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Creative and cost-effective preservation efforts are essential to ensuring the health of our country's unsubsidized affordable rental housing stock.
By Breann Gala and MPC Research Assistant Charles Dabah - November 25, 2013
Cities across the United States are in the throes of an affordability crisis, as rental housing prices continue to rise and outpace growth in household income. As the fiscal belt-tightening continues, subsidized rental housing is taking a knock throughout the country, where federal, state and local government programs that designate funds for affordable housing fail to meet demand. However, perhaps the most pressing challenge for municipalities and advocates of equitable housing lies in preserving the existing stock of unsubsidized affordable rental housing. These units are rapidly disappearing due to units moving up-market, being demolished due to disrepair and undergoing conversion into condos.
It is no secret that increasing numbers of households are turning to the rental market amidst widespread foreclosure and concerns over the rebound of home prices. The compounding effect of stagnant wages and rising rent prices are leaving low- and moderate-income households with unmanageable rent burdens, struggling to make ends meet in neighborhoods they call home. The Center for Housing Policy’s Housing Landscape 2013 data show that more than a quarter of working renter households nationwide—those that report members who work at least 20 hours per week and earn no more than 120 percent of area median income—spent more than half of their income on housing costs in 2011. In the Chicago-Joliet-Naperville area, 27.7 percent of households spent more than 50 percent of their income on housing in 2011, up almost two percentage points from 2008. The reality is that a substandard lifestyle for cost-burdened Chicago households is becoming the norm, and many families are either choosing to or are forced to relocate to neighboring suburbs or the collar counties for better quality of life.
In June 2013, the Minnesota Preservation Plus Initiative released The Space Between: Realities and Possibilities in Preserving Unsubsidized Affordable Rental Housing, a flexible blueprint for cities that illustrates how investing in the preservation of unsubsidized affordable rental housing is an equitable strategy to address the housing needs of all city residents. With already depleted funding and expectedly harsher waves of sequestration on the table, the likelihood that subsidized rental units will fill the gap in communities’ housing needs seems doubtful. The Joint Center for Housing Studies’ The State of the Nation’s Housing 2013 reportasserts that public housing supply is losing about 10,000 units per year, mostly as a result of insufficient funds for maintenance and repair. This downward trend means unsubsidized rentals have become a significant source of affordable housing for low-income households searching for rents that their incomes can support. In an analysis of the Twin Cities Metro Area, Minnesota Preservation Plus Initiative’s report indicates that unsubsidized rental constitutes “at least 57% of all units with rents affordable to households at or below 50% of area median income (AMI); equating to as many as 120,000 units of housing.” Yet, with the loss of unsubsidized units outpacing that of subsidized units, studies show the looming threat to the unsubsidized portion of the nation’s affordable housing stock.
There are opportunities for cities to use new tools, innovative strategies and focused interventions to plug the drain on unsubsidized affordable rental housing lost to units moving up-market or facing demolition due to disinvestment. The Metropolitan Planning Council (MPC) has coordinated with the Illinois Housing Development Authority and eight other housing authorities across the state on the Regional Housing Initiative, a program that encourages the development, rehabilitation and preservation of affordable rental housing through the use of project-based rental vouchers. MPC is also a partner organization of The Preservation Compact, which employs strategies ranging from advocating for a clearer and more accessible property tax system to collecting and analyzing data to encourage smarter, more targeted decisions around multifamily rental preservation.
New data collection systems and cross-sector communication will be essential in monitoring where this important component of the affordable housing stock exists and how it is being affected at a local and regional level. Moving forward, cities should take full advantage of collaborative efforts and think outside of the box on how to make preservation a priority for our region.