Why is Government Funding Critical to Solving the Affordable Housing Crisis?

Tori DillingerAdministrative Assistant

What exactly is the “affordable housing crisis” cited in the news? In one sentence, there is a mismatch between what working-class families make and the cost of housing available to them. The National Low Income Housing Coalition (NLIHC) estimates that nationwide there are only 56 available rental homes for every 100 families below 50% of area median income. Indiana is better, but there are still only 77 available units for this income group. There is simply not enough affordable housing to go around.

Housing is considered “affordable” when no more than 30% of a household’s income is going towards housing costs. In Evansville the average renter can afford about $674 a month. Keep in mind, this means half of renters can only afford rent that is below this. Meanwhile, the average rent for a two-bedroom apartment costs around $769 per month. Below is a graph showing the gap between rent affordable to different groups and the average cost of renting a two-bedroom apartment.


Now you may think, with such high demand, developers would be rushing to build cheaper housing. The problem is developers can’t build housing affordable to low- and moderate-income families. The construction and operation costs for building new rental units is higher than what a developer can make from rents affordable to working-class families. This is why government funding is so critical for the development of affordable housing. The Urban Institute has an interactive webpage that explains this problem in more detail.

Individuals stuck in unaffordable rental units are unable to save to eventually become home owners, and have less money for necessities such as health, education, and transportation. They often have to move frequently as they are unable to make their rent if they have any decrease in income. The missed community investment from these individuals hurts the whole community. Working to make more affordable housing available is critical for communities, and will require many different people working together.