A Million-Person Problem
That 110,000-apartment gap does represent a major problem to at least one million Americans. Why one million? That’s the number of units renting for less than $400 monthly (in inflation-adjusted 1993 dollars) that were lost from 1993 to 2003, which turns out to be a 13 percent drop in the housing stock for that particular product segment.
Who are these people that are losing their homes? The elderly. The disabled. The financially strapped. “A significant number are working poor or people really don’t have many resources at all,” O’Donnell says. “They may have the same income as those in public housing.”
If the housing being lost is subsidized, residents usually will receive governmental rent vouchers that generally cover 85 percent of the cost of a new rental, according to O’Donnell of LISC.
But that doesn’t mean they’ll find quality housing.
“We’re seeing a return of overcrowding,” says Nicolas Retsinas, director of Harvard University’s Joint Center for Housing Studies. “We’re seeing people paying a much higher percentage of their income for rent. We continue to see people trying to find rental apartments and housing to buy further and further out. All of those issues are result of a tight housing market and one with a dwindling supply of low-cost units.”
They also can create new problems. “Preserving existing affordable housing is important for neighborhood stability, period,” says Lisa Davis, project manager for the New Boston Fund, a Boston-based real estate investment management firm that has built and redeveloped affordable housing. “A lot of times, people have been living for a long time in the properties that are expiring. They belong to the neighborhood, and they need to stay there if they want to.”
Residents who have been condo-converted out of their apartments also face the prospect of a big move as a diminishing rental supply pushes rents upward. That’s what has happened to many people in South Florida, says McCabe, who reports that rental rates in the area jumped 13 percent in the first half of 2006.
Usually this would be an ideal situation for apartment owners, but Bozzuto cautions his counterparts to remember the bigger picture. Apartment firms employ many lower-cost workers–maintenance supervisors, leasing consultants, landscapers–and these employees need places to live that they can afford. “It’s impossible to grow an economy that’s dependent upon entry-level workers or low-wage workers if there’s no housing for them,” Bozzuto says.
Many think that solving such a problem will require a broad effort. “If no one steps up, it won’t get better by itself,” says Retsinas of the Joint Center. “The market forces will make it worse.”
