Why it is so hard to find affordable housing in Delaware

Delaware ranks below the national average in available affordable housing for the lowest-income renters and is one of the most unfriendly to those households in the Mid-Atlantic region, according to a report by the National Low Income Housing Coalition.

"The Gap: A Shortage of Affordable Homes" report found nationwide no state offers enough affordable rental homes to accommodate the lowest-income households, with an average of 36 affordable and available rental homes for every 100 households.

In Delaware that gap is even starker, with only 31 available homes for every 100 of the lowest-income renters.

New Jersey had a similar supply for the lowest-income households with 31 available for every 100 renters. Maryland, Virginia and Pennsylvania offered 34, 37 and 39 homes for every 100 renters, respectively, according to the report.

Households that fall into this group have incomes at or below the poverty line, or 30% of the area median income, whichever is greater. Seniors make up 46% of all extremely low-income households with the remaining 44% part of the labor force, in school or single-adult caregivers. They’re also severely cost-burdened, spending more than 50% of their income on rent and utilities, according to the report.

Seventy-two percent of Delawareans in the lowest-income bracket are spending more than 50% of their income to put a roof over their heads. Those Delawareans earn about $20,733 annually, if calculating 30% of the state’s area median income, but incomes vary widely depending on where in the state people live.

“In Delaware, we have a shortage of 18,000 affordable and available rental units for the lowest-income renter households,” said Rachel Stucker, executive director of Housing Alliance Delaware, in a news release. “Significant and sustained federal and state-level investments in affordable housing development and preservation are needed. Housing is not optional.”

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Stucker did not respond to requests for additional comment.

Lost income and housing insecurity during the COVID-19 pandemic exacerbated these conditions, and although the federal government took action to protect the lowest-income renters, those actions were temporary. Eviction moratoriums have lifted, and emergency rental assistance is drying up.

“The pandemic has made plain our nation’s lack of a housing safety net,” the housing coalition’s President and CEO Diane Yentel said in the release. “It is time to invest in long-term housing policies that will finally address the systemic shortage of affordable housing and provide housing stability for the lowest-income families.”

The worst state for available affordable housing for the lowest-income earners was Nevada, with just 18 homes per 100 renters, the housing coalition’s report found.

Housing development

Soaring housing costs – both in the homeownership as well as rental markets – have created additional barriers to affordability.

Delaware had the highest increase in residential rent in the country from 2019 to 2021, according to a survey by online insurance marketplace QuoteWizard, a LendingTree company. As market volatility continues, rental property agencies are giving wide ranges for monthly costs that can change daily.

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These increases can price out low-income households that also must compete with higher-income renters for affordable housing.

In the private market, households can occupy homes that cost less than 30% of their incomes, gobbling up what housing renters with lower incomes could afford. Of the 7.4 million rental homes affordable to extremely low-income households across the country, approximately 3.4 million of them are occupied by households earning higher incomes, the affordable housing report found.

Delaware’s average rent for a one-bedroom apartment jumped 12.3% to $1,142, according to QuoteWizard’s March 2021 report.

While many parts of the state have seen housing development explode, affordable options are in short supply.

Laurie Jacobs, director of public relations for the Delaware State Housing Authority, said if “all the stars align,” about 300 new affordable housing units will be added across the state this year, with 214 in Wilmington and 89 in Sussex County.

In Wilmington – where a quarter of the population is below the poverty line – large developers have brought hundreds of new residential units to the market in recent years, but few have been affordable to those residents in need of housing. Many of the new, “market-rate” apartments in the area are being rented by people who are moving to Delaware.

Increasing the supply of market-rate housing options can benefit the affordable housing market, Jacobs said.

"By increasing the number of market-rate units, there is a potential to relieve some of that pressure and free up less expensive units for people with lower incomes," she said.

On the flip side, Jacobs said more market-rate housing can create opportunities for "exclusionary practices to protect property value and investment," whereby communities resist affordable housing development.

What affordable housing is being constructed in Wilmington is either rehabilitation of existing units or already spoken for through yearslong waitlists, like The Flats on the city’s East Side.

Jacobs acknowledged there are significant efforts being made to update existing affordable housing throughout Delaware. She said there is an expected 593 units that will undergo rehabilitation, with 380 units in Kent County, 175 units in Wilmington and 38 in Sussex County.

“That preservation includes updating affordable housing as well as rehabbing blighted, abandoned properties,” she said. "If the state cannot maintain the current affordable housing that it has, we will just keep treading water. This will be true even if we add more new affordable housing stock to the state's portfolio. Without preservation and rehab, our existing portfolio would shrink."

An effort to redevelop the Riverside section of northeast Wilmington also is underway, which is replacing rundown Wilmington Housing Authority buildings with newly constructed townhomes. The plan includes up to 55 single-family homes for affordable home ownership.

Millions of dollars from the federal American Rescue Plan Act also is being used to improve and add affordable housing, Jacobs said.

Incentivizing affordable housing

Depending on where a family is looking for housing, their dollar will stretch only so far. For example, in Wilmington, 30% of the area median income in the city is just $13,541.70. Taking the statewide area median income of $69,110, an extremely low-income renter may earn only $20,733 annually.

In Sussex County, housing options outpaced the estimated number of homes needed to match population growth, according to a housing report published by the county in 2019. Since then, the housing boom has only continued to take off with more than 4,000 building permits approved in 2020 alone.

To encourage some of that new development to offer affordable units, the county provides incentives to developers, like expedited approvals and, now, grant funding to subsidize costs for affordable housing. Large employers in southern Delaware are looking to partner with developers to provide workforce housing.

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Tiffany Pringle, a Wilmington property manager for Ponderosa Investments LLC, said landlords have mixed feelings about offering affordable housing.

Some landlords do not want to deal with the stipulations and requirements of participating in federal housing programs, while others have had bad experiences with tenants in the past, leaving them hesitant to offer housing considered affordable.

Pringle said state or local funding targeted toward assisting these property owners could help bridge gaps.

She said sometimes Section 8 vouchers do not cover the total cost of rent, and tenants may be unable to pay the gap. With costs to maintain properties, from increases in property taxes to increases in materials for upkeep, going up, Pringle said landlords can't afford to "lower what they are asking for monthly."

Senate Bill 90, now in the Delaware General Assembly's hands, would eliminate an exception to the state's Fair Housing Act and Residential Landlord-Tenant Code that allows landlords to discriminate against tenants who use government-sponsored rental assistance, like Section 8, to pay for housing. The bill passed the Senate earlier this month.

The state housing authority offers incentives to encourage developers to build affordable units through low-income tax credits, Jacobs said.

Through two funds – housing development and affordable rental housing – developers can tap into tax credits to finance construction, she said.

“Last year, that program yielded about 300 units,” she said. “We also have our downtown development district program, and that funds commercial development as well as residential development.”

In total, the housing authority has requested $16 million for the three funds – $4 million for the housing development fund and $6 million each for the affordable rental housing program and the downtown development district program, Jacobs said.

Despite these incentives, barriers to expanding affordable housing still exist.

Sometimes, zoning ordinances limit construction to single-family detached homes, thus requiring permitting and other approvals for higher-density housing projects, Jacobs said. This may deter some developers from pursuing denser, affordable housing projects because of an increased risk the project will be rejected, she said.

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“It still has that stigma where communities – developers and homeowners – relate affordable housing to public housing,” Jacobs said, adding more education around the topic is needed. “It’s so much deeper than those few items.”

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This article originally appeared on Delaware News Journal: Why is affordable housing so hard to find in Delaware?