Michael D. Eriksen University of Cincinnati

October 26, 2021FHFA Fall 2021 Econ Summit

Michael D. EriksenUniversity of Cincinnati

FHFA Fall 2021 Econ Summit

Concerns About the Lack of Affordable Housing Since at Least Ancient Rome

• Always Known to Affect Lowest Income and a Couple of Large Cities on the Coasts

• Less is Known About Trends and Who is Affected in Other Large Cities in the United States

Importance of Quality Neighborhoods• Higher Adult Earnings for Children of Subsidized Renters

Raised in Low-Poverty Environments• Majority of Subsidized Housing in High-Poverty Areas

Download Full Report at: http://www.cba.uc.edu/faculty/erikseml/

Motivation: National Report

Michael Eriksen, University of Cincinnati

http://www.cba.uc.edu/faculty/erikseml/


1. Rental Housing Affordability Trends since ‘01• Use Publicly Available Data from HUD for 50 Largest Cities• Focus on Median Rents and Incomes since 2001• HUD Median 2-bedroom Rent Projections for 2022

2. Changing Rental Burdens of Low-and Moderate-Income (LMI) Households• Use HUD Definitions of 60% AMI as Low-Income

3. Availability of Subsidized Rental Housing• Location of Public Housing, Vouchers, and LIHTC

Goals for Today



Data Source:• Department of Housing and Urban Development (HUD)

• Used for Income Eligibility and Subsidy Reimbursement Rates

• 2-bedroom Units with Utilities

Largest 50 Cities• $1,629 per month in 2021• 5.1% Annual Increase since 2001• 2.0% Above Non-Housing Inflation

Median Rents in Top 50 Cities


-6-2

26

1014

Ann

ual P

erce

ntag

e C

hang

e in

Med

ian

Ren

t

1,20

01,

300

1,40

01,

500

1,60

01,

700

Infla

tion

Adj

uste

d M

edia

n 2-

Bed

room

Ren

t

2001 2004 2007 2010 2013 2016 2019 2022Year


Regional Real Rental Growth


Atlanta, GA

Austin, TX

Baltimore, MD

Birmingham, AL

Boston, MA

Buffalo, NYCharlotte, NC

Chicago, ILCincinnati, OH

Cleveland, OH

Columbus, OH

Dallas, TX

Denver, CO

Detroit, MI

Hartford, CT

Houston, TX

Indianapolis, IN

Jacksonville, FLKansas City, MO

Las Vegas, NV

Los Angeles, CA

Louisville, KY

Memphis, TN

Miami, FL

Milwaukee, WI

Minneapolis, MNNashville, TN

New Orleans, LA

New York, NY

Norfolk, VA

Oklahoma City, OK

Orlando, FL

Philadelphia, PA

Phoenix, AZ

Pittsburgh, PA

Portland, OR

Providence, RI

Raleigh, NC

Richmond, VA

Riverside, CA

Sacramento, CA

Salt Lake City, UT

San Antonio, TX

San Diego, CA

San Francisco, CA

San Jose, CA

Seattle, WA

St. Louis, MO

Tampa, FL

Washington, DC

0.0

1.0

2.0

3.0

4.0

Rea

l Ann

ual %

Incr

ease

in M

edia

n R

ent (

2001

-202

1)

750 1,250 1,750 2,250Inflation Adjusted Median Monthly Rent of 2-bedroom Apartment in 2001

R2 = 0.154β = 0.002


3-person Median Incomes• $91,836 in 2021 (Weighted Avg)• 3.1% Annual Increase• 0.68% Above Non-Housing

Inflation Annually

Relative to Median Rent• Median Rent Increased 194%

Faster than Median Income

Relative Growth in Incomes


025

5075

100

Nom

inal

Per

cent

Incr

ease

sinc

e 20

01

2001 2004 2007 2010 2013 2016 2019 2022year

Median Rent Median Income

Median Rent Index: 101.2

Median Income Index: 62.4


Real Median Income Growth


Atlanta, GA

Austin, TX

Baltimore, MD

Birmingham, AL

Boston, MA

Buffalo, NY

Charlotte, NC

Chicago, IL

Cincinnati, OHCleveland, OH

Columbus, OHDallas, TX

Denver, CO

Detroit, MI

Hartford, CT

Houston, TXIndianapolis, INJacksonville, FL

Kansas City, MO

Las Vegas, NV

Los Angeles, CA

Louisville, KY

Memphis, TN

Miami, FL

Milwaukee, WI

Minneapolis, MNNashville, TN

New Orleans, LA

New York, NY

Norfolk, VA

Oklahoma City, OK

Orlando, FL

Philadelphia, PA

Phoenix, AZ

Pittsburgh, PA

Portland, OR

Providence, RI

Raleigh, NCRichmond, VA

Riverside, CASacramento, CA

Salt Lake City, UT

San Antonio, TX

San Diego, CA

San Francisco, CASan Jose, CA

Seattle, WA

St. Louis, MO

Tampa, FL Washington, DC

-10

12

3A

nnua

l % In

crea

se in

3-p

erso

n A

MI (

2001

-202

1)

55,000 70,000 85,000 100,000 115,000Inflation Adjusted 3-person Area Median Income (AMI) in 2001

R2 = 0.063β = 0.022

Median Income Increased 0.68% Annually Net of Inflation from 2001-2021


Median Rent v. Income Growth


Seattle, WA

Miami, FL

New Orleans, LA

Indianapolis, IN

Norfolk, VA

Boston, MA

Baltimore, MD

Oklahoma City, OK

Cleveland, OH

Birmingham, AL

Dallas, TX

Portland, ORWashington, DC

San Jose, CA

Philadelphia, PA

Atlanta, GA

Denver, CO

Memphis, TN

Salt Lake City, UT

St. Louis, MO

Chicago, IL

Raleigh, NC

Columbus, OH

San Diego, CA

Kansas City, MOJacksonville, FL

Louisville, KY

Nashville, TN

Los Angeles, CA

San Antonio, TX

Milwaukee, WI

Las Vegas, NV

Pittsburgh, PA

Orlando, FL

New York, NY

Cincinnati, OH

Austin, TX

San Francisco, CA

Tampa, FLPhoenix, AZ

Houston, TX

Detroit, MI

Minneapolis, MN

Providence, RI

Riverside, CA

Charlotte, NC

Hartford, CT

Richmond, VA

Buffalo, NY

Sacramento, CA

0.0

1.0

2.0

3.0

4.0

Ann

ual %

Incr

ease

in M

edia

n 2-

Bed

room

Ren

t

-1.0 0.0 1.0 2.0 3.0Annual % Increase in Median 3-person Household Income (2001-2021)

Other Correlated Factors (R2)• Employment Growth (11%)• Individual Earnings (25%)• Housing Supply Elasticity (28%)

R2 = 0.683β = 0.913


HUD Projected Rent Growth


Atlanta, GA

Austin, TX Baltimore, MD

Birmingham, AL

Boston, MA

Buffalo, NY

Charlotte, NC

Chicago, IL

Cincinnati, OH

Cleveland, OH

Columbus, OHDallas, TX

Denver, CODetroit, MI

Hartford, CT

Houston, TX

Indianapolis, IN

Jacksonville, FL

Kansas City, MO

Las Vegas, NV

Los Ang

Louisville, KY

Memphis, TN

Miami, FL

Milwaukee, WI

Minneapolis, MN

Nashville, TN

New Orleans, LA

New York, NY

Norfolk, VA

Oklahoma City, OK

Orlando, FL

Philadelphia, PA

Phoenix, AZ

Pittsburgh, PA

Portland, OR

Providence, RI

Raleigh, NC Richmond, VA

Riverside, CA

Sacramento, CA

Salt Lake City, UT

San Antonio, TX

San Diego, CA

San Francisco, CA

San Jose, CA

Seattle, WA

St. Louis, MO

Tampa, FL

Washington, DC

-5.0

0.0

5.0

10.0

Proj

ecte

d In

crea

se in

Med

ian

Ren

t in

2022

0.0 1.0 2.0 3.0 4.0Annual % Increase in Rent 2001-2021

R2 = 0.126β = -1.144

Rent Projections for 2022• 2.3% Average Increase• 9 Metros with Decrease• 14 Metros with +5% Growth


Growth of L&MI Renters


5.3m in 2019, 13.5% Increase

6.1m in 2019, 15.3% Increase

3.3m in 2019, 22.0% Increase


New Orleans, LA

Memphis, TN

Providence, RI Cleveland, OHDetroit, MIPittsburgh, PAChicago, ILLos Angeles, CAMilwaukee, WINew York, NY Louisville, KY

Boston, MASan Francisco, CABaltimore, MD San Jose, CAPortland, ORBuffalo, NY Seattle, WA

Phoenix, AZSan Diego, CAOklahoma City, OK Washington, DCNorfolk, VA Miami, FLSt. Louis, MO

Cincinnati, OH Riverside, CA Dallas, TXRichmond, VAHartford, CT Denver, COColumbus, OHPhiladelphia, PA Orlando, FL Nashville, TNAtlanta, GASacramento, CAKansas City, MOIndianapolis, INSalt Lake City, UTTampa, FLJacksonville, FL

San Antonio, TXHouston, TXMinneapolis, MN

Birmingham, AL

Austin, TX

Las Vegas, NVCharlotte, NC

Raleigh, NC

020

4060

80G

row

th o

f Low

-Inc

ome

Ren

ter H

ouse

hold

s

0 20 40 60 80Percentage Growth of Renter Households (2005-2019)

Growth of LMI v. All Renters


26% Growth of AllRenters in 50 Largest Cities

16% Growth of LMI Renters in 50Largest Cities


Rental Burden• % of Gross Income on Rent• 2-bedroom unit w/ 60% AMI (3p)

Housing Affordability Gap• Dollar Amount Needed for 60%

AMI Household to Spend only 30% of Income to Rent Median

• Represents Minimum Housing Voucher (Section 8) Subsidy

• Negative Amount Indicates 60% AMI HH can spend less than 30% of Income to Rent Median Unit

Measuring Affordability


20

22

24

26

28

30

32

34

36

38

2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021

Hou

sing

Ren

t Bur

den

Year

Weighted Average of 50 Largest Cities


Affordability Gap (60% AMI)


San Jose, CA

San Francisco, CA

Boston, MA

Seattle, WA

San Diego, CANew York, NY

Los Angeles, CA

Miami, FLRiverside, CAOrlando, FL

Denver, COTampa, FL

Portland, OR

Sacramento, CA

Dallas, TXPhoenix, AZ

New Orleans, LA

Washington, DC San Antonio, TXAustin, TXChicago, IL

Las Vegas, NVAtlanta, GA

Jacksonville, FLHouston, TXNashville, TN

Norfolk, VA

Birmingham, AL

Baltimore, MD

Salt Lake City, UTMemphis, TN

Philadelphia, PA

Charlotte, NCDetroit, MI

Raleigh, NC

Providence, RI

Oklahoma City, OKRichmond, VA

Hartford, CT

Columbus, OH

Minneapolis, MN

Indianapolis, INKansas City, MO

Cleveland, OH

Louisville, KY

St. Louis, MOMilwaukee, WI Pittsburgh, PA

Buffalo, NY

Cincinnati, OH

-3,000

0

3,000

6,000

9,000

12,000

-4,500 -3,000 -1,500 0 1,500 3,000 4,500

Hou

sing

Affo

rdab

ility

Gap

in 2

021

Housing Affordability Gap in 2001

60% AMI in 2001: $54,15130% Housing = $1,353 per month

Median 2b Rent in 2001: $1,177 per month

Monthly Gap = $1,177 - $1,353 = -$176Annual Gap = 12 x -$176 = -$2,112

Seattle, WA in 2001 Seattle, WA in 202160% AMI in 2021: $62,47830% Housing = $1,562 per month

Median 2b Rent in 2021: $2,076 per month

Monthly Gap = $2,076 - $1,562 = $514Annual Gap = 12 x $514 = +$6,168


Affordability Gap (60% AMI)


San Jose, CA

San Francisco, CA

Boston, MA

Seattle, WA

San Diego, CA

New York, NY

Los Angeles, CA

Miami, FLRiverside, CAOrlando, FL

Denver, COTampa, FL

Portland, OR

Sacramento, CA

Dallas, TXPhoenix, AZ

New Orleans, LA

Washington, DC San Antonio, TXAustin, TX

Chicago, ILLas Vegas, NV

Atlanta, GA

Jacksonville, FLHouston, TX

Nashville, TN

Norfolk, VABirmingham, AL

Baltimore, MD

Salt Lake City, UTMemphis, TN Philadelphia, PACharlotte, NCDetroit, MI

Raleigh, NC

Providence, RI

Oklahoma City, OKRichmond, VA Hartford, CT

Columbus, OHMinneapolis, MN

Indianapolis, INKansas City, MO

Cleveland, OH

Louisville, KY

St. Louis, MOMilwaukee, WI Pittsburgh, PA

Buffalo, NY

Cincinnati, OH

-3,000

0

3,000

6,000

9,000

12,000

-4,500 -3,000 -1,500 0 1,500 3,000 4,500

Hou

sing

Affo

rdab

ility

Gap

in 2

021


12 Cities Never Affordable

0 Cities Became Affordable

26 Cities Became Unaffordable

12 Cities Stayed Affordable


Traditional Public Housing• Gov’t Develops and Operates • Tenant Pays 30% of Gross Income• Rents Insufficient to Maintain Units

Housing Choice Vouchers• Tenant Pays 30% of Gross Income• Gov’t Pays Private Landlord Gap

Between Tenant Contribution and Fair Market Rent (40th or 50th Percentile)

Low-Income Housing Tax Credit• Gov’t Allocates Subsidy to Developers who

Operates Rent-Restricted Units• Income < 60% AMI; Rents < 18% AMI

Rental Housing Subsidies



Rental Subsidies per 100k HHs


New Orleans, LA

New York, NY

Seattle, WA

Providence, RINorfolk, VA

Memphis, TNBoston, MA

Cleveland, OH Richmond, VA San Francisco, CABaltimore, MDBuffalo, NY

Kansas City, MO San Jose, CA

Portland, ORWashington, DCAtlanta, GAOrlando, FL

Columbus, OHSacramento, CA

Louisville, KY

Cincinnati, OHHartford, CT

Birmingham, ALMinneapolis, MN

Miami, FLChicago, IL San Diego, CA

Denver, COLas Vegas, NV

Philadelphia, PASalt Lake City, UT

Los Angeles, CASt. Louis, MOIndianapolis, INOklahoma City, OKPittsburgh, PA

Jacksonville, FLTampa, FL

San Antonio, TXNashville, TNDetroit, MI

Dallas, TXMilwaukee, WIRaleigh, NC Charlotte, NC

Houston, TXRiverside, CA

Austin, TX

Phoenix, AZ

2,000

4,000

6,000

8,000

10,000

12,000

14,000

-2,500 0 2,500 5,000 7,500 10,000 12,500

Ren

tal S

ubsi

dies

per

100

,000

Hou

seho

lds i

n 20

19


7,758 Rental Subsidies per 100k Households in 50 Largest Cities

R2 = 0.159β = 0.314


Rental Subsidies per Eligible


New Orleans, LA

Norfolk, VASeattle, WA

Richmond, VAMemphis, TN

New York, NYOrlando, FL

Baltimore, MDKansas City, MO Providence, RI

Atlanta, GA Louisville, KYMinneapolis, MNBoston, MA

San Jose, CA Cleveland, OHSalt Lake City, UTWashington, DC

Birmingham, ALPortland, OR

Buffalo, NYSan Francisco, CA Cincinnati, OHMiami, FL

Pittsburgh, PA Hartford, CTColumbus, OHSt. Louis, MOChicago, IL

Jacksonville, FLTampa, FLSacramento, CA

Denver, CO Philadelphia, PADetroit, MISan Antonio, TX

Nashville, TNSan Diego, CA

Indianapolis, INOklahoma City, OKDallas, TX

Las Vegas, NVLos Angeles, CA Riverside, CA Raleigh, NC

Milwaukee, WICharlotte, NC

Houston, TX

Phoenix, AZAustin, TX

10

15

20

25

30

35

40

45

50

38 40 42 44 46 48 50

% o

f Low

-Inc

ome

Ren

ters

with

a H

ousi

ng S

ubsi

dy in

201

9

% of Renters with Household Income < 60% AMI in 2019

Less than 29 rental subsidies for every 100 income eligible renter households in 50 largest cities


High Poverty Neighborhoods


Source: US. Dept of Housing and Urban Development Picture of Subsidized Households and LIHTC Database; American Community Survey


Summary of Key Findings• Median Rents Increased 5.1%; Median Incomes 2.0%• Rent Growth Correlated with Income and Supply Elasticity• HUD Projects 2.3% Increase in 2022; Mean Reversion• Increasing Number of LMI Renters; Slower than Non-LMI• Significant Excess Eligiibility Remains for Rental Subsidies

How Can We Make Housing More Affordable?• Lumber: Higher Cost of Materials; Reduce Tariffs & Innovate• Land: Increasing Demand for Limited Supply; Document• Legislative: Increasing Oversight & Uncertainty; Define Rules• Labor: Reduced Supply of Trades; Attract, Retain and Train

Summary & Implications



Upcoming Housing Supply


Michael D. Eriksen University of Cincinnati

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