There is a crisis in rental housing in the country. If you live in an apartment -- or your children are looking for an apartment -- you know how bad it is. Some 26 million American families are renters, and many of them are gradually being squeezed out of a place to live. A survey of current trends in rental housing suggests that this squeeze is only going to get worse. The outlook:
Even fewer choices of apartments. Today's national vacancy rate is 4.8 percent and 2 percent in many cities. That's the lowest level ever recorded in the 20 years that data has been kept. Family housing is especially short. Yet new apartments are not being built to meet demand.
Higher rents. The traditional rule of thumb is that you should pay no more than 25 percent of your gross income for housing. Most new homeowners gave up that limit long ago, and renters, too, will have to face the change. Cary Lowe, tenants' rights activist and codirector of the California Public Policy Center, says that, "On a national basis, like it or not, the amount of household income neccessary for rent will be 35 percent unless there is a dramatic change in government housing subsidies." A good many renters already pay more than 35 percent.
Doubling up. As rents rise, fewer people can afford their own apartment in the neighborhood they want. So, singles who formerly lived alone are starting to share. Small families are sharing rental homes. People who own homes witgh spare rooms are renting them out, often in difiance of local zoning rules. Young people newly out of school are staying home rather than moving out.
Smaller apartments. When a new building is put up or an older one renovated, less floor space is allocated to each unit. Rooms are smaller; there are more one-room apartments; amenities like extra closets and a dining alcove are going the way of the dinosaur. This is one of the reasons families have such trouble finding adequate space. Yet if the apartment were truly large enought for a family's needs, it would probably cost more than the family could afford.
More condominiums. The better apartment houses are rapidly being turned into condominiums. That's good, in that they give many middle-income people their only shot at owning their own homes, but bad, in that condos take good buildings out of the rental market and force long-term renters to move.
More housing deterioration. This means more substandard housing for low-to-moderate income people. The problem touches the elderly, the working poor, young people out of school and the newly divorced or widowed, as well as the welfare population. In many cases incomes have not kept up with rents. But rents have not kept up with the cost of operating full-service buildings. So, both renters and landlords are squeezed.
About 10 million of the total 12 million existing rental units are in the hands of private owners, most of them owners of just a few apartments. Many of these apartment houses have become poor investments for one or more reasons: the capital-gains potential is declining because the city neighborhood is going downhill; rent controls keep landlords from earning a competitive returen; even in the absence of rent controls, landlords can't raise rents fast enough to cover costs, because the local tenant population can't afford it; high intrest rates, or poor collateral, prevent landlords from getting a second mortgage.
All these trends converge to discourage long-term investors in rental housing who conserve and improve their properties, and attract instead the type landlord wih milks a building dry, then moves on.
Virtually no middle-income apartment houses are being built today privately. They're almost all government subsidized. And there's not enough money in the federal budget to house all of middle-income America. So the squeeze will go on.