Housing on the Precipice
By Jose Garcia, Policy Fellow, Wealth-Building Policy Project, NCLR
As 2013 approaches, the clock most people are watching is not in Times Square but in Washington, DC, where the countdown to the fiscal cliff has begun. Lawmakers face a self-imposed deadline of December 31 to figure out how to deal with tax hikes and spending cuts. If an agreement is not reached, the Congressional Budget Office projects that it could cost the U.S. two million jobs next year. This drastic job loss could hamper the housing recovery, and the timing could not be worse.
The U.S. is still reeling from a recession that drained more than $17 trillion in wealth from American families, disproportionately affecting low- and middle-income families and communities of color. Hispanic families lost an alarming 66% of their household wealth. Their ability to save and invest in their families, their communities, and our nation’s economy has been severely limited by high rates of unemployment, stagnant wages, and an increased cost of living. Yet on the cusp of a new year, the U.S. is trying to balance the budget by putting the confidence of consumers and our few, hard-earned economic inroads at risk. For Latino families, the fiscal cliff could mean a return to double-digit unemployment, affecting their ability to keep a roof over their heads.
If an agreement is not reached, the U.S. Department of Housing and Urban Development will suffer 8.2% in cuts to a number of programs, including $1.5 billion to tenant-based rental assistance and $4 million to its Housing Counseling Program. For homeowners, fewer jobs could lead to a new wave of foreclosures as newly unemployed workers struggle to make mortgage payments. Decreases to funding for housing counseling could further erode Latino home equity, as there will be less assistance available to help families save their homes.
Cuts to housing subsidies put at risk the housing of millions of families who rely on these subsidies to make ends meet. For these renters, this assistance provides a way to cover the cost of basic living expenses and survive economic shocks from unplanned emergencies like car repairs.
The fiscal cliff also threatens to slow the momentum in the housing market, as nervous consumers may be less likely to purchase a new home. Uncertain about tax hikes or job losses, prospective buyers may hold off on purchasing a home until they feel more secure about their economic prospects. Fewer homebuyers could stall growth of the housing market, and from there the fiscal cliff could lead to an economic slump that may result in greater reliance on economic assistance.
As was evident during the last election, the issues that are important to Latinos can no longer be ignored. Hispanic voters have rejected a strategy that would focus only on spending cuts. Instead, Latinos want to see a balanced approach that raises revenue by requiring everyone to pay their fair share of taxes. Like all Americans who are still recovering from a deep recession, Latinos are most concerned with rebuilding our nation’s economy. Recent polls show that Latino voters overwhelmingly support strategic investments in education and infrastructure over cutting taxes as the best way to spur economic growth. The fiscal cliff provides the U.S. with an opportunity to work toward a better future for all by helping our workforce acquire the skills needed in today’s market, and by taking care of the elderly who worked tirelessly to make the U.S. one of the most prosperous nations in the world. This can all be accomplished while still balancing the budget and avoiding sequestrations. We need to be smart about the budget challenges that our nation faces. We cannot afford to put the housing of working families at risk just to keep giving tax breaks to rich individuals and corporations.
