The number of apartments deemed affordable for very low-income families across the United States fell by more than 60 percent between 2010 and 2016, according to a new report by Freddie Mac.
The report by the government-backed mortgage financier is the first to compare rent increases in specific units over time. It examined loans that the corporation had financed twice between 2010 and 2016, allowing a comparison of the exact same rental units and how their affordability changed.
At first financing, 11 percent of nearly 100,000 rental units nationwide were deemed affordable for very low-income households. By the second financing, when the units were refinanced or sold, rents had increased so much that just 4 percent of the same units were categorized as affordable.
“We have a rapidly diminishing supply of affordable housing, with rent growth outstripping income growth in most major metro areas,” said David Brickman, executive vice president and head of Freddie Mac Multifamily. “This doesn’t just reflect a change in the housing stock.”Rather, he said, affordable housing without a government subsidy is becoming extinct. More renters flooded the market after people lost their homes in the housing crisis. The apartment vacancy rate was 8 percent in 2009, compared to 4 percent in 2017. That trend, coupled with a stagnant supply of apartments, resulted in increased rents.
Freddie Mac buys mortgage loans from a network of primary market lenders, and issues mortgage-related securities. This helps lenders provide loans to developers and owners for the purchase, refinancing, rehabilitation and construction of multifamily properties.
The study defined “very low income” as households making less than 50 percent of the area median income, and “affordable” rent as costing less than 30 percent of household income.
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