July 11, 2019
There has been a great deal written about the housing affordability crisis. Whether the topic focuses on rentals or ownership, housing costs are fast outstripping the ability of many to pay.
Freddie Mac Multifamily’s recent report, “Diminishing Affordability — Inescapable” has put metrics to the problem. Specifically:
- The percentage of multifamily rental units that are affordable to families earning 50% of area median income (AMI) fell from 55.7% in 2010 to 39.1% in 2017
- During the same period, 85.9% of metros experienced a loss of affordable units
- Fastest-growing metros lost their affordable rental stock at a rate roughly twice as high as the national average
- One driving cause of shrinking affordability is that rent growth has outstripped income growth
The chart below shows a decline in percentage of units affordable to very low income (VLI) households. Meanwhile, the percentage of units unaffordable to households earning at or below 100% AMI has increased.
The following chart presented what Freddie Mac called an “ominous picture of shrinking affordability” among the nation’s fastest-growing metros. The “VLI Change,” below, refers to absolute change in the percentage of units affordable to very low-income households. Meanwhile, “VLI% change” focuses to the percentage drop of the same rate.
The report concluded a few things. First, higher population growth tends to lead to a higher loss of affordable units. And second, fast-growing metros tend to experience a decrease in affordable housing at higher rates, with the problem being a consequence of diminishing supply of affordable housing, nationwide. “Although rapid population growth is generally an economic blessing,” the Freddie Mac report concluded, “the adverse effect that it can have on an area’s affordable housing stock is not trivial, and must not be overlooked.”
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