Conclusion

Efforts to find a solution to the high cost of housing production have yielded only modest results. Moreover, operating costs—utility payments, insurance, and maintenance—have also accelerated faster than inflation. Consequently, housing affordability has suffered on two accounts: increases in the base cost of production and increases in operating costs. In combination with slow income growth, these forces have combined to create housing costs that strain middle-income budgets and are untenable for the poor.

Demographic trends reveal a slowing rate of household formation, which may result in decreased demand and a reduction of overall price pressure. Yet, little relief is in sight for the poor. Rents for poverty-level households continue to increase much faster than inflation, despite a softening in the rental market generally. Experimental efforts, like the Enterprise Foundation's Rehab Work Group, deserve encouragement and support so that they may achieve their full potential. However, as long as income growth for poor families proceeds at a slower rate than for the rest of the population, these families will continue to experience the double bind of real increases in housing costs and real losses in income.

Homelessness

The problems of housing affordability and availability come together in the growing numbers of homeless people in urban centers. In ten major cities studied by the U.S. Conference of Mayors, the incidence of homelessness grew over the last several years despite a decrease in unemployment. National estimates of the homeless range from a low of 300,000 reported by the Department of Housing and Urban Development (hud) to a high of 3 million, cited in a private study. Although the number of homeless individuals is widely contested, even the hud report concedes that only 110,000 homeless persons nationwide can be sheltered on any given night. A report to the National Governors' Association concluded