The Hill, January 8, 2020 Troubling Trends In Housing for the New Decade by Richard F. Burns, President, CEO & Trustee, NHPF
During times of deepening economic inequality, housing affordability remains a valuable indicator for measuring the health, financial stability and life outcomes for Americans of all backgrounds. A lack of affordable housing
This is partially the result of new rental construction concentrated on developing higher-cost units. Consequently, the share of new apartments affordable for low- to moderate-income renter households dropped to less than 3 percent annually over the past decade. With naturally affordable rental units disappearing, those of us in the affordable housing industry are the developers trying to fill the gap in a growing market of desperate renters. And it also remains true that the only way the preservation of affordable housing is possible is through government subsidies such as the highly impactful low-income housing tax credit (LIHTC). Restrictions on nearly 1.2 million affordable units are set to expire by 2029: Since 2010, LIHTC has been responsible for the creation and preservation of around 570,000 affordable rental units. However, over the coming decade, subsidies attached to nearly 1.2 million affordable rental units are set to expire, releasing some properties from all attached affordability mandates. These subsidies are a mix of LIHTC, project-based Section 8, and a variety of other sources. According to the National Low Income Housing Coalition (NLIHC), 486,799 LIHTC units, or nearly a quarter of all current LIHTC units, will lose their affordability restrictions before the year 2030. The expiration of affordability restrictions on 1.2 million affordable units highlights a growing concern in our industry: How can we effectively combat an affordability crisis that includes: 1) a current need for 7.4 million new affordable units; 2) a growing population of cost-burdened renters; and 3) a decrease in existing affordable housing stock.
affects the most financially vulnerable among us. In 2017, there were only 37 affordable homes for every 100 extremely low-income renter households. Below are three affordability trends compiled by the Joint Center for Housing Studies (JSCHS) that we are tracking, because of what they signal for the future of the affordable housing industry and the national housing landscape: Cost-burden rates rise among middle- and higher-income households: Percentage of cost-burdened renters, or households that spend over 30 percent of their monthly income on housing, continues to rise across income levels. In 2017, 47.4 percent, or over 20 million renter households, were cost-burdened. Over the past decade, middle-income households consistently have witnessed the largest growth in this category, while lower income families continue to suffer as well. Currently, 77.6 percent of households earning $15,000 to $29,999 were cost-burdened, compared to 53.3 percent of households earning $30,000 to $44,999, and 24.8 percent of households earning $45,000 to $74,999. These data illustrate how a lack of housing affordability continues to affect households of several income levels, not just the poorest, while the percentage of severely cost-burdened families spending over 50 percent of their income on rental housing continues to increase. We concentrate our mission-driven work on providing resident-focused affordable housing for lower- income households, but our organization has come to realize that affordable housing no longer is just a low-income concern. It has become a middle-class problem as well. Supply of low-cost rentals dropped by 4 million units since 2011: Rental units available for under $800 a month have decreased in stock since 2001, with the greatest losses happening from 2011 onward. Since then, the number of units renting in this range has declined by 4 million, or 17 percent. And as recently as the period between 2016 and 2017, the stock of units renting for less than $800 a month fell by another million, or 4.9 percent. This steep decline in low-cost rental stock was even more evident in the overall reduction of total rental units. These figures underscore the lack of existing and newly constructed affordable rental options for a growing population of cost-burdened households. Richard F. Burns
There are, in fact, a number of potential solutions to the nation’s disappearing affordable rental housing.
These solutions require bold public/private partnerships that challenge prohibitive federal and municipal regulations. As a start, Congress should approve the Affordable Housing Credit Improvement Act, which would create many more affordable housing units. We also continue to encourage more institutional investors to get into affordable real estate, promoting the economic and societal benefits of the asset class. In 2020, and over the next decade, everyone in the affordable housing equation will need to produce bolder ideas, speak louder to their representatives, foster greater thought leadership, and be more proactive and bullish in their mission to preserve and create more affordable rental units. If the status quo remains, conditions will continue to worsen and we will be unprepared and ill-equipped for our future affordable housing needs.
73
Powered by FlippingBook