Renters in multifamily apartments of five or more units currently account for 15 million U.S. households and that figure is expected to rise even more as demographics and housing preferences shift, a Fannie Mae executive said.
Various factors are driving the increase in rental housing affordability, including demographic trends, household formations, higher credit standards for residential mortgages and changing attitudes about homeownership in light of the housing crisis, according to Senior Vice President David Brickman of Multifamily at Freddie Mac. Brickman made those assertions in a blog this past week.
However, adequate, affordable rental housing is hard to find in certain parts of the country due to gross rent, which is rent plus tenant-paid utilities.
More than half of all renters spend more than 30% of their income on housing, up from 40% of renters in 2000. Additionally, roughly 30% of renters spend at least 50% of their income on housing while low-income households tend to spend even larger portions of their incomes on rent, according to the U.S. Census Bureau’s American Community Survey 2000-2011.
Nonetheless, Brickman noted that Freddie Mac’s dedication to support affordable rental housing is in the government-sponsored enterprise’s ‘DNA.’
“Working closely with multifamily property owner/borrowers and our network of lenders, Freddie Mac Multifamily structures financings in a way that lets us offer very competitive, long-term rates,” he said.
Brickman added, “Owners realize lower costs of ownership and the benefits are typically passed on to tenants through sustainable, viable properties and lower rents than might otherwise be available.”
Freddie Mac Multifamily purchased more than $150 billion in mortgage loans, financing nearly 2.6 million rental units, between 2005 and 2012.
In January, Freddie Mac set a new record for multifamily loan purchases as well as guarantee volumes.
The GSE’s multifamily business volume reach a record of $28.8 billion, or a 42% increase, compared to $20.3 billion in 2011, according to Brickman’s blog.
“Freddie Mac’s consistent support for the entire multifamily rental housing market provides significant confidence to private apartment developers and construction lenders,” Brickman stated.
He added, “In turn, this helps ensure a strong and stable pipeline of new apartment communities to accommodate the growing demand for affordable rental housing.”