ATL renters, homeowners: Harvard report portrays two distinct financial realities

By David Pendered

In metro Atlanta, homeowners and renters are living in two completely different financial realities. The coronoavirus pandemic has only widened the divide, according to the latest edition of Harvard University’s annual report, The State of the Nation’s Housing.

old, new apartments — Older apartment buildings that had aged into price points that pass as affordable have been eclipsed by new residential towers with units priced much higher than the older neighbors. Credit: Kelly Jordan

The report is national in scope and local in detail. For metro Atlanta, the interactive maps show:

Renters: Nearly half faced affordability challenges in 2019. Pandemic-related job losses have exacerbated their financial stress, according to the report.
Homeowners: A fifth faced affordability challenges in 2019. A combination of governmental interventions and rising home values have helped keep foreclosures at bay.

In the national overview, the report begins with the a grim reminder of the nation’s challenge in providing residences that are affordable to those across the income spectrum: “Although on a downtrend, the number of cost-burdened households was still 5.6 million higher last year than in 2001.” Cost-burdened households spend 30 percent or more of income on housing costs, according to a standard that’s been generally accepted since 1981.

The Joint Center for Housing Studies of Harvard University issued The State of the Nation’s Housing 2020 on Nov. 19. Since its first edition in 1988, the report has become a go-to resource and guide in the national discussion on housing policy.

The report concludes with a section titled Housing Challenges, which amounts to a next-steps outline of suggested housing policies. The section observes: “[M]uch more housing assistance – and housing supply – is necessary to counter the combined effects of the affordability crisis and the pandemic.” The section contains its own set of startling information, such as:

Newer apartments in Atlanta are in accord with a national trend of aiming for the growing proportion of renters by choice, who can afford relatively high prices. Credit: Kelly Jordan

“The shares of Black and Hispanic households behind on housing payments were more than twice as high as that of white households. Among renters, 23 percent of Black households and 20 percent of Hispanic households were behind, compared with 10 percent of white households.
“The disparity among homeowners is also substantial, with 17 percent of Black owners and 18 percent of Hispanic owners behind on their mortgages, compared with just 7 percent of white owners.”

In addition to this banner, the report offers this view of housing affordability in the 29-county metro Atlanta region:

All housing

“Share with cost burdens: 29.5%
“Share with severe cost burdens: 13.8%;
“Households with cost burdens: 710,232;
“Median household income: $69,600;
“Median monthly housing costs: $1,203.

Renter housing

“Share with cost burdens: 47.8%
“Share with severe cost burdens: 23.3%;
“Households with cost burdens: 405,696;
“Median household income: $45,000;
“Median monthly housing costs: $1,190.

Homeowner housing

apartments, highland — Atlanta’s stock of rental apartments that are more than 50 years old, and priced accordingly, are being replaced by structures that offer modern conveniences and the prices that go with them. Credit: Kelly Jordan

“Share with cost burdens: 19.6%
“Share with severe cost burdens: 8.6%;
“Households with cost burdens: 304,536;
“Median household income: $86,900;
“Median monthly housing costs: $1,223.”

The national data provides context for these local figures.

Those able to enter the homeownership market face headwinds that include pricing, while low interest rates provide a tremendous opportunity for those who can overcome the entry to ownership.

Renters, as a group, have lower incomes than owners and thus are at greater risk of job loss.

Lower income renters also are competing with an emerging group of wealthier households that rent by choice, plus a growing cohort of older households that rent by choice.

The report observes:

“Some 7.9 million renter households were added between the homeownership peak in 2004 and 2019, bringing the total number to 44.0 million. With higher-income households driving over half of this growth, the number of renter households with incomes of at least $75,000 increased by 4.6 million in 2004–2019 and their share of renter households jumped from 18 percent to 26 percent.
“Meanwhile, the number of renter households with incomes under $30,000 grew by just 654,000 over this interval, reducing their share of renters from 42 percent to 36 percent. Indeed, the number of lower-income renter households was on the decline in recent years, including a drop of more than 750,000 in 2019 alone.”

Principal funding for the report is provided by the Joint Center’s policy advisory board, ABC Supply Co., and supplements by 16 entities including NeighborWorks America, which partners in metro Atlanta with Atlanta Neighborhood Development Partnership.