Last week, Mecklenburg County Community Support Services released the 2021 Charlotte-Mecklenburg State of Housing Instability & Homelessness (SoHIH) report. The report provides a single, dedicated compilation of all the latest local, regional, and national data on housing instability and homelessness pertaining to Charlotte-Mecklenburg.

The report is intended to be the “go-to” resource for all stakeholders working to address housing instability and homelessness in Charlotte-Mecklenburg. It is anchored by the three main components of the housing continuum: housing instability; homelessness; and permanent, affordable (or stable) housing. As the report is designed to make information easily accessible, there are also helpful complementary materials available; these will help connect the data with stakeholders. These resources include the Key Findings Handouts, Report Toolkit, and Housing Data Factsheet.

Last week’s blog shared three key themes from the 2021 SoHIH report. This blog post will take a deeper dive into the theme regarding the growing need for more permanent, affordable housing and what this means for Charlotte-Mecklenburg.

“PERMANENT, AFFORDABLE HOUSING,” UNPACKED

Similar to the report from 2020, the single biggest takeaway from the 2021 SoHIH report is the urgent need for more permanent, affordable housing in Charlotte-Mecklenburg. What does “permanent, affordable housing” even mean? Is all “permanent, affordable housing” the same? Why does the definition matter?

Housing, regardless of typology, is generally considered “affordable” if a household does not have to spend more than 30% of their pre-tax, gross annual income on their housing-related expenses. Households who pay more than 30% of their gross income on housing-related expenses are identified as being “housing cost-burdened.” If a household has to pay more than 50% of their gross income on housing-related expenses, then they are “severely cost-burdened.”

“Housing-related expenses” include not only the cost of the rent (or mortgage), but utilities and other expenses directly related to sustaining housing. Using this definition, it should be apparent that everyone desires to live in housing that is “affordable” to them. However, the way the term “affordable” is widely applied serves only to artificially stratify the housing market, instead of recognizing the universality of the desire for any household to be unburdened by their costs of housing. The reality is that everyone wants housing that is “affordable.”

More importantly, everyone deserves to live in housing that is affordable to them. Unfortunately, Charlotte-Mecklenburg does not have sufficient housing stock to ensure equitable access. Pages 41 and 42 of the SoHIH report provide the latest data on the number of households with higher incomes who rent units at a cost lower than their AMI level. This results in what the report calls a “rental mismatch.” Households with higher incomes can (and could, given the desire everyone has for affordable housing) “rent down.” This action, while benefiting the household that is “renting down,” has repercussions on the rest of the housing ecosystem. “Renting down” can displace units; and could be a reason for households with lower incomes to “rent up.” There are negative consequences for those “renting up,” like a housing cost-burden, which can lead to housing instability and for some, homelessness.

Affordable housing is universally desired, but the term “affordable housing” is generally applied to households ranging in income from 0% to 120% of Area Median Income (AMI). Using FY2021 data for a family of four, this annual income range spans from $0 all the way to $101,040. The Fair Market Rent for a 2-bedroom apartment in Mecklenburg County is $1,151. A four-person household at 30% of AMI can afford (at most) $663 per month in rent and utilities without being cost-burdened. In contrast, the same size household at 80% of AMI can afford $1,684 per month in rent and utilities. Therefore, when new “affordable housing” is developed or existing “affordable housing” is preserved, it is important to understand (and ask) for all of the details, such as how many units will be made available and at what AMI levels.

The 2021 SoHIH report illustrates that the need is not consistent across all income levels. In fact, the report shares that largest gap in permanent, affordable housing is for households with incomes at or below 30% of AMI. For a family of four, this means an annual income that is at or under $26,500. For a single individual, the number is $17,700. For comparison, the annual income for a full-time, single individual earning minimum wage ($7.75 per hour) is $16,120, which falls at approximately 19% of Area Median Income. In Mecklenburg County, there is a current need for more than 23,000 permanent, affordable units just to serve households with income below 30% AMI. Many at the 30% AMI level are households with frontline workers such as nurses, custodians, and food industry employees. Worse, this  need is only growing, as new inventory is unable to keep pace and existing units are being lost.

THE NEED FOR MORE PERMANENT, AFFORDABLE HOUSING, UNPACKED

Permanent, affordable housing more typically is used to refer to the physical units, themselves.

Permanent, affordable housing can also mean the financial assistance used to gap the difference between what housing costs and what households can afford. Examples of financial assistance include short-term rental subsidies, such as rapid re-housing, as well as long-term subsidies and/or vouchers like permanent supportive housing and Housing Choice Vouchers. Financial assistance is funded by public and private entities at the local, state, and federal levels. New financial assistance has also been made available through the federal COVID-19 funding.

There are three primary considerations related to permanent, affordable housing: preserving existing units and resources; adding new units and resources; and removing barriers to available units and resources. Preserving existing housing stock includes the retention of Naturally Occurring Affordable Housing (NOAH) and other lower-cost rental inventories as well as the rental subsidies needed to gap the difference in cost and affordability.

A subsidy may not be necessary if the rental unit is already affordable; this is typical of NOAH units. In other instances, a short-term rental subsidy, combined with access to a rental unit at or near market rate, may be necessary until a household stabilizes and can afford the unit independently. It is important to consider both the need for financial assistance and the physical units to meet the need when considering solutions. If there are not enough physical units to support an increase in available subsidies, then the needle is not moved.

• The 2021 SoHIH report indicates that the share of units renting below $800 per month has dropped from 45% of all inventory in 2011 to just 22% in 2019. In addition, the 2021 SoHIH shares analysis from the CoStar Real Estate database, which found that most one-bedroom rental units under $800 were located in west Charlotte (zip code 28208) and east Charlotte (ZIP codes 28205 and 28212). Adding new units and expanding resources includes development of new units; rehabilitation of existing housing stock; and allocating more money for subsidies and/or vouchers so that households can live in all areas of Mecklenburg County.

• Also per the 2021 SoHIH report, the local Housing Trust Fund has supported the development, preservation, or rehabilitation of 11,596 total units between FY2002 and FY2021. After deducting the total number of units that were emergency shelter beds for people experiencing homelessness (888); and the total number of units that are pending and/or under construction (2,815); this equates to a total of 7,893 total new units over nineteen years, or 415 new units on average per year. These 7,893 units also rent in a range from 0% to 80% AMI, and even include some market rate units.

• Finally, removing barriers to access available units means addressing what has become the new redlining: Source of Income Discrimination (or SOID). The 2020 SoHIH provides data on the percentage of households who face barriers to utilizing subsidies and vouchers. This data was previously collected as a community-survey question during the Point-in-Time Count; due to COVID-19, the community-survey was not conducted, and therefore, not reported in this year’s report. To ensure this data is collected in the future, the community’s housing and homeless data-focused committee is considering integrating it into regular data collection protocols. This week, USA Today released a multi-part series on SOID, including the translation of the issue into a graphic novel. Barriers like SOID only further limit the community’s supply of permanent, affordable housing.

SO, WHAT

Prior to the COVID-19 pandemic, there was a growing deficit of permanent, affordable housing.  This deficit was already especially large for households with income at or below 30% of AMI. Now, in the pandemic era, the need for permanent, affordable housing (as well as the debt accumulating from households struggling to maintain the housing they already have) is growing. According to the 2021 SoHIH report, more than 28,000 households in Mecklenburg County have high rental debt; the average estimated amount is $3,589 per household.

In response to the need for more permanent, affordable housing in these circumstances, the federal government has issued billions of dollars in relief assistance. Pages 19 – 31 of the 2021 SoHIH report outline the different types of funding assistance provided to mitigate the impact of COVID-19. Between January and July 2021, the SoHIH report indicates that the City of Charlotte and Mecklenburg County dispersed more than $24 million in emergency rental assistance to over 6,500 households who sought assistance.

Additional federal housing investments are being considered through the Build Back Better reconciliation package, including new rental assistance that could serve 1 million more families; new funding for public housing to repair units that would house 2.5 million residents; and new Housing Trust Fund allocations that would support more than 300,000 affordable homes to be built and preserved for households with the lowest income.

Funding will help close the gap in the number of permanent, affordable housing units needed. But money alone does not end and prevent homelessness and housing instability. A more strategic use of the dollars in hand is a place to start. One of those more strategic uses is increased acceptance of vouchers by landlords. There are as many parties to these complex problems as there are contributing factors to the community’s current situation related to housing and homelessness.

Stay tuned for future blog posts, which will take a deeper dive into the other key findings from the 2021 SoHIH report.