Joint Center for Housing Publishes 2017 State of the Nation’s Housing Report
The Joint Center for Housing Studies of Harvard University (JCHS) recently released “The State of the Nation’s Housing” report for 2017. The data shows that renters are continuing to experience affordability challenges and that construction hasn’t been keeping pace with demand for affordable housing.
The report finds a 50-year high of 37 percent of households that now rent. And despite slight improvements in the share of cost-burdened households or those spending more than 30 percent of their income on housing, housing affordability remains a challenge, particularly for renters. In 2015, 21 million renter households were cost-burdened and 11.1 million renter households were severely cost-burdened, paying more than 50 percent of their income on housing. The report shows that the incidence of cost-burden is especially prevalent among lower-income renter households. More than 70 percent of renters with incomes under $15,000, which is roughly equivalent to the income of a full-time minimum wage worker, are severely cost-burdened.
With regard to the supply of affordable housing, the report found that even after seven consecutive years of growth in construction activity, new residential construction activity in 2016 was still well below annual rates in the 1980s and 1990s. The report finds that housing completions over the past 10 years totaled just 9 million units, 4 million units less than any 10-year period going back to the 1970s. This low rate of construction activity, coupled with strong rental demand, has resulted in the nation’s rental vacancy rate dipping to 6.9 percent, the lowest level in more than three decades.
The report also addresses potential threats to the supply of affordable housing due to possible tax reform. The authors acknowledge that the LIHTC program has provided most of the funding for both new construction and preservation of affordable housing in the country for 30 years, helping to add 2.8 million rental units to the stock from 1987 through 2014, more than any other program within the same time span. Absent other changes to tax credit rules, however, the Trump administration’s proposed cuts to corporate tax rates could dampen investor demand for the credits.
In addition to potential funding cuts to the program itself, the report notes that the affordability restrictions on over half a million LIHTC units will expire over the next decade. While only 5 percent of LIHTC units typically convert to market rate at the end of their affordability periods, absent additional subsidies, units in low-poverty neighborhoods are at higher risk.