Although the nation’s multifamily market has continued to see strong growth, with starts rising to nearly 360,000 units and historically low vacancy rates, there remains a shortage of affordable rental housing, according to Harvard University’s Joint Center for Housing Studies (JCHS).
Many of those units coming online are at the higher end of the market and not affordable for low- and even middle-income households. In addition, the national vacancy rate dropped to 7.6% last year and is helping to inflate rents, according to JCHS’ annual The State of the Nation’s Housing report, an analysis of the current rental and homeownership markets, that was released on Wednesday.
The affordable housing rental crisis continues to grow, according to a panel discussion held as part of the report’s release.
Celia Smoot, director of housing for the Local Initiatives Support Corp., says the private higher-income market that is coming online will take care of itself, but there is a disparity with other income bands. “There’s not true funding to create that affordable, middle-income band,” she says. “There’s federal funding that supports the lower area median income (AMI), but that’s decreasing every year.”
Findings from the report that are key for the affordable housing industry include:
- For extremely low-income households, those earning no more than 30% of the area median income (AMI), the gap between the number of renters and the units they could afford almost doubled from 2003 to 2013. In 2013, excluding inadequate units and those occupied by higher-income households, only 34 affordable housing units were available for every 100 extremely low-income renters.
- For very low-income households, those earning no more than 50% of the AMI, the prognosis was slightly better, with 58 affordable units available for every 100 very low-income renters.
- Preservation of the affordable housing stock continues to be essential, with almost 2.2 million assisted units at risk of removal from the stock. Over 1.2 million at-risk units are part of low-income housing tax credit (LIHTC) developments nearing the end of their compliance periods. The remaining at-risk units are privately owned developments receiving rental subsidies and may opt out of the federal programs.
- Even though the number of the nation’s households paying more than 30% of their income for rent declined for a third consecutive year, the improvement was mainly on the homeownership side. Just under half of all renter households were found to be cost-burdened in 2013, a record high of 20.8 million.
- Severely cost-burdened households in the bottom expenditure quartile spent almost triple on housing in 2013 than those living in affordable housing. Paying more than half of their income on housing, these households were found to spend 70% less on health-care needs and 40% less on food than those living in affordable housing.
- The number of very low-income renters who qualified for subsidies increased from 14.7 million to 18.5 million between 2003 and 2013, according to the Department of Housing and Urban Development. However, in 2013, just 26% of eligible very low-income households received rental assistance.
- The nation’s total homelessness rate decreased 11% between 2007 and 2014, but increased in higher-cost areas. Nearly 600,000 people were homeless as of last year, more than a third who were families.