Freddie Mac Study Finds Significant Savings on Rent for Households in Housing Credit Units Compared to Market-Rate
Freddie Mac has published new research illustrating the significant financial savings Housing Credit tenants are able to achieve compared to low-income households living in comparable market-rate rental housing. Freddie Mac looked at trends in rent levels in nine metropolitan areas across the country between 2012 and 2017, comparing the average market-rate rent in each of these areas to the 60 percent of Area Median Income (AMI) Housing Credit rent limit for a two-bedroom apartment. While the average Housing Credit apartment was only modestly more affordable than the average market-rate apartment in 2012 in the metro areas studied, market-rate rents increased far faster on average than Housing Credit rents. By 2017, the average Housing Credit restricted rent payment was 38 percent lower than the average market-rate rent in the areas analyzed in the study.
The study looks at rental trends in Albuquerque, New Mexico; Nashville, Tennessee; Minneapolis, Minnesota; New York, New York; Los Angeles (L.A. County), California; Los Angeles (Riverside County), California; Orlando, Florida; Salt Lake City, Utah; and Austin, Texas. Over the six-year time frame, the average annual increase in market rate rents ranged from a low of 1.6 percent in New York to a high of 7.9 percent in Nashville, with an annual average of 5 percent per year across the areas studied. Conversely, the average annual change in the 60 percent of AMI Housing Credit rent ranged from a reduction of 0.7 percent in Los Angeles (Riverside County) to an increase of 3.2 percent in New York, with an annual average increase across metro areas of just 0.9 percent.
The study shows the benefits of Housing Credit homes to tenants, not just in the total rent paid, but also in the modest and predictable rent increases on a year over year basis.