method first advocated by the Enterprise Foundation, designers of Boston's Inner Harbor and St. Louis' Union Station. Selective rehab uses a simplified style of rehabbing and redecorating buildings that keeps costs low while not sacrificing safety and utility. |
| Housing Fact: 13,414 applicants are on the Section 8 waiting list in St. Louis--a wait of four years. |
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| The Problem and Challenge of Low-income Housing |