The Coming Rental Crisis

The housing bust will hurt low-income renters, report says.

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A new report from Harvard University's Joint Center for Housing Studies offers a chilling look into the future of America's low-income rental market, which faces its own set of challenges in the aftermath of the housing bust.

Among the findings:

1. Higher demand for rental units

From the study:

After averaging just 0.7 percent annual growth from 2003 to 2006, the number of renter households jumped by 2.8 percent or nearly one million in 2007.

2. Pressure builds on the supply side

From the study:

Last year, completions of multifamily units for rent fell to 169,000 units—just two-thirds of the 2002 figure and only one-third of the 1986 record high.

3. Rent is getting higher, but renters are getting poorer

From the study:

The national median gross rent rose 2.7 percent in real terms from 2001 to 2006 while the median renter income fell by 8.4 percent.

Sounds as if a potentially devastating squeeze could be in store for America's low-income renters—a segment of the population already highly vulnerable to economic distress.

It's another negative, unanticipated outcome of the housing bust. But you didn't think the Harvard folks were going to bring up the problem without solving it, did you? (They really are smarter than us.)

From the report:

In today's soft housing market, many holders of foreclosed properties will be forced to sell these assets for deep discounts. This creates an opportunity for a well-capitalized mission driven entity to acquire properties with the goal of expanding the supply of affordable rental housing and promoting economically stable communities.