Rents Go Up Faster Than Incomes
Rents are rising faster than incomes according to a recent report from Harvard's Joint Center on Housing Studies. And, the number of renters is expected to increase by four to five million in the next ten years. Finding affordable rents is becoming an issue in this country. New Freddie Mac research shows how we could make affordable rental housing more accessible by better targeting capital to where it's really needed.
We are looking at ways to target debt capital to property owners and help lower income individuals get access to affordable housing in most markets. Our new research shows the benefits of using the Department of Housing and Urban Development’s approach to targeting funds for their rent voucher programs.
Our research show that breaking metropolitan areas into smaller submarkets, such as by zip code, would provide more information about local market rents which could lead to a more refined approach to identifying affordable housing needs.
Our data analysis showed that using the traditional Average Median Income-based rule makes it harder for properties in some markets with high rent to income ratios to qualify for affordable funding despite the acute need in those markets. It also found that using HUD's Small Area Fair Market Rents (SAFMR) method instead could increase debt capital from the GSEs.
The reason is that AMI bases its rent and income averages on the broader market, whereas SAFMR breaks down a large metropolitan area into smaller markets to allow for the vast differences in incomes and rents. With this methodology more apartments would be appropriately identified as relatively affordable in their markets and qualify as affordable funding.