Report Examines the State of America’s Rental Housing
May 16, 2011
by Luke Lindberg
Currently, more than 50 percent of American renters face moderate or severe cost burden on their rental properties, and that number is increasing. What that means is roughly 20 million people are spending 30 percent or more of their income on rent and utilities. Although low-income Americans are certainly suffering the most, “(the) affordability problems are marching up the income scale,” according to a study by Eric S. Belsky, managing director of Harvard University’s Joint Center for Housing Studies (JCHS).
The JCHS study’s report, “America’s Rental Housing: Meeting Challenges, Building on Opportunities,” presents the current state of the rental housing sector and highlights the vital role the rental market plays in providing affordable housing.
According to the report, the number of low-cost rentals is declining. To be exact, more than 700,000 federally subsidized rentals have left the subsidized housing stock since the mid 1990s. Some of these residences have been demolished, but others have switched to market-rate rentals by decision of the owner.
At a time when the total rental stock has decreased by 6.3 percent over the last decade, this has caused a significant shortage in affordable housing. Meanwhile, most new construction sites are being built for the upper end of the market.
The focus remains on retention and preservation of existing affordable units rather than construction of new ones. Developers face significant challenges in erecting profit-yielding affordable homes because many older programs that enabled them to do so in the mid 1990s are no longer being funded.
Each year the federal government spends more than $40 billion and forgoes about $10 billion more in tax revenues on housing and community development assistance. Vouchers and the Low-Income Housing Tax Credit (LIHTC) program make up the bulk of those expenditures. However, the study found that unless combined with other subsidies, LIHTC units provide shallower rent subsidy than other assistance programs.
The report recommends that cities nullify land-use and building regulations to allow expansion of modest, high-density rental developments. Rather than tightening restrictions on subdivision standards, minimum unit sizes and multifamily dwellings, cities can help alleviate the high cost of rental units by enacting inclusionary zoning relief programs which require the integration of affordable housing in market-rate developments.
These changes can help increase supply and thus have a lasting effect on the stock of new, affordable rental housing.
The full report, “America’s Rental Housing: Meeting Challenges, Building on Opportunities,” can be accessed on the Joint Center for Housing Studies website at www.jchs.harvard.edu.
Details: For more information about NLC’s Center for Research and Innovation’s work on housing, contact James Brooks at brooks@nlc.org.