For local policy makers anticipating the economic landscape in the post-recession and post-foreclosure period, there are three factors that will influence decisions about new housing development – the number of homeless families; the slowdown in household formation; and the severe cost burden that so many face for housing. The combination of these factors means that there will be a much greater need for rental housing than for ownership opportunities in the next decade.
According to figures by the Department of Housing and Urban Development, the number of homeless families increased from 2007 to 2008 and then again from 2008 to 2009. Families constitute 34 percent of the 1.56 million homeless counted in 2009.
Data from the Census Bureau show that the prolonged recession has taken its toll on the number of people starting a household. The 10-year average of new households being formed has been 1.3 million per year. This number has declined significantly to 772,000 in 2008 and to only 398,000 in 2009, impacting rates of rental vacancies and new housing starts, as young singles and couples wait out the worst of the recession in shared living arrangements.
The share of U.S. households that are severely burdened with housing costs (spending more than half of their income) increased to 16 percent in 2008 rising from a steady 12 percent in both 1980 and 2000. Numbers from the Census Bureau show that a record 18.6 million households faced high housing cost burdens in 2008. Living within these households were 44.2 million Americans including 13.7 million children.
These severe cost burdens for housing exist side-by side with a national vacancy rate for both owned and rental housing units that stand at a record of 14.5 percent in 2009. In this instance, an excess of supply is not having a significant impact on lowering prices for housing except in the cases of buildings with 10 or more units or with expensive rentals.
The catastrophe in mortgage foreclosures, the rising tide of homeless families, the cost of housing for so many and the anticipated demand for rental housing by both the aging baby boomers and the echo boom generation has changed the fundamentals about the kinds of housing most needed in communities. The implications of these data point to a need for construction of more multi-family rental housing units.