CORRESPONDENCE - WS-1 OPPOSITION

Home Browse Search

After a decade of broad-based growth, renter households are increasingly likely to have higher incomes, be older, and have children. The market has responded to this shift in demand with an expanded supply of high-end apartments and single-family homes, but with little new housing affordable to low- and moderate -income renters. As a result, part of the new normal emerging in the rental market is that nearly half of renter households are cost burdened. Addressing this affordability challenge thus requires not only the expansion of subsidies for the nation's lowest -income households, but also the fostering of private development of moderately priced housing. RENTER HOUSEHOLD GROWTH IN A SLOWDOWN Rental housing markets have seen an unprecedented run-up in demand over the last decade, with growth in renter housholds aver- aging just under one million annually since 2010. But the surge in demand now appears to be ending, with the three major government surveys reporting a sharp slowdown in renter household growth to the 136,000-625,000 range in 2016. Early indications for 2017 sug- gest a further deceleration, with one survey showing essentially no increase and another posting a substantial decline (Figure 11. While these estimates are notoriously volatile from year to year, the con- sistent trend across surveys provides some confidence that growth in renter households is indeed cooling. The recent wave in renter household growth reflects in part the sharp drop in the national homeownership rate after 2004. While many fac- tors drove that decline, the massive wave of foreclosures after the hous- ing crash was a key contributor, This drag on homeownership has now eased. And with the economy near full employment and incomes on the rise, more households that want to buy homes are able to do so. Still, the housing crisis no doubt generated renewed appreciation for the advantages of renting that will help sustain demand in the years ahead. Indeed, even as the homeownership rate stabilizes, renters are still likely to account for slightly more than a third of household growth. According to Joint Center projections, the number of renter households will increase by nearly 500,000 annually over the ten years from 2015 to 2025—a still robust pace by historical standards. The sweeping changes in the nature of rental demand, however, seem likely to persist, in particular, renting now appears to have greater appeal for households that could afford to buy homes if they desired. In 2006, 12 percent of households earning $100,000 or more were renters. In 2016, that share exceeded 18 percent, a cumulative increase of 2.9 million renters in this top income category. Indeed, these high-income households drove nearly 30 percent of the growth in renters over the decade. Even so, renting remains the primary housing option for those with the least means. A majority (53 per- cent) of households earning less than $35,000 rent their housing, including over 60 percent of households earning less than $15,000.