How much value do we place as a society on our ability to house the poor? You have to wonder after suggestions arose during the latest budget compromise about cutting the Low-Income Housing Tax Credit (LIHTC), the only major national program remaining that funds affordable rental development.
In fact, there couldn’t be a worse time to eliminate this meaningful, jobs-creating support. Nearly 100 million Americans pay rent these days, and all signs point to that figure growing in the months and years ahead. People are losing their homes in record numbers, and many that have been foreclosed on have yet to move into rental housing. Analysts expect renters to account for 36 percent of U.S. households by 2015, up from 32.8 percent in 2004, and every percentage-point increase amounts to about 1.3 million more households joining the renting ranks.
Here’s the problem: If current trends hold up, their rental options will dry up fast. Construction starts for multifamily residences are lagging behind demand – at a significant rate. The multifamily market will add an estimated 133,000 new residences this year, well short of the 250,000 to 300,000 needed to keep supply and demand in balance.
With multifamily developers so focused on high-end condos, low-income communities are feeling the shortage the most.
According to a report this year from the Harvard Joint Center for Housing Studies, the nation’s housing stock has subtracted more than 700,000 subsidized rentals since the mid-1990s, and adding new supply is getting harder than ever. The country now adds about 75,000 subsidized rental units every year, compared to about 300,000 in the 1970s. And what is still around is aging fast; the median age of a subsidized apartment building these days is about 38 years.
Preserving the LIHTC is one way to ensure that aging apartment buildings are replaced and that new ones are built to meet rising demand. But we also have to strengthen support for those in the federal government who are taking on this important mission.
The Department of Housing and Urban Development (HUD) has done an admirable job over the past few years in managing a three-fold increase in FHA mortgage insurance applications for new and refinanced mortgages for affordable, workforce, and senior housing developments. And still, FHA-insured multifamily housing loans remain among the best performing loans in the business, returning money back to the Treasury.
Further investments in HUD’s multifamily staff and other resources would allow them to do even more to close the affordable rental housing supply gap, while putting Americans back to work in the process. The National Multi Housing Council estimates that for every 1,000 apartment units that are built, 1,160 full-time jobs in construction and related industries are generated.
With so much of the nation’s focus on the single family market, we have lost sight of the fact that renting is the only option for many Americans. Our economy doesn’t need another housing crisis. It needs smart housing policy that gives everybody a chance at a roof over their heads, regardless if they own it or not.
Mark Dellonte is president of Love Funding, one of the nation’s leading providers of FHA multifamily and healthcare financing.
Via The Hill