We are at a critical juncture for expanding housing choices. The financial crisis made clear that aggressively pursuing universal homeownership does not always result in the American dream. The loss of wealth — Americans lost $6 trillion in home equity over the course of the crisis — and the ongoing distress — more than one in five mortgages are in a negative equity position — show that “ownership at any cost” is not a winning strategy. Although there has been much focus on the difficulties in the ownership market, significant stresses also exist for America’s renters. Half of all renters currently spend more than a third of their income on housing. And according to HUD’s Worst Case Housing Needs 2009: A Report to Congress, there has been a 20 percent increase in renters experiencing worst case needs — very low-income renters without government housing assistance spending more than half of their income on rent or living in severely inadequate conditions, or both — from 2007 to 2009. This increase in rent burden has been driven, in part, by the ownership crisis and the job loss associated with the deep recession. These current problems are compounded by the fact that demand for rental housing will likely rise substantially in this decade due to a rapidly expanding senior population.
Because of these economic and demographic changes, we need robust, deeply engaged debates to leverage these current challenges so that we can develop a long-term housing policy agenda. We have a once-in-a-generation opportunity to re-imagine the role that housing plays in our lives — and the role that government plays in housing.
That’s why HUD partnered with the White House to hold the Next Generation Housing Policy Conference (described in this issue), where prominent housing experts outlined proposals for improving life outcomes for children through housing, addressing financial challenges to rental housing, and breaking down silos in the American social safety net, among other topics. Larry Summers, former director of the National Economic Council, noted in his keynote address to the conference that economic realities require that rental housing be supported equitably by federal housing policy. Because of fundamental labor market shifts, the average American may hold as many as 11 jobs over the course of a lifetime, and the need for mobility may make leasing more attractive than owning. But even beyond this, Summers observed that a simple imperative drives us to rethink rental housing policy; renting is not unique to any single demographic. We are all renters at some point in our lives.
The conference was a strong step toward envisioning the future of our rental housing policy. HUD continues this interagency effort on an ongoing basis as partners in the White House Domestic Policy Council’s Rental Policy Working Group. We’re also considering a variety of proposals to recognize subsidized rental housing’s potential to connect families to opportunity and choice, including supporting an income averaging proposal for properties that use the Low Income Housing Tax Credit to ensure that the credit reaches very low-income households, using housing as a platform for delivering supporting services, and incentivizing employment through efforts like our Family Self-Sufficiency Program. At HUD, we must help ensure that a flow of market-rate capital is available to meet the rising demand for rental homes and to keep those homes affordable for the families who need them. The Federal Housing Administration Office of Multifamily Housing Programs has successfully stepped up to play a stronger role in this marketplace.
Affordable rental housing is a critical part of our nation’s housing supply, and that’s why we’ve made it the subject of this issue of Evidence Matters. As we continue to respond to current challenges in the housing market, we will promote evidence-based policies that respond to different market types, housing forms, and modes of being housed (that is, renting or owning, which academics refer to as “tenure”). We will look outside the federal government for solutions and leverage the efforts of private enterprise, nonprofits, and state and local governments to remove barriers and create opportunities for the preservation and creation of affordable rental homes. Together, we can seize this uncertain moment and create a stronger, more balanced housing policy.
— Raphael Bostic, Assistant Secretary for Policy Development and Research
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