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Current Rental Housing Market Challenges and the Need for a New Federal Policy Response

Testimony Before the U.S. House Committee on Appropriations

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Document date: February 28, 2007
Released online: February 28, 2007

The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.

Margery Austin Turner is director of the Metropolitan Housing and Communities Policy Center at the Urban Institute.


Abstract

Our country's rental housing challenges are changing in ways that not only affect an expanding segment of the population but also implicate other top domestic priorities. We face a nationwide housing affordability problem, insufficient housing supply in prosperous regions, a problem of housing location within metropolitan regions, and a neighborhood distress problem. Some states and localities are starting to respond to these challenges in new and creative ways. But without a renewed commitment from the federal government, these efforts will never be sufficient to address the breadth and depth of the affordable housing challenges we face today.


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Testimony

In recent years, housing has all but disappeared from national-level debate, except for occasional discussions of a possible housing "bubble" and the all-too-brief concern about housing needs in the aftermath of Hurricane Katrina. Despite the lack of sustained attention, our country's housing challenges are changing in ways that not only affect an expanding segment of the population but also implicate other top domestic priorities. Some states and localities are starting to respond to these challenges in new and creative ways. But federal housing policy—particularly rental housing policy—is not getting the serious national attention it warrants.

Understanding Today's Rental Market Challenges

One-third of all Americans rent the homes and apartments in which they live. Some are renters by choice—because they are highly mobile or prefer not to assume the responsibilities of homeownership. But most are renters by necessity—because they have limited savings or lack the income necessary to cover the costs of homeownership. A growing share of these renters cannot find homes or apartments that they can reasonably afford. Specifically, as of 2005, more than 16 million households—up from about 13 million in 2000—spent more than 30 percent of their monthly income on housing, a cost burden defined as unaffordable by federal standards. Almost two-thirds of these cost-burdened renters had annual incomes below $20,000. But the share of higher-income renters who are paying unaffordable housing costs is rising; between 2000 and 2005, the share of renters with incomes over $35,000 whose housing cost burdens were unaffordable climbed from 6.4 to 12.2 percent (U.S. Census Bureau 2000 and 2005).

Today's rental housing market failures reflect a confluence of demographic, economic, and social forces that the current array of federal programs can no longer effectively address. Our country's greatest housing challenges occur at different levels: a nationwide housing affordability problem, insufficient housing supply in prosperous regions, a problem of housing location within metropolitan regions, and a neighborhood distress problem.

The complete testimony is available in PDF format.

The views expressed are those of the author and should not be attributed to the Urban Institute, its trustees, or its funders.



Topics/Tags: | Cities and Neighborhoods | Race/Ethnicity/Gender


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