Report reveals which cities meet the needs of cost-burdened residents and why others are falling short
With affordability issues worsening in the United States, a study found that some cities are better at producing housing that meets the needs of cost-burdened households, while others struggle with wide rent gaps.
A new analysis from Yardi Matrix reveals why some regions in the US are more capable of delivering affordable housing that meets the needs of financially stretched households. It highlighted the widening gap between market-rate and affordable housing in major metros, while also pointing to smaller cities where affordable housing options are more attainable.
As more households become “cost-burdened” — meaning they spend over 30% of their income on rent — policymakers are advocating for a substantial increase in affordable housing. The study noted that 69,600 new affordable units are expected to be delivered in 2024, with a peak of 70,500 units projected for 2025. But after that, a potential slowdown in new inventory after 2025 could intensify the current shortage.
One of the key challenges identified is the gap between market-rate and affordable housing in many of the country’s largest metropolitan areas, including cities like Chicago, San Francisco, Los Angeles, Boston, Miami, and Northern New Jersey.
For example, in San Francisco, the average market-rate rent stands at $3,028, compared to $1,982 for fully affordable housing. In Boston, the difference is similarly stark, with market-rate rents averaging $2,801 compared to $1,819 for affordable units.
On the other hand, several smaller markets are more competitive when it comes to affordable housing. The study found that at least 90% of market-rate units in cities like Wichita, Kansas; Huntsville, Alabama; Des Moines, Iowa; and Omaha, Nebraska, are competitive with affordable properties, offering more options for renters in those areas.
The Yardi Matrix study is based on data from over 3.3 million units across 20,000 fully affordable housing properties. These properties are operated by both private sector entities and non-profit organizations. The analysis compared the maximum allowable rent for fully affordable units with the average advertised rent for market-rate apartments, breaking the data into four levels of apartment quality.
In addition to the competitiveness of rents, the study pointed out other challenges such as supply growth limitations and the overall composition of housing stock. However, it also stressed that each market is unique, and broad-scale analysis comes with challenges.
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“We believe that this analysis represents a valuable first step to compare the differences between market-rate and affordable rents and to understand why some markets are more successful at producing housing that meets the demands of households with limited incomes,” said Paul Fiorilla, director of research for Yardi Matrix. “Far from being the last word on the topic, we view this as a beginning of what we hope is an ongoing effort to study numbers that are now available through the new Matrix database.”
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