JCHS Study: Multifamily Fundamentals Stay Strong, Renter Pressures Increase
The Joint Center for Housing Studies of Harvard University recently released its annual The State of the Nation’s Housing report. It’s an interesting read with plenty of useful information for those of us in housing finance. Check out the full report here.
The findings on rental housing reinforce what we’ve been seeing in the market:
- 2014 marked the 10th consecutive year of robust renter household growth, with the pace of growth accelerating to an average of 900,000 renter households annually in 2010-2014. This puts us on track to be the strongest decade for renter growth in history.
- 2014 also marked another year with a record-high number of cost burdened households (those paying 30 percent or more of income for housing): 49 percent of renter households were cost burdened. This includes 11.2 million (26.5 percent) with severe cost burdens, paying more than half of their income for housing.
- At the same time, the homeownership rate fell to 64.5 percent last year, erasing nearly all of the increase from the previous two decades. The total number of homeowners fell for the 10th consecutive year, and the trend does not appear to be abating (the homeownership rate further fell to 63.7 percent as of 2015Q1).
- Part of the extraordinary growth in rental demand has come from younger adults, but the number and share of older renters has risen significantly over the last decade. Adults 35 and older contributed 76 percent of renter household growth, despite making up 60 percent of renters.
- While the supply of multifamily units rose steadily, reaching 360,000 units in 2014 — the highest level since the mid-1980s — single family rentals have absorbed most of the renter household growth in recent years.
- The outlook for rental housing is strong, as more millennials form households and enter the housing market. There will also be a large increase in renters over age 65.
Reading the report reaffirmed for me that Freddie Mac Multifamily serves a vital role in rental house finance and is headed in the right direction – especially when it comes to our product innovations and our focus on workforce housing.
I’d love to hear your thoughts on this study and the trends you’ve noticed.
Steve Guggenmos is Senior Director of Multifamily Investments and Research. You can reach Steve at Steve_Guggenmos@FreddieMac.com
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