Harvard’s Joint Center for Housing Studies has published a new report on the state of rental housing in the United States – America’s Rental Housing: Meeting Challenges, Building on Opportunities.

The report notes that with little new multifamily supply in the pipeline (multifamily starts for 2010 totaled only 116,000) and a decreasing rental vacancy rate, rents could rise quickly over the short-run.

The JCHS authors also note the importance that rental housing offers for individuals, as most people rent at sometime during their lifecycle, typically prior to attaining homeownership.

The report highlights the growing affordability crisis among renters. As of 2009, the share of renting households who paid more than 30 percent of their income on rent had grown to 49 percent, with 26 percent of such households paying more than 50 percent of their income. In comparison, in 1960 only 24 percent of renting households paid more than 30 percent of their income for rent, but by 2000 that figure had reached 38 percent. In general, this decline in rental affordability is due to declining real incomes among renters as well as increasing housing costs, including energy costs.

The JCHS team notes that the Low-Income Housing Tax Credit (LIHTC) “is nearly alone” as a policy capable of replenishing the affordable housing stock. From 1986 to 2007, this private-public partnership program has led to the development of nearly 1.7 million affordable rental housing units, with two-thirds of this total being new construction. Yet the LIHTC has been among “tax expenditures” up for elimination in various Treasury Department and fiscal deficit commission reports.

Based on demographic factors, the JCHS estimates that the number of renting households will increase annually by 360,000 to 470,000 between 2010 and 2020. Given this expected growth and constraints on multifamily supply, the reports predicts “worsening” rental affordability conditions.

Consequently, the JCHS identifies sources of affordable financing for smaller multifamily rental properties as an item of concern, especially given ongoing tax and housing finance policy debates. This is in line with ongoing NAHB efforts to secure definite solutions for the housing finance system, including a federal backstop for multifamily (and single-family) development financing and protection and improvement for the LIHTC program.