Latest “State of the Nation’s Housing” Report Is Released
The Joint Center for Housing Studies of Harvard University recently released its annual report, State of the Nation’s Housing 2023. The report combines analyses of data from the U.S. Census Bureau, HUD, Freddie Mac, the National Association of Realtors, RealPage, and other sources to provide a comprehensive snapshot of the country’s housing supply and demand.
Rent growth. According to the report, although the rate of growth in rent prices has slowed in early 2023, rents are still increasing and remain well above pre-pandemic levels. As of March 2023, apartment prices were 131 percent higher than they were 10 years prior and rents in professionally managed units jumped by nearly 24 percent between early 2020 and early 2023 alone. The report also highlights that only 55 affordable units are available for every 100 renter households who earn less than 50 percent of area median income.
Cost burdens. The report also finds that housing cost burdens have reached record levels. Rising housing costs, coupled with pandemic-era income losses, produced the most significant drop in housing affordability in years, as seen in the most recent Census data. Between 2019 and 2021, the number of cost-burdened renters, defined as those spending more than 30 percent of their income on housing, increased by 1.2 million to a record 21.6 million households. Among these, 11.6 million were severely cost burdened, spending more than 50 percent of their income on housing. Although the share of renter households with cost burdens had been steadily declining in the past decade, the trend reversed during the pandemic.
Shrinking supply. Low-income renters face additional housing security threats due to a limited and rapidly shrinking supply of affordable rental housing. According to the report, the rental housing market lost 1.2 million low-cost units between 2019 and 2021, impacting nearly every state. And during this period, nearly three-quarters of states lost more than 10 percent of rental units that had contract rents less than $600. This loss was particularly felt in southern states that recently experienced rapid population growth. The report warns that the stock of low-cost rental units is likely to be further impacted in the coming years by natural disasters and a lack of investment to repair aging units.
Recommendations. The report advises federal, state, and local officials to implement policies that help alleviate strain on the housing market. These policies can include increasing rental housing subsidies to make available units more affordable to low-income households and passing zoning reforms to lower the development cost of new affordable units.
With regard to the LIHTC program, the report points out that the program has supported more than 3.6 million low-income units since 1986. It also highlights the fact that LIHTC properties typically have a 30-year affordability period, after which the unit can flip to market rate. But because property owners can opt to convert units to market rate after 15 years through the qualified contract process, an estimated 10,000 low-income units per year are lost prematurely.