A new report by HUD analyzing changes in the U.S. rental market from 2005 to 2007 finds that the number of rental units affordable to the lowest income households significantly declined during that time period.
Over the two-year period, the net number of units that renters with incomes at or below 50% of the local area median income (AMI) could afford declined by a range of 1.5 million to 2.0 million units. The report attributed three-quarters of the loss to units becoming less affordable over the two-year span. The remainder of the loss, representing approximately 500,000 units, was attributed to units being transitioned into owner-occupied, seasonal, or non-residential units, or being demolished.
At the same time, the report found that the number of units affordable to renters with incomes greater than 50% and up to 80% of the local AMI increased by a net range of 1.2 million to 1.6 million units. The majority of the gain was due to units moving into and out of other affordability categories.
The report stated that filtering, the notion that as units age their rents tend to decline in relative terms, was modest during the time period. Among the highest-priced units, a slightly higher proportion became more affordable than less affordable. Among the lowest priced units, the reverse was true, with more units becoming less affordable. This may have been the consequence of efforts to upgrade older, less desirable units to make them more competitive, or of gentrification activity in older neighborhoods.
Overall, the rental housing stock – both renter-occupied units and vacant rental units – grew by approximately 1.3 million units between 2005 and 2007. There were a total of 39.8 million rental units in 2007.
The biennial report, the Components of Inventory Change (CINCH), is based on the biennial American Housing Survey, which tracks many of the same housing units over time. This comparison allows researchers to see changes in both the characteristics of housing units and the units’ occupants. CINCH is the only report to explicitly detail where additions to the nation’s housing stock come from and the characteristics and fate of the units that were lost.
The CINCH report is available at: http://www.huduser.org/datasets/cinch/cinch07/RentalMrkt05-07.pdf