Few Gains in U.S. Housing Affordability

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Research shows last decade’s housing affordability problems improved little. Report suggests some affordability problems may be more related to income than housing issues.
Few Gains in U.S. Housing Affordability

RISMEDIA, Aug. 27 — The U.S. is among the best-housed nations in the world, but affordable housing remains a problem for low-income Americans in many, if not most, housing markets in the country, according to a new research report by the National Multi Housing Council (NMHC).

“Housing Affordability: The Apartment Universe” also finds that despite the economic expansion of the late 1990s, there has been little change in our affordability problems since 1989, and it suggests that, in some cases, our affordability problems may be “income problems” and not “housing problems.”

“While the shortage of affordable housing is well-documented, this is the first research to focus specifically on the affordability problems of the nation’s 15 million apartment renters,” says NMHC Chief Economist Mark Obrinsky. “Prior research has generally treated owners and renters together, but apartments are distinct from owner-occupied housing and even from other forms of rental housing. In order to fully understand our affordable housing challenges, we need to understand the apartment component.”

The report finds that 26% of all apartment renters (3.8 million) received some sort of federal housing assistance in 1999. Of the 74% of unassisted apartment renters, 23% (2.3 million) were “moderately rent burdened” and 19% (1.9 million) were “severely rent burdened.”

A household is considered “severely burdened” if it pays more than 50% of its income on rent plus utilities. It is considered “moderately burdened” if it pays 30-50% of its income on rent plus utilities.

Not surprisingly, the report found the most severe rent burdens at the lower end of the income distribution. Fully 90% of renters with severe rent burdens are very-low income households, and more than half of all apartment renters with very-low incomes are severely rent burdened.

Moderate rent burdens are more widespread, however. Forty-seven percent of moderately burdened households have very-low incomes, but another 39% are low-income and 11% are moderate-income.

Examining how the nation’s record economic expansion of the 1990s changed the affordability picture, the study finds little difference in affordability between 1991 and 1997 but some improvement from 1997 to 1999. Even so, the magnitude of the changes over the entire period from 1989-1999 was quite small. Furthermore, the number of low-income and moderate-income renters with severe burdens in 1999 was higher than in previous years, suggesting that in some areas, at least, severe housing burdens are becoming a problem for more than just very low-income households.

Very-low income households are those earning less than 50% of HUD-adjusted area median family income (HAMFI); low-income households are those earning between 50% and 80% of HAMFI; moderate-income households are those earning between 80% and 120% of HAMFI and higher-income households are those earning 120% or more of HAMFI.

“The seeming intransigence of the affordable housing problem, even during prosperous economic times, raises an interesting public policy question of whether our affordability problem is caused by a lack of housing supply, or by a lack of income,” Obrinsky says. “More research is needed to fully understand the nature of our affordable housing problems.”

“One thing is for certain,” NMHC Senior Vice President Clarine Nardi Riddle says, “this research makes it clear that we cannot rely on economic growth and prosperity alone to solve the problem. It is time to make housing a national priority and to muster the political will at all levels of government to address three key issues if we want to reduce housing costs. They are public funding, regulatory reform, and ‘not-in-my-backyard’ opposition to much-needed new housing development communities. NMHC and its joint legislative partner, the National Apartment Association, look forward to working with Congress as it considers recent recommendations from the Congressionally-chartered Millennial Housing Commission. We are confident we can find ways to unleash the expertise of the private sector to assist in solving this national problem.”

The full report is available at www.nmhc.org/Content/ ServeContent.cfm?ContentItemID=2591.

Based in Washington, DC, NMHC is a national association representing the interests of the larger and most prominent apartment firms in the U.S. NMHC’s members are the principal officers of firms engaged in all aspects of the apartment industry, including ownership, development, management and financing. One-third of Americans rent their housing, and 15% of all U.S. households live in apartment homes.

For more information, contact NMHC at (202) 974-2300, e-mail info@nmhc.org, or visit www.nmhc.org.

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