The Nation Needs to Invest in Rental Housing
WASHINGTON, D.C. – Without leadership and effective policy from lawmakers, the nation will continue to fall short of meeting the growing demand for affordable multifamily housing. This was the key takeaway from today’s congressional testimony by Clyde Holland, chairman and CEO of Holland Partner Group, on behalf of the National Multifamily Housing Council and the National Apartment Association.
Speaking before the House Committee on Financial Services Housing and Insurance Subcommittee, Holland outlined the primary reasons why America faces a growing affordability problem – stagnant wages, a supply-demand imbalance and numerous hurdles and regulations in developing new apartments – along with potential solutions.
“First, while the cost to develop and operate rental housing increases every year, the median renter household income today is virtually unchanged since 1981, on an inflation-adjusted basis,” said Holland.
In addition, Holland pointed to the enormous deficit when it comes to aligning the supply of rental apartments with the demand. “Almost 75 million young adults are entering the housing market, primarily as renters. At the same time, Baby Boomers and empty nesters are trading single-family houses for rental apartments,” said Holland. “This combination of factors is forecast to lead to four million new renter households over the next decade.”
“Between 300,000 and 400,000 apartments must be constructed annually to simply keep pace with this demand,” he said. “Yet, on average, just 208,000 apartments were delivered in the four year period from 2011 to 2015.”
And finally, Holland noted that the development of new apartment homes is exceptionally difficult – more-so in markets where apartment needs are strongest. Even if, hypothetically, developers agreed to take no profit, the cost to build still exceeds what people can afford to pay. Adding to the difficulty are the litany of hurdles and regulations that often slow down or even stop the process.
“Even in communities that want and desperately need new multifamily development, there are numerous hurdles that must be overcome, including entitlement expenditures, zoning rules, environmental site assessments, impact fees, mandates like inclusionary zoning or rent control, labor expenses and building code requirements,” said Holland.
He then outlined that policymakers must recognize that addressing local workforce housing needs requires a partnership between government and the private sector. Some of the key solutions Holland touched on at the local level included deferring taxes and other fees for a set period of time, in addition to leveraging their tangible assets like buildings, raw land and entitled parcels.
At the federal level, he noted that Congress must enable new development, preserve subsidy programs that make units available at below-market rates, and rehabilitate existing stock at-risk of loss due to obsolescence and other factors.
“What is needed is a bold, fresh vision that sets aside historic approaches that have only marginally succeeded,” said Holland. “We invite policymakers to convene a task force to bring together the public and private sectors so as to embrace all the tools at our disposal in order to meet the tremendous challenge of affordable housing production.”
To read Mr. Holland’s full written testimony, please click here.