¶ … prohibitively rising cost of housing in Rhode Island has affected both the nuclear and extended family. Rising housing costs may force family members to move to less expensive areas, causing a breakdown in both extended and nuclear family structure. However, this may be balanced by the increased tendency of young adults, who cannot afford the high housing costs in Rhode Island, to live at home. Certainly, data outlined below indicate that the housing crisis in Rhode Island is very real and immediate. Individuals across Rhode Island society are beginning to feel the constraints of the difficult housing market, and low-income individuals are feeling the greatest strain.

Given that federal and private agencies are unable to keep up with the increasing demand for housing assistance for low-income residents, the housing crisis will only continue to grow. As a result, the pressures of the nuclear and extended family are not expected to increase into the foreseeable future.

The Housing Crisis in Rhode Island

Certainly, the rising cost of housing is affecting Americans countrywide. Rapidly increasing home prices can have many effects, from changing the condition and size of the home that a family can afford, to often pricing them right out of the market for buying a home. In a recent study by the National Association of Realtors, 44% of Americans said rising housing costs had forced them to rent, rather than buy, and 56% said that costs forced them to buy a smaller home than was needed (Real Estate News).

The Statewide Housing Action Coalition for Massachusetts notes, "There is a critical shortage of affordable, accessible, decent housing in our state." Since 2000, the median sales price for a single-family home in Massachusetts State increased to 164,800 in 2002, a 21% increase. The median price of a single-family home in Rhode Island capped 184,000 in 2002, a 19% increase over the year before (Arditi).

The housing situation in Rhode Island is dire for many residents. Habitat for Humanity, Rhode Island reports that in 1998 there were 23,000 "worst case" households in the metro Rhode Island area who pay over half their incomes for rent (or are living in substandard housing), and have incomes of 50% less than the area median income. The agency also reports that in 1998 there were 967 Providence households on the waiting list for HUD assistance (Habitat for Humanity: Providence, RI).

Rhode Island's increasing population suggests that housing price increases in Rhode Island are likely to continue into the near future. In 1990, Rhode Island's population was 1,003,464, and rose to 1,048319 in 2000, representing a significant population increase of 4.5%. Further, only 8.1% of the population for Rhode Island County lives in non-urban areas. The high urban population, combined with the significant population growth over the past ten years suggest that the pressures for housing in Rhode Island will not decrease at any time in the foreseeable future (Economic Research Service, County-level).

Per-capita income for the metro area of Rhode Island was 28,709 in 2000, with the non-metro area at 33,659. Statewide per-capita income was 29,113. Further, the poverty rate for the metro area was 12.4% for 1999, and 7.1% for the non-metro area. Statewide, the poverty rate was 11.9% (Economic Research Service, Rhode Island). Clearly, both the per-capita income and poverty rate for Rhode Islanders are very similar to those for the entire state of Massachusetts. As such, the problems in providing low-cost housing in Rhode Island are likely not due to an inordinately low income or poverty rate among residents of Rhode Island. Clearly, other factors, such as local real estate demand and pricing must play in important role in the prohibitive cost of housing in Rhode Island.

Habitat for Humanity, Providence sees the current housing crisis as a result of both a decline in federal funding, and recent trends in both labor and housing that have put affordable housing out of the reach of many residents. Says Habitat, "the result of the trends in the labor and housing markets, and the abandonment of the poor by the federal and state governments, is a squeeze involving declining incomes and a declining stock of affordable housing" (Habitat for Humanity: Providence, RI).

Rhode Island housing prices are rising due to two main factors: a sluggish stock market and low mortgage rates. Low mortgage rates encourage introductory buyers to purchase homes. Low mortgage rates and a sluggish real estate market encourage investors to put their money into real estate. Further, people in search of summer homes are driving up real estate prices (Arditi).

At the moment, real estate prices in Rhode Island are expected to continue to rise. However, if the stock market's long slide eventually could result in decreased consumer spending. When spending decreases, and the...

The State of Rhode Island General Assembly succinctly defines the serious extent of the housing problem in Rhode Island:
Housing costs consume a disproportionate share of income for many Rhode

Islanders; housing affordability is a continuing problem, especially for first time home buyers and lower and moderate income renters; the high cost of housing adversely affects the expansion of Rhode Island's economy. Housing affordability and availability affect conditions of homelessness. The high cost of housing and the lack of affordable, decent housing for low income households is a source of hardship for very low income persons and families in Rhode Island."

Housing Assistance for Rhode Island Residents

Importantly, government agencies like The Rhode Island Housing and Mortgage Finance Corporation were created to help provide assistance to individuals and families needing assistance with the exorbitantly high cost of housing in Rhode Island. The agency is important in attempts to preserve housing stock for both low and moderate-income families (State of Rhode Island General Assembly). The Rhode Island Housing and Mortgage Finance Corporation is a semi-public, self-supporting corporation that funds most of the states affordable housing programs. Funding is obtained both through private sources and federal funds. The agency has programs and projects geared at affordable home ownership and rental properties for low- and middle-income citizens (U.S. Department of Housing and Urban Development, HOPWA).

However, The Rhode Island Housing and Mortgage Finance Corporation is currently facing financial challenges which could seriously impair its ability to service the issues of home affordability. Currently, the agency has operating deficits for the year 2001, and is faced with the choice of either increasing revenues or reducing programs. As such, the agency will be compromised in its abilities to help both low income and first time buyers (State of Rhode Island General Assembly).

Despite its current financial difficulties, the Rhode Island Housing and Mortgage Finance Corporation has played an important role in finding affordable housing for Rhode Island residents. Since 1973, the agency has helped 175,000 residents find affordable homes and apartments. Household incomes for the home ownership program cannot exceed $54,500 for a household of one or two people, and house prices for most of Rhode Island cannot exceed $190,500 for existing single-family homes or condos. Other areas like Middletown, Newport, Portsmouth and Block Island have a limit of $245,000 for existing single-family homes or condos (The Rhode Island Housing and Mortgage Finance Corporation).

In addition to facing the consequences of the seriously compromised financial status of the Rhode Island Housing and Mortgage Finance Corporation, first-time homebuyers are also provided precious little help from the federal government. According to The State of Rhode Island General Assembly, "The federal government has been reducing its commitment to housing since 1981, and there is no indication that earlier levels of federal support for housing will be restored."

Given the high cost of housing in Rhode Island, many individuals will want to turn to public housing authorities for help. However, public housing authorities are seriously impacted by decreases in federal funding, as they rely extensively on federal support (State of Rhode Island General Assembly).

The most powerful and influential source of federal funding is The U.S. Department of Housing and Urban Development (commonly called HUD). HUD offers potential assistance of families dealing with the difficulties of the expensive Rhode Island Housing Market. HUD's mission is to create "A decent, safe, and sanitary home and suitable living environment for every American" (U.S. Department of Housing and Urban Development, Mission). As such, the agency provides assistance for low-income individuals, and attempts to create and maintain affordable housing, and create opportunities for home ownership.

Encouragingly, recent funding initiatives from HUD have indicated that federal funding initiatives may provide a much-needed financial boost for Rhode Island. For example, in August of 2002, HUD announced that the City of Providence will receive more than $10 million in federal assistance. Of this amount, over $7 million will be targeted to community development, while over 2.3 million will go to promote affordable housing through Home Investment Partnerships (HOME) funds. HOME is a program that is designed to specifically create affordable…