Tackling Affordability with Fannie Mae’s Multifamily Chief

By Jeff Hayward

Jeff Hayward, Executive Vice President and Head of Multifamily, Fannie Mae

More than one-third of U.S. households—about 44 million—are renter households, and nearly 60 percent of those are classified as low-income. Many struggle to make rent payments, buy food and afford the basics.

At the same time, these households often face rising rents, a decline in the number of vacant low-income apartments and only modest growth in their paychecks. Many families are forced to find a less expensive rental or stay put and pay higher rent. It’s a difficult choice, especially for families trying to stay close to work, school or relatives.

How We Got Here

This squeeze has been evolving for years because there’s an imbalance between the units being built (the supply) and the number of people who want to rent them (the demand).

When it comes to new affordable units, about 100,000 are built each year on average, according to data published by the National Housing Trust. Yet, for every new affordable unit added to the pool of rental housing, two are lost from deterioration, abandonment or conversion to market-rate housing.

Construction of new units is closely tied to what builders think will bring them the highest return. Additionally, construction costs have been rising across the country, and not just in prosperous metropolitan markets. As a result, without a subsidy, developers are more inclined to undertake new projects where they can generate higher rents. Not surprisingly, most current multifamily construction is tailored for high-end buildings located in large cities where Millennials are driving demand.

While some subsidized rental housing is being built, it’s not enough to serve the demand from the lowest-income households—families earning less than half of the median income in their cities. Subsidized housing is a small part of multifamily construction and generally represents less than a quarter of new construction annually.

The combination of these factors is driving rents up and vacancy rates down. Until wages rise faster than rents, and supply increases substantially, there won’t be a resolution to this economic challenge.

So, Where Do We Go Next?

The crisis in affordable rental housing is a complex problem. There won’t be one solution—we need to pursue many avenues at the same time. But we’ll need the collective wisdom of lenders, state and local government, developers, housing experts and advocates.

Our mission is to provide access and affordability in all markets at all times. We want to work with those who have a stake in affordable housing to take a fresh look at the path forward. Specifically, we want to bring together affordable housing investors and state and local government representatives to identify the best ways to create more units for low- and moderate-income renters. More broadly, our goal is to expand our network of affordable housing partners to include more investors, lenders and other organizations with a vested interest in addressing the affordable housing crisis.

We are driven to make Fannie Mae America’s most valued housing partner and to provide safe, affordable rental options to families across the nation.