The renter is a dwindling and buffeted breed in America.
Forty years ago, more than half the households in this country lived in rented quarters. Today, only about a third do.
That is partly a triumph of national policy; homeownership is part of the American dream. But there are some who are left out, as always; it is mainly the poor who rent, because they can't afford to own.
Yet as prices rise, increasingly they cannot afford to rent either -- rents consume a higher and higher percentage of renting households' income.
Nor can many people afford to build rental housing these days. Costs are staggering and there is little prospect of profit in it.
Low-income people needing rental housing, coupled with construction costs so high that it's virtually impossible to build much of it profitably, has led to what many economists call a crisis of rental housing in America.
Few new rental units are being put on the market. Vacancy rates have plummeted to near zero in some cities, making it increasingly difficult to find an apartment. It takes about 600,000 new multifamily rental units annually just to keep up with the need and replace decaying stock, but economists estimate that, left to itself, the free market would provide less than half of this.
Government has responded to this problem in two ways.
The first is through subsidies.
The federal government always has subsidized homeownership through the tax code. Mortgage interest payments and local property taxes on owner-occupied homes are tax deductible. In effect, the government pays part of the owner's housing costs, and the higher the owner's tax bracket the more the government's payment. The ownership subsidy is one of the largest on the federal books, and will cost the Treasury nearly $24 billion in the next fiscal year.
To meet the gap in rental housing, particularly for the poor, the government increasingly is subsidizing that, too. Rent supplements of various kinds for the poor during the next fiscal year will cost nearly $7 billion, up from $2.5 billion in 1976. They are rising faster than almost any other government program. Yet, this still doesn't provide enough decent new apartments for families that need them.
A second broad response to the gap in rental housing has been price controls -- but at the state and local government level rather than federal.
Many major cities have rent control laws similar to the one in the District. According to one estimate, as much as a fifth of the national population lives in areas where rent control is in effect or soon may be imposed.
There are more price controls in this area of the economy than any other, now that oil and gas are being decontrolled.
The aim of rent control is to make apartments available to low-income families at a rent they can afford, but many economists believe these controls are self-defeating. By holding profits down, controls discourage construction of rental housing that could expand the supply and ease the shortage.
While the shortage of rental housing is receiving increasing government attention, there appear to be no immediate solutions.
Only a decade and a half ago, the vacancy rate on rental units was more than 8 percent -- comfortable, perhaps a little loose, and allowing people to find apartments and rental houses with relative ease.
Today it is about 5 percent nationally, considered very tight, and in some cities it is far less. In Atlanta, according to a Citicorp. Real Estate Co. survey, it was 2.7 percent a year ago; in Denver, 2.5 percent; in Los Angeles, 1.8 percent; in Seattle, 1.9 percent -- all rates that are considered extremely tight.
"Reasonably priced rental units simply [are] unavilable in many major cities from New York to Los angeles," said Housing and Urban Development Secretary Moon Landrieu a few days ago.
The essence of the problem, according to Anthony Freeman, director of HUD's Office of Policy and Program Developemt, is that with population growing among young couples who usually start out in apartments, construction of reasonably priced rental units -- particularly in multifamily buildings with five units or more -- isn't keeping up with demand.
During the 1980s, according to one widely-used government estimate, the nation will need about 600,000 new multifamily rental units a year to meet needs of low- and moderate-income families and to replace apartments that are decaying or are below minimal standards.
But current projections, even before the latest mortgage-rate increases thrust the cost of financing into the stratosphere, were that only about 300,000 units a year would actually be built -- half of these through government subsidy programs.
Economists and builders give many reasons for the failure of the housing marketplace to supply the needed number of units.
The high interest on building loans and high costs of construction usually are cited as the most important. They make construction costs so prohibitive that most people who can afford rental housing find it cheaper to buy and deduct homeowner interest on their taxes. So little new rental housing is built.
Another reason cited is rent control.
New York, Boston, Washington, San Francisco, Los Angeles, Baltimore, Buffalo, parts of New Jersey -- all have or have had until recently some form of rent control. On the West Coast, it was put in only recently.
In a recent study for the Joint Economic Committee, housing expert George Sternlieb of Rutgers concluded: "The reality or the threat of rent control has had a very strong chastening influence upon lender and builder willingness to become involved in the multi-family rental housing industry."
What happens, according to Anthony Downs, a housing expert at the Brookings Institution, is that "political pressures from tenants, who vastly outnumber landlords, always persaude rent control administrators to prevent rents from rising as fast as expenses, thereby penalizing property owners.'
According to this theory, when owners can't make a good profit, they "disinvest" in various ways.
For example, in New York, according to some economists, many owners simply stop repairing the buildings while continuing to collect rents. They also stop paying taxes. Eventually they abandon the bulding for tax arrears. New York, according to Freedman, has 80,000 such city-owned units. a
In other situations, owners will convert to condominiums, sometimes ousting the current tenants. They will cut back on repairs -- and the buildings deteriorate.
Not everyone buys this theory. Marie Nahikian, a member of the District of Columbia Rental Accommodations Commission, believes that rent control is only a symptom of housing shortages, not a cause.
Other factors, according to various experts, operate even where there isn't any rent control. One is the ability of tenants to use eviction laws, courts, and rent strikes to keep rents down and make it difficult to be a landlord. Some call it "the hassle factor."
And Downs says that small landlords usually prefer to keep a good tenant rather than risk losing him by raising the rest as high as they could.
These factors exert a downward drag on rent levels, Downs says.
Since the market really doesn't work to provide new rentals, the U.S. government is heavily into subsidies. It has been building public housing and providing various forms of rental or rental-construction subsidies for years.
In fiscal 1981 it will provide $5.2 billion in outlays for low-income public housing and "Section 8" rental subsidies to poor families, in addition to $643 million in rental housing mortgage subsidies that result in lower monthly costs to tenants, as well as $231 million in another rent subsidy program.
The costs of these programs per unit are high by many tenants' standards. According to recently published government regulations, a three-bedroom "Section 8" walkup in San Francisco, being built for use by poor people will call for $804 in monthly rent -- with the government paying a large portion of this for the low-income family that gets the apartment.
In a five-story elevator building the allowable rental for three bedrooms will be $978. In Washington, D.C., a three-bedroom walkup will bring $564. w
Sternlieb doesn't believe Congress will continue to provide money for such rentals, so he anticipates difficulties in getting new subsidies for rentals. He expects that the new housing simply may not be built.
"When housing is cheap and available, two snot-nosed brats can go out and leave home and get an apartment together," he said. "When housing is expensive, you don't. You stay in and double up with your parents."
Doubling up and a reversion to an earlier, money-shortage may be the prospect, he said, adding: "Welcome to the 1940s."