Harvard Joint Center for Housing Studies Releases State of the Nation’s Housing 2016

The Joint Center for Housing Studies of Harvard University released The State of the Nation’s Housing 2016 on June 22. This year’s report highlights the changing demographics driving the demand for housing, the continuing decline in homeownership, the increasing tightness of the rental market, and the role of federal policy in addressing these issues. The report emphasizes the struggles of the nation’s lowest income renters.

According to the report, the homeownership rate declined to 63.7% in 2015, while the share of households who rent grew to 36.3% - the highest level since the 1960s. Between 2005 and 2015, the number of renter households grew by 9 million, the largest growth ever recorded over a ten-year period. Rental vacancy rates fell to 7.1%, as production has failed to keep pace with demand. As a result, rents for primary residences increased 3.6% in nominal terms in 2015.  

The report indicates that an increased supply of new rental units in the production pipeline “may help ease these conditions, although most new units are intended for the upper end of the market.” For the lower end of the market, the supply is largely driven by the downward filtering of older units. However, the 4.6% increase in rental units costing under $800 per month between 2003 and 2013 through filtering was more than offset by the permanent loss of 7.5% of units in a similar price range. Using NLIHC data from The GAP 2016, the report highlights the acute shortage of rental units affordable and available to the lowest income renters. In 2014, only 31 rental units were affordable and available for every 100 extremely low income (ELI) renter households, earning 30% or less of the area median income (AMI). Only 57 rental units were affordable and available for every 100 very low income (VLI) rental households, earning 50% or less of AMI.

The growing tightness in the rental market economically burdens more renters. The number of cost burdened renter households, those paying more than 30% of their income on rent and utilities, increased from 20.8 million in 2013 to 21.3 million in 2014. Moreover, 11.4 million of these households were severely cost burdened, paying more than 50% of their income on rent and utilities. The lowest income renters are the most likely to be severely cost burdened. Among renter households earning less than $15,000 annually, 72% were severely cost burdened.

Cost burdened households are forced to cut back on basic necessities and are particularly at risk of eviction. The study found that lower income households with a severe housing cost burden spent 41% less on food compared to similar households without a severe cost burden. The report also shows that more than 1 million ELI households missed at least one rental payment in 2013 and more than 900,000 were under threat of eviction in that year.     

The report points to a weak federal response to the affordable housing crisis, putting greater pressure on state and local governments to act. Localities have responded with measures ranging from housing trust funds to inclusionary zoning ordinances. The report indicates that between the 1970s and 2010 local zoning ordinances resulted in the production of 129,000 to 150,000 affordable units. However, states and localities have been unable to meet the rapidly growing need for affordable housing. The report’s authors argue it is impossible to address the nation’s housing needs without significant federal policy intervention. The report concludes by highlighting the essential role of federal affordable housing interventions such as the Housing Trust Fund and the HOME program, while also emphasizing the importance of preserving lower cost units in the private market.   

The State of the Nation’s Housing 2016 is available at http://bit.ly/28QIWIN

Diane Yentel, president and CEO of NLIHC, participated on a panel discussion for the report’s release. The archived webcast is available at http://www.jchs.harvard.edu/