(This is the second in a two-part series reporting on a recent study by Harvard University’s Joint Center on Housing Studies called The State of the Nation’s Housing. Part 1 appeared yesterday in Fox and Hounds.)
Every year about this time the Joint Center for Housing Studies of Harvard University publishes its evaluation of the nation’s housing condition. It’s been doing this for 30 years. There is so much packed into the report that I chopped this review in two. My initial review appears as Part 1 and dealt with the general outlook for the nation’s housing in 2018. Part 2, presented below, digs deeper into some of the affordability issues we as a nation are experiencing.
Picking up where the Part 1 review of this report leaves off, a nationwide shortage of inventory is putting the squeeze on affordability. At a minimum, the production shortage has fallen especially heavily on units affordable to lower-income households. The study found:
- Between 2006 and 2016, the total number of occupied rentals was up by 21 percent, but the number renting for under $650 fell by five percent.
- Over this same period, lower-cost rental stock shrank by more than 10 percent in 153 of the nation’s 381 metro areas and by more than 20 percent in 89 metro areas.
- These losses indicate that older rental units have not filtered down to more affordable levels in many parts of the country.
- But, demand for new multifamily (rental) housing still remains strong.
The study showed the problem of affordability is not getting any better. Indeed, the cost-burdened share of renters – those households paying more than 30 percent of their gross incomes for rent – doubled from 23.8 percent in the 1960’s to 47.5 percent in 2016. Adjusting for inflation, the median rent payment rose 61 percent for the same period while the median renter income grew only five percent.
The report then turns to a fact that we in California have been living with for decades: The only way to reach the truly hard to house requires participation from government. Says the report, “expanding the supply of lower-income housing would help relieve the cost burdens of some households of modest means, but subsidies are the only way to close the affordability gap for the nation’s lowest-income families and individuals.” The report goes onto lament federal rental assistance has lagged far behind growth in the number of needy renters.
This fact highlights just how shameful the de-authorization of redevelopment by California politicians is for the interests of affordable housing. Redevelopment, which arguably didn’t cost state or local government a nickel to perform, meant assisted housing for the hundreds of jurisdictions that employed it. Countless redevelopment projects included a ready supply of affordable housing, matched many local lower-income housing requirements and for each economic development project the program’s efficient and ever-popular tax-increment financing produced meant a set-aside of cash for affordable housing.
Nevertheless, even with locals doing more, says the report, homes for the millions of needy households simply cannot pay enough to cover the costs of producing that housing. For these families and individuals, the report declares, there will always be a need for public subsidies and calls on the federal government to provide “a more robust response” if the nation is to make progress in meeting its pervasive affordable housing need.
Admitting that housing affordability problems have long been a part of a longer-term trend that was evident well before publication of the first State of the Nation’s Housing report it does say that the nation’s housing market is on sound footing. “With the economy near full employment, household incomes are increasing and boosting housing demand.”
But the nation, like California, still suffers from a housing-supply shortage which will only make its affordability problems persist. “Increasing supply”, says Harvard, remain the watchwords in 2018.