Review To Assess Rental Housing Market Conditions

GAO reviewed the rental housing market to assess the condition of private and subsidized rental housing and to determine the major factors responsible for the current situation and the effect on lower income households. The Department of Housing and Urban Development's responsibility for administering programs to encourage production or maintenance of rental housing includes: (1) providing funds to facilitate the financing of construction, purchase, or rehabilitation of multifamily housing; and (2) assisting lower income families obtain decent, safe, and sanitary housing through rent subsidies. Currently, about 35 percent of American families live in rental housing and are faced with the nation's lowest recorded vacancy rate. Most renters have lower incomes than homeowners, and although most incomes have increased, the increase for renters has been much less than the increase for homeowners. The national rental vacancy rate has been declining since 1974, and the rental housing market has reached a crisis. Primary factors responsible for this crisis are low levels of moderately priced new private construction and losses of existing units through abandonments and conversions to condominiums. Rapidly escalating operating costs and the increasing age of the existing rental stock also have a detrimental effect. The burden of providing multifamily rental housing has historically been shared by the private sector and the federal government with the private sector dominating the market. However, the proportion of federally subsidized multifamily rental construction has steadily increased so that an estimated 75 percent of multifamily construction starts were federally subsidized in 1979. If this trend continues, there will be even greater reliance on federal housing programs, particularly for lower income households. The number of households in need of, and qualified for, assistance still exceeds the number of subsidized units the government is able to provide. While new construction is important in the rental market, existing stock must also be improved physically and financially. The problem is so severe that immediate attention and action by Congress and the Administration is needed.