According to new research by Freddie Mac Multifamily, the affordability of rental housing has remained at a low level over the past decade.
As of 2010, less than 10% of all rental units are affordable for low-income tenant households – those earning 50% or less of median rental income – for each year, says the new report "Affordability of Leases Re-examined".
That's more than four times less than using the most common income measure: median family income, says the report, which measured the availability of affordable housing for tenants based on tenant income.
While previous analysis of affordable housing has shown strong income growth for renters, those numbers are skewed by the influx of high-income households, including former homeowners, into the tenant pool, the report said. The results found, in part, to reflect a move away from home ownership since the Great Recession.
In addition, the number of wage earners per tenant household increased by 2.4% from 2010 to 2018, which increased household income, although the income of individual tenants did not increase.
Although aggregate statistics suggest that tenants' household income has increased in proportion to rental growth, individual tenant households are not doing better, the report says, as the availability of affordable housing for them has not improved over the past decade.
"Rental affordability continues to be a major concern as demand remains high and the supply of affordable housing is both inadequate and declines rather than grows," said Steve Guggenmos, vice president of multi-family research and modeling, Freddie Mac.
The report calculates the affordability of apartment rentals using unit-level rental data from the American Community Microdata Public Use Survey sample.
The new Freddie Mac report follows last year, "Affordability Decrease – Inevitable," which saw a decrease in affordable multi-family rental units from 56% to 39% for very low-income households that was 50% or less Earn Area Median Income (AMI). . The decline in affordability was most pronounced in fast-growing metropolitan areas like Austin, Denver, and Orlando, according to the earlier report.
Rather than using the area median income, which includes income for both tenant and owner-occupied households, the new report looks only at tenant income.
The median rental income is around 46% below the family income. This number is derived from the income of the tenant and the owner, known as the Federal Housing Finance Agency (FHFA) fixed income. The median tenant income in 2018 was $ 41,000, compared to a weighted average FHFA income across all metropolitan areas of $ 76,300, the report said.