MCLEAN, VA—A combination of increasing rents and stagnant household incomes has caused the already-acute shortfall of affordable rental units to widen considerably over the past six years, according to a new report by Freddie Mac. Furthermore, the problem is expected to worsen problem if nothing is done to increase the supply of affordable units commensurate with the increasing demand from lower-income renters.
The GSE dug into this issue using a new approach to analyzing affordability. It looked at loans that Freddie Mac Multifamily financed multiple times between 2010 and 2016. It found that at the first financing, 11.2% of the total number of underlying rental units across the United States were categorized as affordable to very low-income (VLI) households with incomes no greater than 50% of area median income. At the second financing, rents had increased so significantly that just 4.3% of the same units were categorized as affordable to VLI households — amounting to more than a 60% reduction in the number of units deemed affordable to VLI households.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
