The following are remarks by Jonathan Fanton at a Press Conference Announcing the Findings of Harvard University's Joint Center for Housing Studies First Annual Report on the State of the Nation's Rental Housing.
March 8, 2006
Thank you, Nic, for such a kind introduction. It is a pleasure to be present for the inaugural release of the Joint Center's State of the Nation’s Rental Housing report, which MacArthur was proud to fund.
In the past five years alone, the MacArthur Foundation has awarded more than $125 million in grants and program-related investments to the field of housing. While education, health care, and workforce development often receive more attention, there is mounting evidence that housing is a critical factor in opening opportunity to individuals and improving communities. Housing matters.
Recent studies have found that decent, stable housing improves the ability of individuals to get and keep jobs, increases psychological and physical health, and leads to better social behavior and school achievement among children. Other studies link the availability of affordable housing to the economic vitality of cities and regions.
Although homeownership stands at an all-time high of 67 percent, the need for affordable rental housing remains significant. Ninety-five percent of Americans rent at some time in their lives. At this moment, thirty-four million households -- one in three -- are renting. Of these, 12 million spend more than 35 percent of their income to pay for their housing, beyond threshold generally considered affordable.
The release of this report on the State of the Nation’s Rental Housing will bring new attention to the role rental housing plays in the economy and in the daily lives of individuals, especially for those with lower incomes.
The shortage of apartments with reasonable rents for people of modest means is a national problem. In the last decade, the United States has lost hundreds of thousands of affordable rental homes as markets soared, federal subsidies waned, owners divested, and aging properties deteriorated beyond repair.
From the mid-1960s through the mid-1980s, the United States made a historic investment in rental housing, building more than 10 million apartments. But since the mid-1990s, the nation has lost almost 20 percent of its most affordable rental housing as long-term federal subsidies and financing agreements expired. Meanwhile, demand in hot markets is driving rents up, and in weak markets deferred maintenance is running many properties down.
Four years ago, the MacArthur Foundation launched a ten-year, nationwide housing preservation initiative called “Window of Opportunity” – a $75 million commitment to the important challenge of preserving affordable rental housing. It has already stimulated $2 billion in additional investment from private and public sources, helping rehabilitate 30,000 apartments.
Preserving affordable housing is sensible public policy. On average across the country, it costs half as much to acquire and improve an existing rental apartment than to build a new one. And because these units were originally financed by taxpayer subsidies, we have an obligation to protect that investment. To truly increase the net supply of affordable housing, new construction must be accompanied by the preservation of existing properties. Only by combining these strategies can we meet our nation’s growing need for decent homes at a reasonable cost.
Successful preservation requires strong institutions, expert policy analysis, and good information. As we began to shape the Window of Opportunity initiative, we discovered that data about the nation’s rental housing stock was sorely lacking. Even though rental housing makes up one-third of the nation’s overall housing supply, no institution was systematically tracking rental stock or its contribution to the economy. To help full this gap, we made a grant to the Joint Center for Housing Studies, which publishes an annual report on the State of the Nation’s Housing. This year, for the first time, they are devoting a report to the issue of renting. It will become part of their annual survey of how and where Americans live.
No city knows the value of rental housing better than New York, where two-thirds of New Yorkers rent. And no other city invests as much in ensuring that its rental stock is affordable. In fact, the City of New York invests more in affordable housing programs than most states. Here in the city, MacArthur has funded rental housing preservation leaders like Phipps Houses, which owns and operates the building we are in today. We also support the Urban Homesteading Assistance Board, as well as researchers at New York University and other top institutions.
In October we announced a $5 million contribution to the $200 million New York Acquisition Fund, which will make it possible to build more affordable housing where there is vacant land and fresh opportunity. But because Mayor Bloomberg and his staff understand the importance of preserving the housing assets we already have, the Fund will also make it possible to retain and improve the homes of lower-income families and seniors throughout the city.
MacArthur is proud to play a part in funding the best practitioners and researchers, which are demonstrating the importance of rental housing and bringing new attention to it. The Joint Center report we unveil today on The State of the Nation’s Rental Housing is an important contribution to this broader effort.