America has a serious affordable housing problem.
In 2021, a record number of U.S. renter households – 21.6 million, or nearly half of all the nation’s tenants – were “cost-burdened”, spending 30 percent or more of their income on housing, according to a report from the Harvard Joint Center for Housing Studies. Rental rates have outpaced wages for decades, as the national median rent price rose 149 percent from 1985 to 2020, while income grew by just 35 percent. That imbalance has worsened post-COVID, with rents increasing by approximately 15 percent in 2021 and an additional 6.2 percent in 2022, while wage increases haven’t kept pace with inflation.
The lack of affordable housing affects renters across all income ranges, from those seeking “workforce” housing to “Big A” housing. Big A housing units are those created in partnership with national and state government agencies such as HUD or the California Housing Finance Agency. These units are available to low-income renters making less than 50 percent of the area median income (AMI), who qualify for Section 8 housing vouchers. Workforce housing is generally defined as rental units geared toward those making 80 percent of AMI. These units can be market-rate or incentivized.Cities and states provide tax incentives and/or tax exemptions for developers and owners who reserve a portion (typically 20 percent) of their units for residents who qualify for affordable housing at the 80 percent AMI threshold.
While most people are acutely aware of the supply constraints that drive the crisis, the affordable housing gap has both direct and indirect consequences for communities and the people living in them. The true costs are almost unfathomable.
What can be done? Which levers can be pulled to make a real difference for millions of U.S. families?
Walker & Dunlop is committed to becoming part of the solution to creating, maintaining and preserving affordable housing nationally. Our affordable housing division includes specialized products and services in one consolidated team to advise clients, provide solutions and work together to create better resident outcomes.
Learn more about the next steps we believe can make a real impact in addressing the housing crisis when you download your complimentary copy of our Multifamily Outlook report.