Exploring the RCP's Draft Programme

Housing in the U.S.A.:
Nightmare of the "American Dream"
and the Dream of Revolution

Revolutionary Worker, No. 1113, August 5, 2001 posted at http://rwor.org

The RCP has published its new Draft Programme, and the Party is inviting people to join in the study, discussion and wrangling over this roadmap and battle plan for revolution.

In this new RW series, "Exploring the RCP’s Draft Programme," we will look at different key problems in society, and what the Draft Programme says about how people can solve them through revolutionary change.

The possibility of owning your own home is held up as proof of the "American dream" and the notion that capitalism can provide everyone--even the masses of working people--with a decent life.

But today, for millions of working and oppressed people, the possibility of home ownership is barely even a "dream." In reality, just paying the rent is becoming more and more difficult, if not impossible. And for many millions more, including sections of the middle class, it’s becoming more difficult to buy or keep a home.

Any just society in the world today should provide for peoples’ basic survival--things like food, shelter, and health care. After all, it isn’t as if the resources and know-how to provide food, build shelter, and prevent many diseases don’t exist!

In the course of doing research and social investigation for the new Draft Programme, the RCP found that:

• Hundreds of thousands of people are homeless on any given night, and many others are homeless at different times.

• The economic "boom" of the 1990s has neither lessened homelessness nor made housing more affordable for poor people.

• The waiting time for getting federal housing assistance has dramatically increased in recent years.

• The availability of subsidized housing for poor people may well be decreasing even further in the years ahead.

• Some 30% of U.S. households spend more than 30% of their income on housing, a level that is considered a real strain on household budgets. Millions of poor people spend more than half of their income on housing.

• Today, compared to 30 years ago, it more often takes two incomes--and often long hours--to pay a home mortgage, and many are falling deeply into debt to buy and keep a home.

Most recent indicators point to a worsening crisis for working and oppressed people, and incredible hardships on children. The most savage expression of the housing crisis in the U.S. is homelessness.

According to a recent study by the Urban Institute, "at least 800,000 adults and children are homeless at any given point in time, while at least 2.3 million experience it at least once in a year." (emphasis added) This is nearly 1 out of every 100 people in the U.S.!

Of the 2.3 million who experience homelessness sometime in a year, about a third are children. A recent survey by the U.S. government found that, contrary to popular belief, nearly half of homeless people had some paid employment in the previous month. ("The State of the Nation’s Housing--2001," by the Joint Center for Housing Studies of Harvard University.)

A December 2000 survey by the U.S. Conference of Mayors, titled "Hunger and Homelessness in America’s Cities" found that the average demand for emergency shelter in 2000 had increased by 15% from 1999--the highest one-year increase of the 1990s. In 50% of the cities surveyed, officials also said that the length of time people are homeless increased during the past year.

While the survey reported a variety of causes of homelessness, "nearly every city in the survey cited the lack of affordable housing as the primary cause of homelessness." In 72% of the cities surveyed, officials expect that requests for emergency shelter will increase in 2001. Some 36% of the homeless are families with children and 7% are children under 18 living on their own.

For many poor and low income people fortunate enough (at least temporarily) to afford shelter, paying the rent or mortgage is extremely difficult. "The State of the Nation" study found that in 1999, over 14 million households, about one in eight, were spending more than 50% of their income on housing--a level which is considered a severe burden. Most--about 11.5 million--are low-income households.

Another 3.3 million poor rental households are spending between 30% and 50% of their income on rent. This means that 85% of all poor people who rent are either severely or moderately burdened by housing costs.

The study also found that poor people are "the most likely to live in overcrowded and/or structurally inadequate housing"--a situation faced even by many people working full-time jobs. Another recent report found that on average, there must be more than two full-time minimum wage workers in a household to afford an average two-bedroom apartment. ("Out of Reach," September 2000, National Low-Income Housing Coalition.) One reason is that in 1997 and 1998 rents increased at twice the rate of general inflation.

Even the U.S. government admits that there’s a crisis of affordable rental housing for the poor. In a report issued in January 2001, the Department of Housing and Urban Development acknowledged that roughly five million households of people who are renting have "worst-case" housing needs--in other words they spend more than half of their income on rent. The report also said "substantial shortages of rental housing continue, and in some respects are worsening," and that between 1997 and 1999 the number of affordable units available to poor people dropped "at an accelerated rate…" ("A Report on Worst Case Housing Needs in 1999: New Opportunity Amid Continuing Challenges")

The U.S. housing crisis hits African Americans, Native Americans, Latinos, Asian Americans and other oppressed nationalities, especially hard. For instance, the U.S. government has reported that African Americans had the highest rate of severe financial needs among renters who receive no subsidies or other government housing support.

While this situation is already bad enough, it could get even worse in the years ahead. Federal rent subsidies on 1.3 million apartments will be ending over the next five years. These subsidies enable low income tenants to pay 30% of their monthly income on rent, with the government paying the difference. At the same time, the government is slashing new federal housing programs for low-income people.

These cuts also mean that families are waiting longer and longer for subsidized housing--if they get it at all. The average waiting time had increased from 22 months in 1996 to 33 months in 1998. In many cities, the wait is on the order of many years. For example, in New York City the waiting time is eight years, and in Los Angeles and Newark the waiting time is 10 years.

The percentage of households owning a home rose slightly during the 1990s, from about 64% in the 1980s to 67% in 1999--a rate just above the level of home ownership in the late 1970s. For the bottom half of society income-wise, the rate of home ownership is about 53%.

But these statistics mask deepening polarization between different sections of the people. There is a widening "housing affordability gap" between those who have benefited from the "economic expansion" of the 1990s and those who were left behind. Low- and moderate-income homebuyers are finding it harder and harder to find affordable housing and are spending more of their income on housing. Many households, including in the middle class, are going deeper in debt to buy a house.

One reason is that home prices rose faster than overall inflation for seven straight years, from 1993 to 2000. During that period inflation-adjusted house prices soared 16%--and in some urban areas the increase was even steeper.

While home prices and mortgage payments steadily increased between 1993 and 2000, incomes for much of the population did not keep pace.

"The State of the Nation" study concluded that "Both housing prices and higher average interest rates in 2000 made home ownership less affordable for new buyers coming into the market.... Last year’s buyers saw higher housing costs consume nearly all their income gains."

In part because of these trends, more and more households depend on two incomes (or more) and/or working longer hours to pay the rent or mortgage. The number of American households that now depend on two incomes to pay for housing is on the rise. Yet, even with both spouses employed, more than one in five low-income married couples have "severe cost burdens," paying more than half their incomes for housing. And overall, about 8.3 million poor home-owning households are paying over 30% of their incomes for housing, or living in severely inadequate housing.

People from oppressed nationalities in the U.S. have a much harder time buying a house than white people. "State of the Nation’s Housing" notes that "Despite the economic good times of the 1990s, minority homeownership rates still lag those of whites by a wide margin.... The Black ownership rate now stands at 47.6%, the Hispanic rate at 46.3%, and the Asian/ other rate at 53.9%--all considerably below the 73.8% rate of whites."

Debt and debt payments dramatically increased in the 1990s, and one big reason was rising mortgage payments. The authors of The State of Working America 2000/2001 concluded:

"The media casts much attention on the stock market. But for most households, rising debt--not a rising stock market--is the real story of the 1990s. Burgeoning debt has squeezed the net worth of the typical household, which saw only small gains in wealth in the 1990s. This growth in debt has put real economic strains on a significant number of low- and middle-income families, leading, in extreme cases, to personal bankruptcy."

The mortgage component of total debt is increasing--rising from 45% of total debt in 1979 to 67% in 1999.

One particular problem facing African Americans, Latinos and other oppressed nationalities is that they are locked into extra-high payments on housing loans. This is because in poor and minority neighborhoods there is a whole "subprime" lending network, made up of loan and finance companies which specialize in making people with poor credit histories pay high rates and fees for consumer loans.

Affordable housing is scarce enough across the U.S. as a whole, but in many urban areas the situation is even worse and there is open discussion of a housing affordability crisis. Areas such as Boston; the San Francisco Bay Area; Sacramento, California; Tacoma, Washington; and even the states of Maine and Minnesota all report sharply increased housing costs.

In these areas, the economic "boom" has boomeranged on many proletarians, and even among many in the middle class, because home prices and rents have been driven sky high by the anarchic, profit-driven workings of capitalism. In these areas, home prices have become less and less affordable to most new buyers, except relatively small numbers in the upper sections of the middle class--or the capitalists--who have benefited from the economic expansion of the 1990s. In these areas rents are also skyrocketing, and many--especially the oppressed--are being driven out of these urban areas altogether.

An economic downturn could make the already precarious housing situation much worse. Layoffs could cause many to lose their homes or be unable to pay rent. This is true even of two-income families where one person is still working. "The State of the Nation’s Housing" notes that "Rising unemployment could also jeopardize the ability of millions of two-earner households to meet their housing costs."

The fact of the matter is that there is a deep crisis of affordable and decent housing in U.S. society. In the richest country in the world, after the longest economic "boom" in the post-WW 2 era, hundreds of thousands are homeless every night, millions can barely afford their rent, and many others can barely afford the mortgage on their homes.

It’s a damning indictment of capitalist society that it cannot provide affordable, decent housing for tens of millions of people. There is a crying need--and the resources exist--to build new housing that people can afford. But because the "free market" is guided by profits, not the needs of the people, huge sections of the people in the U.S. are burdened by deep debt, on the edge of being evicted, or on the streets.

This article is posted in English and Spanish on Revolutionary Worker Online
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