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Nearly 85 percent of Pennsylvania’s extremely low-income (ELI) renter households spend more than 30 percent of their income on housing and 69 percent spend more than 50 percent.1 Not surprisingly, ELI renter households also have severe shortages of affordable and available rental housing in Pennsylvania. In addition, housing conditions and shortages have grown worse for this group during the first half of this decade.
These findings and many more are reported in a recent study conducted by the Community Affairs Department of the Federal Reserve Bank of Philadelphia. The study Affordability and Availability of Rental Housing in Pennsylvania was written by Erin Mierzwa, community development specialist in the Community Affairs Department, and Kathryn P. Nelson, an affordable housing consultant, along with Harriet Newburger, also in Community Affairs. The research was initiated to assess the housing needs of Pennsylvania’s lower-income renter households and to better understand how their needs vary across the state.
This study is particularly relevant due to the current state of the housing industry nationwide. The number of renters has increased in recent years, and this increase has added to the pressures that already exist in the affordable rental housing market.
In a recent report, the Joint Center for Housing Studies of Harvard University noted that “after averaging just 0.7 percent annual growth from 2003 to 2006, the number of renter households jumped by 2.8 percent, or nearly 1 million, in 2007. The growing number of renters must now compete for the limited supply of affordable housing, adding to the long-standing pressures in markets across the country.”2 The situation is exacerbated by the mortgage foreclosure crisis, which, in addition to forcing many previous homeowners to become renters, also has implications for current renters.
The study Affordability and Availability of Rental Housing in Pennsylvania uses two primary data sources to assess the housing needs of Pennsylvania’s lower-income renter households: special tabulations from the 2000 census that are called Comprehensive Housing Affordability Strategy (CHAS) data and similar tabulations from the 2005 and 2006 American Community Survey (ACS). The study distinguishes renters in three lower-income ranges:
Following are key highlights of the study:
To provide some background, the study explores rental housing characteristics in Pennsylvania and several surrounding states.3 In 2000, there were 11.8 million Pennsylvanians living in 4.8 million households. Of all households statewide, 1.4 million, or approximately 29 percent, were renter households. There is a great income disparity between owners and renters throughout the state. While this finding follows national trends, it further emphasizes the challenges that are faced by renters as well as state and local policymakers in Pennsylvania.
In comparison to neighboring states and to other areas of the country, Pennsylvania has some particularly challenging housing characteristics. Most notably, the state has:
The study offers a valuable methodology for quantifying rental housing needs from current data. State and local policymakers can use the data provided in this study to help develop local rental housing strategies. A key finding of this study is that rental housing markets within Pennsylvania differ markedly in the extent of the shortage of units that are affordable and available to ELI and very low-income renters, as well as in vacancy rates and population growth trends. This finding reinforces the importance of choosing strategies that are sensitive to local housing market conditions.
As highlighted in the study, shortages of affordable and available housing units do not always imply that additional units must be built because, in many cases, providing rental assistance could enable renters to rent another unit affordably or to better afford their current unit. In some parts of Pennsylvania, the use of vouchers or other rent subsidies may be sufficient to address most affordable rental housing needs. In other areas of Pennsylvania, expanding the affordable rental housing supply may be warranted.
This study concludes by offering the following questions to help state and local policymakers develop effective local housing strategies:
Regardless of the ultimate decisions that are made to address rental housing needs for the lowest-income renter households, this study provides policymakers with solid data about the affordability and availability of rental housing throughout Pennsylvania. To see the report, go to www.philadelphiafed.org/community-development/publications/special-reports/.