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A Long Look at Affordable Rental Housing John C. Weicher Hudson Institute Presentation to NAAHL May 4, 2012.

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Presentation on theme: "A Long Look at Affordable Rental Housing John C. Weicher Hudson Institute Presentation to NAAHL May 4, 2012."— Presentation transcript:

1 A Long Look at Affordable Rental Housing John C. Weicher Hudson Institute Presentation to NAAHL May 4, 2012

2 What We’re Doing Looking at buildings, not at people – was it affordable, not who was living in it Looking at the same housing units, every two years, – a VERY long run  Data source is the American Housing Survey Between the two worst postwar recessions: & Virtually no HUD-assisted projects or low-rent public housing built after 1983

3 Looking Backwards & Forwards Where did today’s affordable rental housing stock come from? What happened to the affordable rental stock of 20 years ago?

4 The Meaning of “Affordable” “Affordable” is NOT a synonym or euphemism for “assisted” Most affordable rental units AREN’T assisted  17.6.million affordable rental units in 2005  4.9 million assisted by HUD or USDA  6.2 million unassisted, occupied by low-income households

5 The Meaning of “Affordable” Household with income at half the local median (“very low income”) could pay the rent (including utilities) by spending no more than 30% of its income Example: Chicago metro area in 2005  Median Household Income:$69,700  Half of Median:$34,850  30% of Monthly Income:$871  Adjusted for Unit Size – 2 BR:$784

6 The U.S. Housing Stock: housing stock 96 million units Removals, million  Demolitions - 7 million  Other removals - 5 million (houses/mobile homes moved from site, structural changes) Additions, million  New construction+33 million  Other additions + 6 million (rebuilding, conversion from nonresidential uses) 2005 housing stock123 million

7 The Affordable Rental Stock: 1985 and Affordable Rental Stock  13.5 million units  14.1% of U.S. housing stock 2005 Affordable Rental Stock  17.6 million units  14.3% of U.S. housing stock “Affordable” includes assisted units in all programs – public housing, Section 8, voucher, LIHTC – if they meet affordability criterion

8 Accounting for the Change Net increase of 4.1 million units consists of:  0.5 million from additions (& removals) to stock  3.7 million from changes in status of 1985 stock 3.0 million – rental units becoming affordable 0.7 million – owner-occupied units becoming rental Net increase from higher rent units becoming affordable is six times as important as net new construction

9 What Happened to the 1985 Affordable Rental Stock by 2005? 12% no longer affordable (1.6 million units) 21% no longer rental (2.8 million units) 19 % no longer housing (2.6 million units) 46% were affordable rental in both 1985 and 2005 (6.1 million units)

10 Where did the 2005 Affordable Rental Stock come from? 26% were rental but not affordable in 1985 (4.6 million units) 20% were not rental (3.4 million units) 18% were not in the housing stock in 1985 (3.1 million units) 35% were rental and affordable in both years (6.1 million units)

11 Stability as well as Change 6.1 million units were affordable rental in both 1985 and 2005 – 46% of 1985 affordable rental stock 2.9 million were always affordable, in every survey – 22% of 1985 affordable stock  We think 2.2 million of them were assisted, in projects 3.2 million started and ended as affordable, but sometimes were in other categories  1.2 million were sometimes moderate rent (affordable at 80% of local median income)  Of these, 500,000 were moderate only once (“blips”)  Another 600,000 were blips to another status Also, 0.9 million units added to stock after 1985 were always affordable

12 Affordable Rental Housing: Private vs. Assisted (2005) AffordableProjects * Voucher Single-family homes32% 2% 35% 2-4 units22%15%24% 5-9 units15%16%15% units20%20%19% 50+ units11%41% 7% In central cities46%59% 47% In suburbs32%28% 39% Outside MSAs22%13% 14% * Public housing, Section 8, other HUD-subsidized projects

13 The Rental Housing Inventory TotalAffordable Small Buildings 70%69% SF Houses 37%32% 2-4 Units 20%22% 5-9 Units 13%15% Large Buildings 30%31% Units 21%20% 50+ Units 9%11%

14 Who Owns Rental Housing? SF HousesIndividuals – 83% 2-4 UnitsIndividuals – 85% 5-49 UnitsIndividuals – 63% Large: 50+ UnitsLimited Partnership - 41% ALLIndividuals – 70%

15 The Government Role The government entities specialize in the “top 10%” – the biggest projects GSEs have concentrated on 50+ unit buildings  So much so, that in 2000 HUD gave them double credit for buying loans on 5-49 unit buildings FHA: typical MF project has 120 units MF lending is very staff-intensive - FHA in 2004: SF/MF portfolio split: 75/25 SF/MF staff split33/67

16 All Housing Markets Are Local (What’s Affordable Rental, Where?) New York50% in buildings with 50+ units Washington50% in buildings with 10+ units Chicago50% in buildings with 2-9 units Detroit50% in buildings with 1-4 units Philadelphia50% in row houses & 2-4 units Los AngelesNo dominant building size HoustonNo dominant building size (Metropolitan Areas in 2005)

17 Plans for Future Analysis Extend to 2007 & 2009 – with luck, 2011  What happened in the downturn? Assisted units – matching AHS & HUD data  AHS data based on household response Not answered consistently Sometimes not answered at all Not reported for vacant units after 1997  HUD: data by program and address – both HUD programs and LIHTC


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