COVID-19 has contributed to a rise in the cost of home-building materials. It’s influencing not only Louisville’s buyer’s market but the future of rental affordability. Because of things like factory closures, worker shortages and import barriers, materials, like lumber and glass, aren’t being produced fast enough to match the growing desire for homeownership.
“For every $1,000 a house increases, you knock about 800 Louisvillians out of the marketplace,” said Juva Barber, executive vice president of the Building Industry Association of greater Louisville.
Barber said people who would otherwise be able to buy are having to either continue to rent or choose to do so instead of homeownership. And that’s affecting the future of affordable housing.
“If you've got more demand, then you have supply, obviously, that impacts the pricing,” Barber said. “We still need multifamily rental properties in Jefferson County to meet our growing population's needs.”
In Jefferson County, there’s an overwhelming need for housing affordable enough for very low-income residents, according to a 2019 housing needs assessment conducted at the local level. Specifically, the city needs more than 30,000 new units estimated at about $3.5 billion.
Cathy Kuhn is executive director of the Metropolitan Housing Coalition, a nonprofit advocacy group. She said while investment is critical, there are other factors that affect the development and sustenance of affordable housing.
“It’s also about reducing regulatory barriers that inhibit the production of affordable housing. It's about educating the community, so that people really understand why affordable housing is so critical, not just for those who live in it, but for the entire community,” Kuhn said. “I know people worry about affordable housing coming in and that property values might decline.”
Kuhn said the city needs zoning reforms that would allow for higher-density, multifamily housing like duplexes. Right now, 75% of Jefferson County is limited to single-family developments. She added that another way forward is to break-down racist stereotypes and stigmas associated with affordable housing.
“We all need to do our fair share, and make sure that affordable housing development is not just happening in the areas where we already see concentrated affordable housing, but that we're providing opportunities across the city,” Kuhn said. “People should be able to have a choice to live close to their schools, close to their place of employment, close to their faith communities, family and friends. And right now that choice just does not exist in Louisville.”
Louisville remains generally segregated to this day ━ a lasting imprint of redlining, a racist practice intended to displace Black residents. The metro government’s housing needs assessment shows the four rental market areas in Jefferson County with the most affordable housing stock are Northwest Core, West Core, Downtown, and University. These areas are also home to majority Black residents.
In an effort to address low-income residents' needs, the city put aside $10 million in its latest budget for the Affordable Housing Trust Fund. Two and a half million dollars of that will be dedicated to building housing for families who make 30% or less of the area’s median income. Christie McCravy is the trust fund’s executive director. She said while the funding is a start, it's not enough and will take time to produce results.
“The $2.5 million is not going to solve the entire problem. But it will encourage developers who are thinking about building some housing,” McCravy said. “We probably won't start taking applications until September - October. And then you have to build. So anytime affordable housing is awarded money, you have to realize that there's a time lag because you're talking about building capital, building properties and, you know, bricks and mortar.”
In addition to resources, McCravy said the city still needs to address the homelessness crisis which advocates say will likely be exacerbated by the domino-effect of the homebuyer inflation.
“Those with the lowest incomes in our community, they are the most vulnerable. But oftentimes, some of them may have other needs like mental health or addiction support,” McCravy said. “So, even though we can feel the bricks and mortar, somebody needs to provide the support, and the services that would help these residents be successful, not only just find a place to live, but to be able to succeed in life and to have somewhere that they can call home.”
“We'll probably see a lot more persons that are going to be homeless is what we're going to eventually see,” said Phil Ellis, executive director of Community Action of Southern Indiana.
The graph below breaks down the U.S. Department of Housing and Urban Development's caps on household income amounts in Louisville, as of July, 2020.
The nonprofit advocacy agency is focused on providing a variety of services to residents, including rent assistance and housing vouchers. He said in his 31-year career, the biggest challenge he’s seen is the shortage of housing options for low-income residents.
“There are persons that are in between a certain income guideline that are not eligible for subsidized housing. And they are the working poor,” Ellis said. “Persons who are income-eligible for Section 8 ━ If they make $2 above that, it makes them ineligible for subsidized housing. And they might be over the income level for public housing. But they're still poor.”
Advocates, developers and some local officials have come to a general consensus: affordable housing will not exist in Louisville without an agreement, across the board, investing local and federal funds to build it, expanding zoning guidelines to allow for higher-density developments and a variety in housing stock. And busting misconceptions people may have about affordable housing in an effort to eliminate NIMBY-ism.