A home helps to keep families stable and connected with each other and their communities. Finding an affordable place to rent that's close to work is becoming increasingly difficult across the country. In no state can a full-time minimum wage worker afford market-rate rent for a one- or two-bedroom apartment.
Since the Great Recession, job growth has been heavily concentrated in low-wage industries, but affordable housing – both subsidized and unsubsidized – has not kept pace with growing demand.
More than one in four renters spends over half their family income to pay for housing and utilities. The share of cost-burdened individuals now includes not just low-income renters, but those whose incomes reach $75,000 a year, according to a recently released report from the Joint Center for Housing Studies, Harvard University.
Most people agree that more affordable housing is needed, but few focus on how it benefits families and our communities, or how the lack of it affects society. Building affordable housing provides jobs during construction and new consumer spending after it's occupied. The increased spending for goods and services boosts the local economy and is a revenue source for local governments. The National Association of Home Builders estimates building 100 apartment units generates $11.7 million in local income, $2.2 million in taxes and other revenue for local governments, and 161 local jobs in one year. And when workers have shorter commutes, their transportation costs go down, roads are less congested, and they have time for other activities.
An impact of the lack of affordable housing could be evident during a snowstorm, as just one example of many. If the bus drivers, day care workers, medical assistants, ambulance drivers, and grocery store clerks can't get to work because the only housing they can afford is too far away, the impact is felt by people across the community when services are not available and businesses are not staffed.
Also, cost-burdened households are forced to cut back on food, healthcare, and other critical expenses. But if they were spending less on housing and utilities, then they could have more money to put toward serving nutritious food, receiving necessary medical care, and providing reliable day care for their children. Studies also have shown that when these and other needs are met, children show up for school ready to learn and their performance improves.
At Freddie Mac, we are proud of our role in making housing affordable and moving housing forward. More than 90 percent of the apartment loans we purchase are for properties offering rents that are affordable to individuals who earn Area Median Income or less. Many of the properties we finance likely would have trouble securing funding elsewhere. A large majority of these properties are more than 10 years old, and many are in need of capital improvements, which our funding helps to provide. The Targeted Affordable Housing group of Multifamily provides financing for properties that are specifically restricted for low-income households, often with rent levels affordable as low as 50 percent of Area Median Income. Freddie Mac Multifamily settled roughly $2.7 billion in targeted affordable loans last year and expects to do even more this year to support this important market and help families have safe, stable housing.
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