Today's housing market seems to be suffering from a split personality. While residential real estate continues to be a pillar for the U.S. economy, a sad dichotomy finds more and more of America's working families experiencing a critical housing need – defined as paying more than half of the household income for housing and/or living in substandard conditions.

Yes, housing production is up, with 1.6 million housing units, including 320,000 multifamily units, predicted to be built this year, according to the National Association of Home Builders. However, the gap in housing affordability for low- and moderate-income households continues to widen. In 2001, 4.8 million working families faced critical housing needs, a 60 percent increase in just four years, according to the November 2002 Center for Housing Policy/National Housing Conference report "America's Working Families and the Housing Landscape."

Nationwide, full-time workers have to earn nearly triple the federal minimum wage of $5.15 per hour to afford the rent on a modest two-bedroom apartment, reports the National Low Income Housing Coalition (NLIHC) in its September 2002 report, "Out of Reach." And, while both homeowners and renters are burdened with the high cost of housing, renters are twice as likely to live in substandard conditions.

Government Assistance The federal government provides programs to owners and developers to subsidize affordable housing, including the HOME Investment Partnerships Program and the Low-Income Housing Tax Credit (LIHTC) program. HOME, a block grant program created by the National Affordable Housing Act of 1990, makes federal money available to state and local governments to produce low- and moderate-income housing. Through the required participation of nonprofit organizations, HOME funds activities such as housing rehabilitation, conversion, reconstruction, new construction, and tenant-based assistance.

LIHTC, established by Congress in 1986, provides private developers with a tax credit for the construction or rehabilitation of affordable rental units. The federal government gives states a per-capita allocation. States then distribute the funds according to their own qualified plans.

But, federal programs are not enough – for two reasons. There is more need than the federal programs can meet, and the applications for funds far exceed the number of dollars available for allocation. The fastest growing segment of the population with critical housing needs are families earning 50 percent to 120 percent of the area median income (AMI). And while there are federal programs targeted for families earning less than 60 percent of the AMI, the majority of this growing group has little or no access to assistance programs. According to the National Housing Conference's 2002 report, among households earning 50 percent to 80 percent of the AMI, the number with critical housing needs increased by 23 percent between 1997 and 1999. Households earning 80 percent to 120 percent of the AMI rose by 55 percent during the same time period.