Difficulty in finding affordable multifamily rental units is not an issue that is isolated to gateway markets like New York City and Miami where residents have long paid high proportions of their income on housing. In recent years, metros across the nation have experienced worsening rental affordability to varying degrees. In this report, Freddie Mac explores the loss of affordable units nationwide and examine the relationship between this loss and population growth.
The basic finding is that population growth is negatively correlated with an area’s ability to preserve affordable housing. That is, metros with higher rates of population growth tend to lose affordable units at a faster pace. In the nation’s fastest growing areas, the issue is alarming.
In this paper, Freddie Mac tracks multifamily rental affordability at the unit level by comparing area median income (AMI) data from the Federal Housing Finance Agency (FHFA) with rent data from the American Community Survey (ACS)i. Our primary focus is to show how rental affordability has changed since 2010, both nationally and in select metros, and to show how population growth is correlated with the change in the rate of affordable multifamily rental housing. Although the intent of our analysis is not to conclude a causal relationship, the findings are consistent with intuition.
Measuring the affordability of an area’s rental stock is not a straightforward exercise. Input data is not always sufficient for understanding the issue, but Freddie Mac tried to look at what is available from multiple perspectives to better understand the issue. Reasons for difficulties in assessing affordability include limited availability of reliable, timely and geographically granular data, and debate regarding how exactly affordability should be measured. Because of this, the intent of this report is not to conduct a study that comprehensively documents affordability measures, but is instead to show that rental affordability continues to be a national issue that is most pronounced in fast growing areas.