10.8.2013 | Harvard University’s Joint Center for Housing declared the housing industry’s recovery from the Great Recession began in 2012, “heralded by rising home prices and further rental market tightening.”
That may be so for the housing industry, but what about the people who inhabit, or are assumed to inhabit all those homes? After all, as the MacArthur Foundation noted, travel and tourism workers are among those in service industries struggling to find affordable housing in metropolitan areas throughout the United States.
To its credit, Harvard explores this. The executive summary of its study shows good news and bad. First, the good news:
“As of December 2011, 81 of the 100 metropolitan areas tracked by CoreLogic still reported year-over-year price declines. Just one year later, prices were on the upswing in 87 of these markets. The momentum continued into 2013, lifting the number of markets with rising prices to 94. On the strength of these gains, the national median house price was up 11.6 percent in March 2013 from a year earlier.”
Moreover, a sustained recovery in housing prices will help millions of middle-class homeowners by providing enough financial security that they can now spend money on big-ticket items, or be in a better position to sell. It could also encourage Millennials, who so far have remained renters to become owners. (Although whether they will—and if they do, where they will buy—are other questions, which we’ve covered here.)
The bad news: The number of households with severe housing cost burdens has set a new record; the recent increase in the share with housing cost burdens is confined to renters (which may be because so many of those foreclosed on are now renting). And while the number of low-income households that rent grew, the number of affordable units shrank.
“As a result, the gap between the supply of affordable housing and demand from extremely low-income renters doubled in just four years to 5.3 million units. Given that the typical unit completed in 2012 rented for $1,100 per month, new housing development is unlikely to alleviate this affordability gap.”
The problem may even be worse, if one takes into account the Center for Neighborhood Technology’s Housing + Transportation Index, which I believe is a more accurate measurement of how big a bite basic needs take from household income. (It also underscores the critical need for strong public transit, but that’s another post.)
Naturally, when a family devotes up to half of its monthly income to housing (or housing and transportation) costs (considered a “severe burden” by housing experts), it must cut back on other things. For children especially, this can be damaging. Parents may be unable to invest in early childhood education opportunities, or enrichment items such as books and trips to a museum that help prepare kids to do well in school. It can lead to living in substandard housing, which is hard on kids’ social and emotional development.
It can also lead to moving frequently, and high mobility in schools is hard on teachers and kids; the disruption sets kids back significantly. Often affordable housing is in poorer neighborhoods, which can mean lower-performing schools, higher crime and conflict, and poorer health—all of which can affect upward mobility.
The Preservation Compact, active in Cook County, Illinois, advocates for preserving rental options so people can avoid these problems. Preserving a rental unit, after all, is much more cost-effective—and ultimately affordable—than building new rental housing. Their recent conference, “Rental Housing in the New Economy,” offers some ideas for how to build up the affordable housing stock.
Speaking at the conference, Richard Florida of the “Creative Class” movement and Atlantic Cities founder worried that the draw of cities for those “creatives” he has spent more than a decade documenting, is creating “class clustering on steroids.”
“[The rising popularity of cities] puts enormous pressure on affordable housing,” he said. “Rental housing is going to be an increasingly important part of our social bargain.”
In Chicago, where he was speaking, hip neighborhoods and the downtown area have added thousands of new rental units (decidedly not affordable to many) while poorer neighborhoods have lost rentals.
But a word of caution: we must be careful not to re-concentrate poverty with housing policy. As Chris Brenner and BRR’s Manuel Pastor write in their book, “Just Growth”:
“The much-needed infusion of resources for affordable rental housing has the potential to reduce hardship and expand opportunities for low-income families, but not if all the funds are used to build or preserve housing in high-poverty and distressed neighborhoods. Instead, rental support must be targeted in opportunity-rich neighborhoods where affordable rental options are scarce, and in gentrifying neighborhoods where lower-income renters are being squeezed out.”
Metro areas need housing that working families—the housekeepers, wait staff, auto mechanics, front desk managers, and flight attendants who serve the tourists and creative class—can afford, in neighborhoods where they want to live, if metro areas are to remain vibrant, equitable places to live.
- Does homeownership make cities more resilient?
- The Bipartisan Policy Center’s proposed national housing policy reform
- The Great Recession’s effects on young adults’ housing habits
Photo / Joanna Poe