Seven hundred billion dollars to bail out the banking and financial industries is a lot of money. But let’s not forget where this crisis started: in a failing housing market, the initial domino in the meltdown. The banks are being bailed out – but what about housing?
Too many people today are spending too much of their income on keeping a roof over their heads. Nearly half of Americans are “rent burdened,” spending more than 30% of their income on housing. Whether it is high rents or a mortgage, these excessive costs drive people into debt. The problem has been escalating, and examples can be seen in all sectors of the housing market and all areas of the country.

For instance in April of this year, the Chicago Housing Authority opened its waiting list for Section 8 housing vouchers. More than 250,000 people signed up to be in a lottery for the 40,000 open slots. “Winning” a voucher meant its holder will “only” have to pay 30% of their income to rent. By winning this lottery they will have enough leftover money -- barely enough -- to afford food, medicines and other necessities, providing these families with some semblance of security.

Those are the lucky ones. Nearly 20% of families pay 50% of their income to housing costs. Those families have to make painful choices between housing, food and medicines that no one in this land of wealth should have to make. They are one paycheck or medical bill away from losing their home. Tens of thousands of these people could benefit from an expanded rental subsidy program, yet the federal budget for Section 8 housing vouchers is flat.

For homeowners the situation is no better. Adjustable rate mortgages have left many owners either barely or unable to pay escalating mortgages. So far in the first six months of 2008, foreclosures have risen to an all time high. In July of this year, 272,171 properties received a foreclosure filing or a default notice, were warned of a pending auction or were foreclosed on during the month.

Yet during the recent banking bailout, proposals that would have helped homeowners meet their mortgage payments and stay in the homes failed to gather sufficient bipartisan support. As more homeowners go into foreclosure and their homes are boarded up, that unleashes a domino effect where the blighted homes drag down the property values in these neighborhoods, worsening the situation for everyone and further sinking the economy.

But it’s not just during the recent banking bailout that the nation’s housing needs have been ignored. Looking at federal investment in public housing going back decades, we see that much of public housing is deteriorating and in need of repair. The lack of repairs puts the building’s residents at risk, as well as threatens the viability of the building. Yet once again the federal budget for maintenance of public housing is shrinking. It’s nothing less than tragic that, as the need for housing is increasing, the real dollar investment has been decreasing.

The national housing crisis calls for a different approach. As Congress and the President seek to ease the crisis, solutions must be found in programs that ensure the affordability and availability of safe and decent housing.

First, we must start with ensuring housing stability, and that will require investment in the existing housing stock. Second, legislation should focus on making sure that the thousands of people facing foreclosure or eviction are able to stay in their homes. Interest rates should be capped to make sure that each family’s investment is protected, and this in turn will also help to make sure that the banks don’t fail. Barack Obama has proposed a three month moratorium on foreclosures for some homeowners, and that’s a good start.
Third, rental subsidies can be increased or rent control can be used to ensure that no one pays more than 30% of their income to rent. Finally, the government can build more affordable housing and make sure that it is well-maintained; part of this task can be accomplished with a sizable increase in the use of nonprofit housing corporations who build “social housing” for people, not for profits.
One of the primary roles of government should be to create conditions so that families can succeed. Rather than saying Wall Street and the banking industry are too big to fail, a better outlook would recognize that Main Street and all the people living in our communities are too many to fail.

It will not matter how much relief the government gives to Wall Street. If housing costs remain too high, Main Street will continue to struggle as more and more people are unable to pay their mortgages or rents.