Rapidly growing American cities are losing affordable housing at an alarming rate, according to a study released Wednesday by Freddie Mac, a government-sponsored entity that buys mortgages and packages and resells them as mortgage-backed securities.
The percentage of multi-family rental units affordable to households making 50 percent of the area median income in any given metro fell from 55.7 percent to 39.1 percent from 2010 to 2017, according to the report. During that same period, 85.9 percent of metros saw a loss of affordable units.
“Cities that have experienced aggressive population growth have struggled to build enough rental housing to meet the increased demand,” said Steve Guggenmos, a co-author of the report who leads Freddie Mac multifamily’s research and modeling team.
“The problem continues to get worse, and every year more very low-income families are forced to spend more of their income on housing,” Guggenmos added. “That’s especially true where population growth is rapid. The old laws of supply and demand are showing their teeth and the people who can least afford it are getting bit.”
The report looks at multifamily rental affordability and unit-level rent data published by the American Community Survey. Researchers compared that data to population data and found a strong correlation between population growth and affordability loss.
“If these two variables were in fact not related, the chance of observing a result this extreme is about one in seven million,” Guggenmos said. “The data show that population growth is strongly correlated with affordability loss.”
Specifically, in Austin, Texas, researchers found that the population grew by 22.5 percent over the time period they studied and nearly a quarter of Austin’s new units were built after 2009. In 2010, 66 percent of multifamily units in the Austin Metro area were affordable to very low-income houses. By 2017, that number dropped to 31.9 percent, seven points lower than the national average.
In Raleigh, North Carolina, as the population grew by 17.4 percent from 2010 to 2017, the number of units affordable to low income-households fell 40.1 percentage points. In contrast, in a city like Pittsburgh that saw a 1 percent decrease in population, the number of affordable units only fell 5.8 percent.
The report concludes that one of the driving costs behind shrinking affordability is that rent growth has outpaced income growth.
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