1. A Long Look at Affordable Rental Housing John C. Weicher Hudson Institute Presentation to NAAHL May 4, 2012

2. What We’re Doing Looking at buildings, not at people – was it affordable, not who was living in it Looking at the same housing units, every two years, 1985-2005 – a VERY long run  Data source is the American Housing Survey Between the two worst postwar recessions: 1980-1982 & 2007-2009 Virtually no HUD-assisted projects or low-rent public housing built after 1983

3. Looking Backwards & Forwards 1985-2005 Where did today’s affordable rental housing stock come from? What happened to the affordable rental stock of 20 years ago?

4. The Meaning of “Affordable” “Affordable” is NOT a synonym or euphemism for “assisted” Most affordable rental units AREN’T assisted  17.6.million affordable rental units in 2005  4.9 million assisted by HUD or USDA  6.2 million unassisted, occupied by low-income households

5. The Meaning of “Affordable” Household with income at half the local median (“very low income”) could pay the rent (including utilities) by spending no more than 30% of its income Example: Chicago metro area in 2005  Median Household Income:$69,700  Half of Median:$34,850  30% of Monthly Income:$871  Adjusted for Unit Size – 2 BR:$784

6. The U.S. Housing Stock: 1985-2005 1985 housing stock 96 million units Removals, 1985-2005-12 million  Demolitions - 7 million  Other removals - 5 million (houses/mobile homes moved from site, structural changes) Additions, 1985-2005+40 million  New construction+33 million  Other additions + 6 million (rebuilding, conversion from nonresidential uses) 2005 housing stock123 million

7. The Affordable Rental Stock: 1985 and 2005 1985 Affordable Rental Stock  13.5 million units  14.1% of U.S. housing stock 2005 Affordable Rental Stock  17.6 million units  14.3% of U.S. housing stock “Affordable” includes assisted units in all programs – public housing, Section 8, voucher, LIHTC – if they meet affordability criterion

8. Accounting for the Change Net increase of 4.1 million units consists of:  0.5 million from additions (& removals) to stock  3.7 million from changes in status of 1985 stock 3.0 million – rental units becoming affordable 0.7 million – owner-occupied units becoming rental Net increase from higher rent units becoming affordable is six times as important as net new construction

9. What Happened to the 1985 Affordable Rental Stock by 2005? 12% no longer affordable (1.6 million units) 21% no longer rental (2.8 million units) 19 % no longer housing (2.6 million units) 46% were affordable rental in both 1985 and 2005 (6.1 million units)

10. Where did the 2005 Affordable Rental Stock come from? 26% were rental but not affordable in 1985 (4.6 million units) 20% were not rental (3.4 million units) 18% were not in the housing stock in 1985 (3.1 million units) 35% were rental and affordable in both years (6.1 million units)

11. Stability as well as Change 6.1 million units were affordable rental in both 1985 and 2005 – 46% of 1985 affordable rental stock 2.9 million were always affordable, in every survey – 22% of 1985 affordable stock  We think 2.2 million of them were assisted, in projects 3.2 million started and ended as affordable, but sometimes were in other categories  1.2 million were sometimes moderate rent (affordable at 80% of local median income)  Of these, 500,000 were moderate only once (“blips”)  Another 600,000 were blips to another status Also, 0.9 million units added to stock after 1985 were always affordable

12. Affordable Rental Housing: Private vs. Assisted (2005) AffordableProjects * Voucher Single-family homes32% 2% 35% 2-4 units22%15%24% 5-9 units15%16%15% 10-49 units20%20%19% 50+ units11%41% 7% In central cities46%59% 47% In suburbs32%28% 39% Outside MSAs22%13% 14% * Public housing, Section 8, other HUD-subsidized projects

13. The Rental Housing Inventory TotalAffordable Small Buildings 70%69% SF Houses 37%32% 2-4 Units 20%22% 5-9 Units 13%15% Large Buildings 30%31% 10-49 Units 21%20% 50+ Units 9%11%

14. Who Owns Rental Housing? SF HousesIndividuals – 83% 2-4 UnitsIndividuals – 85% 5-49 UnitsIndividuals – 63% Large: 50+ UnitsLimited Partnership - 41% ALLIndividuals – 70%

15. The Government Role The government entities specialize in the “top 10%” – the biggest projects GSEs have concentrated on 50+ unit buildings  So much so, that in 2000 HUD gave them double credit for buying loans on 5-49 unit buildings FHA: typical MF project has 120 units MF lending is very staff-intensive - FHA in 2004: SF/MF portfolio split: 75/25 SF/MF staff split33/67

16. All Housing Markets Are Local (What’s Affordable Rental, Where?) New York50% in buildings with 50+ units Washington50% in buildings with 10+ units Chicago50% in buildings with 2-9 units Detroit50% in buildings with 1-4 units Philadelphia50% in row houses & 2-4 units Los AngelesNo dominant building size HoustonNo dominant building size (Metropolitan Areas in 2005)

17. Plans for Future Analysis Extend to 2007 & 2009 – with luck, 2011  What happened in the downturn? Assisted units – matching AHS & HUD data  AHS data based on household response Not answered consistently Sometimes not answered at all Not reported for vacant units after 1997  HUD: data by program and address – both HUD programs and LIHTC