CORRESPONDENCE - WS-1 OPPOSITION

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2 After a Decade of Expansion, the Pace of Growth in Renter Households Has Slowed Millions 1.6 1.4 7.2 1.0 0.8 0.6 04 02 0.0 -0.2 -0.4 Millions 2004 2005 2006 2007 2008 2009 2010 2011 2U12 2013 2014 2015 2016 2017 'al ChaUse in Renter Lyres holds (Loft scale) — Number of Rentor Households (Right salol Now. Utinnete in -2017 is the evam9e of second -and third quarter data. Soume, JCHS tahulotions of US Census Bureau, Rausing Vacancy Survey. In addition, renters are now much older on average than a decade ago, reflecting both an increase in middle-aged households that rent and the overall aging of the population. The median age of renters thus increased from 38 in 2006 to 40 in 2016. Although roughly a third of renters are under age 35, nearly as many are now age 50 and over. With renting more common across age and income groups, renter households are more representative of the broad cross-section of US families. Most notably, families with children now make up a larger share of households that rent (33 percent) than own (30 percent). Married couples without children, in contrast, make up 37 percent of homeowners and just 12 percent of renter households. Single per- sons are still the most common renter household type, accounting for fully 37 percent of all renter households. While whites accounted for a large share of the overall growth in renters, renter households are quite racially and ethnically diverse. Unlike homeowners, who are overwhelmingly white, renter house- holds include a large share (47 percent) of minorities. At the same time, one in five renter households is foreign bom, reflecting the importance of rental housing to new immigrants. EVOLUTION OF THE RENTAL SUPPLY Soaring demand sparked a sharp expansion of the rental stock over the past decade. Initially, most of the additions to supply came from conversions of formerly owner -occupied units, particularly single- family homes, which provided housing for the increasing number of families with children in the rental market. Between 2006 and 2016, the number of single-family homes available for rent increased by 44 42 40 38 36 34 32 30 28 26 24 nearly 4 million, lifting the total to 18.2 million. While single-family homes have always accounted for a large share of rental housing, they now make up 39 percent of the stock. More recently, though, growth in the single-family supply has slowed. The American Community Survey shows that the number of single-family rentals (including detached, attached, and mobile homes) increased by only 74,000 units between 2015 and 2016, substantially below the 400,000 annual increase averaged in 2005- 2015. With this slowdown in single-family conversions and a boom in multifamily construction, new multifamily units have come to account for a growing share of new rentals. Indeed, completions of new multifamily units intended for rent averaged 300,000 annually over the last two years, their highest level since the end of the 1980s. Much of this new housing is targeted to higher -income households and located primarily in high-rise buildings in downtown neigh- borhoods. Given that construction and land costs are particularly high in these locations, the median asking rent for new apartments increased by 27 percent between 2011 and 2016 in real terms, to $1,480. Using the 30 -percent -of -income standard for affordability, households would need an income of at least $59,000 to afford these new units, well above the median renter income of $37,300. At the same time, the supply of moderate- and lower-cost units has. increased only modestly (Figure 2). While the share of new units rent- ing for at least $1,100 jumped from 37 percent in 2001 to 65 percent in 2016, the share renting for under $850 shrank from just over two- fifths to under one-fifth. The lack of new, more affordable rentals is in part a consequence of sharply rising construction costs, includ-