On the surface, the connection between the foreclosure crisis and lack of affordable housing may seem weak. But on closer look, there's a big impact. That's what the Harvard Joint Center for Housing Studies found in its most recent report, “America's Rental Housing: The Key to a Balanced National Policy.”
The Mortgage Bankers Association says that one out of every five foreclosures involved absentee owners. The National Low Income Housing Coalition says renters make up 45 percent of households whose homes are in foreclosure in four New England states.
Since a foreclosure generally overrides a lease, many tenants in these buildings must move. “People who are getting kicked out of their housing are becoming homeless,” says Sharon Price, director of policy for the National Housing Conference, an advocacy group based in Washington, D.C.
For those displaced, renting may be the most likely option. The Joint Center says renter households jumped by 2.8 percent, or nearly 1 million in 2007. Many of these people are competing for limited affordable housing. Only 20,000 new apartments renting for less than $750 a month were completed in 2006, and many older affordable units have been destroyed, according to the study.
“The demand for affordable rentals never really went anywhere,” says Janis Bowdler, associate director of the Wealth-Building Policy Project for the National Council of La Raza, a Hispanic civil rights and advocacy organization based in Washington, D.C.