With the debt ceiling debate behind us, at least temporarily, some economists have expressed concern that the spending cuts required in the deal may stall or reverse the nation’s already weak economic recovery. In a recent article published in the Planning Commissioners’ Journal, Center for Housing Policy senior research associates Rebecca Cohen and Keith Wardrip make the case that cuts to housing programs may also weaken local economies. Investments in affordable housing can create local economic growth and increase state and local tax revenues – both of which are sorely needed in many parts of the country today.
The article outlines the basic premises covered in the Center’s recent literature review exploring the impact of affordable housing on local economies. Building affordable housing creates short-term jobs in the construction industry, and, once occupied, its residents support local commerce and have more money to spend on necessities because their housing costs are in-line with their incomes. State and local governments benefit from taxes and fees collected during construction. Additionally, research shows that the risk of foreclosure is lower for those who participate in affordable homeownership programs than for similar borrowers who do not, and reducing the number of foreclosures allows local governments to spend less on property maintenance and court costs. Finally, by creating affordable options that would not have existed otherwise, investments in affordable housing can make it easier to attract and retain an essential workforce, thus making a community a better place to do business.
No one would argue that waste should be trimmed from any government’s budget. However, proven programs that invest in affordable housing for those who need it should be spared from punitive cuts. Not only do these programs lower the cost of housing for those who cannot afford what the market offers, but they can also inject life into flagging local economies. The irony is that the failure to protect these programs might weaken the economy at a critical time and create even more families who need housing assistance.