The Joint Center for Housing Studies of Harvard University released the 2014 State of the Nation’s Housing report on June 26 during a live webcast with a panel of housing experts. The panelists highlighted the report’s findings on housing affordability challenges and emphasized the urgent need for more affordable housing.
The rental market tightened in 2013 due to a continued increase in demand for rental housing. The number of renter households rose by more than half a million in 2013, with households earning less than $15,000 annually making up 25% of that growth, and households with income between $15,000 and $29,999 making up 30% of the growth. As the number of renters rose in 2013, the rental housing vacancy rate fell to 8.3%, the lowest since 2000. These trends are coupled with rising rents and declining incomes. The median rent paid increased by 4% between 2001 and 2012, while median renter incomes were 13% lower in 2012 than in 2001.
In 2012, these factors led to 20.6 million renter households experiencing housing cost-burden, paying more than 30% of their income for housing. This was the sixth consecutive year that the number of housing cost-burdened renters rose. Furthermore, 27% of renter households were severely cost-burdened, spending more than 50% of their income on housing. Lower income households are most likely to face a housing cost burden. Of those with income below $15,000 a year, four out of five were cost-burdened and 71% faced severe housing cost burden, up from 66% in 2002. Severely cost-burdened households must often make trade-offs to pay for housing. In 2012, severely cost-burdened households, the group that ranked lowest in total overall household expenditures, spent 39% less on food each month and 65% less on healthcare than similar households living in housing that was affordable to them.
According to the report, there is a continued lack of housing both affordable and available to lower income renters. In 2012, there were only 3.3 million affordable and available units for 11.5 million extremely low income households (those with income below 30% of the area median income), or just 29 affordable and available units for every 100 extremely low income renter households.
Most new multifamily construction has been creating units at the upper end of the rent distribution and therefore out of reach for low income households. The median monthly gross rent for units built from 2008-2011 was $1,052, with only 34% renting for less than $800 per month. At the same time, many low-rent units are being demolished. The loss rate for all rental units in 2011 was 5.6%, but for units renting for less than $400 the loss rate was 12.8%.
While the need for affordable housing is rising, government programs continue to struggle to meet demand. From 2007 to 2011, the number of households eligible for federal assistance rose by 3.4 million, but federal resources declined. For example, sequestration in FY13 resulted in 42,000 fewer low income households receiving vouchers.
Demographic changes are also expected to play a major role in shifting housing needs. The millennial generation is facing a set of economic challenges, delaying household formation and homeownership. This age group will drive demand for housing over the coming decades. In addition, the aging baby-boom population will lift the over-65 population to 10.7 million households, requiring greater options for in-home care, assisted living, home retrofitting, and transportation.
The 2014 State of the Nation’s Housing report is at: http://bit.ly/1kKwpkW