Harvard’s Joint Center for Housing Studies Releases Biennial Report on Today’s Rental Market

On December 14, Harvard’s Joint Center for Housing Studies released its 2017 America’s Rental Housing report. CLPHA staff attended the event, which also featured key note remarks from HUD Deputy Secretary Pam Patenaude and U.S. Senator Maria Cantwell of Washington. According to Christopher Herbert, the Joint Center’s managing director, this year’s report “paints a complicated picture of the rental market. While we are seeing the record growth in renters slow down, there are alarming trends that suggest a growing inability to supply housing that is available for middle- and working-class renters, let alone those with very low incomes.” Specifically, there are:

·         Signs of a slowdown. Overall, rents increased quite slowly in most markets in the U.S. New multifamily units reached a plateau in 2016 and have fallen by 9% through October 2017.

·         Changes in the nature of renters. While renters are disproportionately younger and lower-income, growing shares of renters are older and higher-income. The median age of renters increased from 38 in 2006 to 40 in 2016. Although roughly a third of renters are under age 35, nearly as many are now age 50 and over.

·         Changes in the nature of new units. Additions to the new stock are increasingly concentrated at the high end of the market. The share of new units renting for $1,500 per month or more soared from 15% in 2001 to 40% in 2016. Conversely, the share of new units in the lower end of the market (below $850 per month) fell from 42% of the stock to 18%. In addition, affordability continues to be a major problem. Nearly half of all renter households are cost-burdened, paying more than 50% of their income for housing.

·         Reductions in the amount of very low-income households who receive rental assistance. The share of very low-income households receiving rental assistance has declined from 28% in 2001 to 25% in 2015. As the report notes, much of the subsidized rental stock is at risk of loss due to lack of maintenance or expiring affordability periods. Over the next decade, nearly 500,000 LIHTC units, along with 650,000 other subsidized rentals, will come to an end of their required affordability periods.

In her response to the report, Deputy Secretary Patenaude thanked the Joint Center for their comprehensive report and their meticulous data analysis. She noted that seeing the complete renter landscape and demographic shifts helped her to understand the set of issues confronting housers. She was surprised by how little the slowdown in the luxury market added to the supply of middle- and lower-income units. In addressing the question of what HUD can do about the diminishing number of rental units for lower-income families, Patenaude said that it is not the federal government’s sole responsibility, that the problem required an “all hands on deck” response and that state and local elected officials need to take ownership of the problem to ensure that workers had places to live near their jobs.

Patenaude said that HUD should educate state and local governments about the need to step up to provide units of affordable housing and they need to educate congress on the importance of the Low-Income Housing Tax Credit. HUD is also looking at reducing regulatory burdens, finding ways to preserve units, including the Rental Assistance Demonstration Program (RAD), and researching rent reform. She asserted that HUD programs do not do enough to encourage self-sufficiency.

Remarks by Sen. Cantwell underscored the importance of expanding the base of affordable housing units. Cantwell, who introduced The Affordable Housing Credit Improvement Act (S. 548) with U.S. Senator Orrin Hatch of Utah, said that the Joint Center report could not have come at a better time. She asserted that we are now in an affordable housing crisis, that major cities across the country need more affordable housing units, and that the crisis is so stark in Seattle that at least once a week the major newspaper features an article on the critical need for more affordable units. According to Cantwell, the problem is one of limited supply and increasing demand. Her bill would increase the housing credit allocation by 50%, which she estimates will translate into an additional 400,000 affordable housing units. Cantwell also said that we should not lose sight of the fact that housing is stimulative for the economy and that over the last few years housing has declined as a percentage of GDP. She also urged the audience to make the critical connection between housing and improved health outcomes.