The executive director of Harvard’s Joint Center for Housing Studies, Eric Belsky, opened a national summit on rental housing policy Tuesday morning (Nov. 14) with a sobering assessment of America’s rental properties as increasingly unaffordable, rundown, and concentrated in blighted neighborhoods.
“I want to create the impression in your mind that these are major challenges. These forces are significant. They are not small, not modest,” Belsky told a packed room in the Taubman Building’s Nye Conference Center. “There’s a lot of reason to be concerned.”
After laying out the complex and persistent challenges besetting the industry, Belsky called on the “Revisiting Rental Housing” conference participants to push beyond old ways of thinking about those problems and to strive for bold, innovative solutions during the two-day meeting.
Belsky, a lecturer in the Harvard Graduate School of Design (GSD), stressed the essential importance of apartments and rental homes to the prosperity and standard of living of Americans. Home ownership may be the American dream for most, but rental housing crucially allows people to relocate easily and pools the risk of property investing with individuals or companies sufficiently diversified to manage it.
While a home can be a solid financial asset, Belsky noted, a real estate portfolio consisting of one property in a single market also is an alarmingly undiversified investment. And home ownership often isn’t financially advisable for the millions of Americans whose lives are in transition, he said.
“So, perhaps it’s not surprising that when you run the numbers, that 70 percent of people who report moving for job-related or financial reasons rent,” Belsky said. “You’d like a world where they have a full set of choices and a full range of geographies.”
Among people who are divorced or separated, 47 percent rent, while 67 percent of people under 35 live in rental properties, he added.
“Clearly it’s a critical choice because for so many it’s the only choice,” Belsky said.
But the nation’s rental market has long struggled with a number of challenges – not the least of which is lack of affordability. Belsky reeled off several eye-opening statistics to underscore his point, including the figure that 8.4 million Americans spend more than half of their income on rent.
“That’s really a shocking number and, in fact, it’s up a million. It went up 14 percent in just five years,” Belsky said. “It’s a very dramatic and significant problem.”
Belsky also expressed concern about the clustering of low-rent apartments in city centers and of poor renters in declining neighborhoods. Studies have shown that nearly four out of 10 rental properties leased at or below $400 a month are located within 5 miles of city centers, he said. Meanwhile, roughly the same portion of renters makes less than $20,000 a year.
“It isn’t just that rental housing has become very unaffordable. It’s where it is and where it isn’t,” said Belsky, who attributed the problems to several factors including low and stagnant incomes among many renters amid soaring housing costs.
Supported by the John D. and Catherine T. MacArthur Foundation, the policy summit drew nearly 100 scholars, policymakers, landlords, and political leaders from around the country. The Joint Center for Housing Studies is a collaborative venture of the GSD and the John F. Kennedy School of Government.
The conference’s six panels examined the operation of the rental market, the role of government in solving rental market problems, whether current housing policy is working, rental subsidy programs, local government resistance to apartment developments, and possible new approaches to rental housing policy.
The keynote address on the impact of government land use regulation on rents was also given on Tuesday by Fred and Eleanor Glimp Professor of Economics Edward Glaeser of the Kennedy School.