2017 National Rent Study
by David Levine, President/CEO
Harvard’s Joint Center for Housing Studies Harvard released its 2017 America’s Rental Housing report. (Its annual rental housing is a vital barometer of the state of the rental market). For this year, the report points to the slowing in the number of renter households.
But that appears to be a feature of the higher-income rental market. For the lower-income rental market, where some 21 million households are rent burdened (paying more than 30 percent of income toward housing costs), the demand is still strong and the supply is not keeping pace with it.
For example, according to the report, new affordable housing units are not being produced in enough numbers. The share of new rental units at $1,100/month and above grew from 37 to 61 percent from 2001 to 2016; while, at the same time, the share of units at $850/month and below has shrunk to under 20 percent.
The high costs of construction are driving this lack of production of new affordable rental units. Tight land use regulations, limits on higher-density building, and higher material and labor costs have made affordable rental units infeasible. Affordable rental units are mainly found in smaller multifamily buildings under three stories, where building costs have increased 8 percent in just the last year.
These costs are highest where affordable rental units are most demanded, which is in centrally located communities and urban core areas. Moreover, the increasing demand for affordable rental units has made “once-affordable units…out of reach for lower-income households.” These existing units — many of them naturally occurring affordable rentals resulting from aging and obsolescence — require greater maintenance and upkeep.
They do not “pencil out” in any financial way for their owners. Given the lack of new construction of affordable units, the report makes this clarion call: “Preserving the existing stock of privately owned affordable units is increasingly urgent.”