Dive Brief:
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Low-income families face a more pronounced shortage of affordable homes and rental properties, according to CityLab, citing a report by the National Low Income Housing Coalition. The report includes revising the Low-Income Housing Tax Credit and the Mortgage Interest Deduction among its potential solutions.
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For the 11.4 million U.S. residents who earn less than 30% of the median income in their market and don't spend more than 30% of that income on housing, there is a 7.4 million–unit shortage of affordable and available rental homes.
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Every state and metro area in the U.S. is under-supplied. Las Vegas, Los Angeles, Houston, Orlando, FL, and San Diego face the most acute shortages among major metros. State-wise, Nevada has the greatest shortage of affordable rental housing at 15 units per 100 renters in this income group while Alabama has the least at 61 units.
Dive Insight:
The report highlights the growing gap in housing affordability in the U.S. as for-sale and for-rent prices rise and the supply of low-cost properties dwindles, impacting low- and middle-income households most significantly.
Another demographic feeling the burn: first-time homebuyers, some of whom also fall in the low- or middle-income tiers. Inventory of for-sale starter homes posted its biggest drop in three years during the fourth quarter of 2016 while the median list price in the category was up 7.6% year-over-year, according to Trulia.
In addition to a slow warm-up for new single-family construction targeting entry-level buyers, existing-home inventory has been made tighter by a rise in interest from single-family rental investors. Since the recession, companies like Blackstone Group’s Invitation Homes have purchased foreclosed homes from the bank and other low-priced properties and sold them at a markup. That's cutting into the stock young, first-time buyers can typically afford.
According to Attom Data Solutions and Clear Capital, non-owner-occupied homes took a 37% share of all homes purchased last year, the highest in the two decades that the pair have been tracking the figure. Invitation Homes’ $1.45B IPO in February was an indicator of optimism in the sector, though the otherwise-slow environment for REIT public offerings in recent years suggests the activity is coalescing around a few major players.