Small, medium multifamily housing is overlooked part of solution to housing affordability challenges
New research shows properties with between two and 49 units provide 54 percent of rental housing and are home to majority of low-income households.
WASHINGTON, D.C. – While rental housing is often associated with large, high-rise apartments, 54 percent of U.S. rentals are in small and medium multifamily housing (SMMF), properties with between two and 49 units. SMMF is a much more important source of homes than has generally been recognized, especially for low-income households, according to new research from Enterprise Community Partners Inc. (Enterprise) and the The USC Bedrosian Center on Governance, housed at the USC Price School of Public Policy.
Understanding the Small and Medium Multifamily Housing Stock, released on March 30, finds that SMMF provides homes to the lowest-income households, including for the majority of renters earning $50,000 or below and for 60 percent of all renters who make less than $10,000 per year.
USC Price Professor Raphael Bostic and Price Ph.D. students Brian An, Anthony W. Orlando and Seva Rodnyansky were among the authors of the report.
The report concludes that policymakers should prioritize the development of financial tools to preserve SMMF and reduce barriers to production of new SMMF to help ease growing housing affordability challenges in the U.S.
“SMMF is crucial for low-income communities, both for families who receive subsidies and those fending for themselves,” said Andrew Jakabovics, vice president of policy development, Enterprise Community Partners.
“Our research shows that SMMF serves as an equilibrating force in the larger market, allowing people to find more sustainable housing costs. Preserving and expanding SMMF is a critical part of addressing the need for well-designed homes that are affordable.”
Located in all types of communities — urban, suburban and rural — SMMF properties account for more than one in three homes in central cities and more than in one in five suburban homes. Yet for the past 25 years, construction of SMMF has declined relative to historical trends, and older SMMF buildings are not being replaced with similar building types.
Only 15 percent of the existing SMMF stock has been built since 1990 and the existing buildings are aging, leading to a decrease in physical quality. SMMF properties have exhibited a greater likelihood of becoming more affordable as they age than other building categories, so the relative lack of new construction over the past few decades may pose challenges to the future supply of market-rate affordable homes.
“The long-term viability of the SMMF stock is especially important for low- and moderate-income households and it is worrisome that the construction of SMMF has slowed in recent decades,” said Dr. Bostic, the Judith and John Bedrosian Chair in Governance and the Public Enterprise at the USC Price School. Dr. Bostic is also an Enterprise Trustee. “Given the growing gap between the need for and supply of affordable housing, we must preserve and expand the SMMF stock,” he added.
Enterprise seeks to end housing insecurity in the U.S., which affects nearly 19 million low-income families who are homeless or paying more than half of their monthly income on housing.
This release was originally published by Enterprise, March 30, 2017.