People in rural communities have different needs then those in urban centers. Some families need secure rental housing while others can benefit from sustainable home ownership.
At Enterprise, we focus on local and community needs. We have helped to create communities with both stable home ownership opportunities for families and affordable and safe rental housing. As the financial crisis has shown, America needs a spectrum of housing options. During the past 10 years, many borrowers had unsustainable home loans. Millions of homeowners are underwater on their mortgages. Irresponsible lending coupled with high unemployment has led to un- precedented foreclosure rates and vacant homes creating neighborhood blight. This crisis is undermining decades of progress that Enterprise and our national and local partners have made in revitalizing neighborhoods and bringing economic develop- ment, jobs and community safety improvements to underserved and low-income communities. As the pendulum swings back to a more balanced housing policy and more home- owners look to the rental market, either out of choice or necessity, it is critical that Congress and the Administration ensure that affordable housing is available — this means ensuring that there is a stable source of capital and liquidity for affordable home ownership and rental housing. Any shift away from the cur- rent GSE structure must be done carefully and must ensure that viable affordable housing options — both home ownership and rental — exist in all communities.
We must do no harm and take time to truly understand the consequences of housing finance reform on all borrowers and communities and all market segments. We urge Congress to consider how any new structure will impact the availability of credit to affordable housing and to ensure access to capital for all communities. However, the GSEs have played a critical role in ensuring the availability of capital for affordable housing — through their loan purchases and securitizations as well as their investments in the Low Income Hous- ing Teix Credit.
The Government cannot walk away from all Government support of this market segment. We must think carefully before proceeding with a quick wind down of the GSEs without a successor financ- ing system in place. To begin, consider that in the United States today, there are 38. Sixty percent of the unsubsidized rentals are in properties with four units or fewer. By contrast, the United States has 6 million units of subsidized rental housing. More than 16 million units, or 47 percent, of rental housing are in buildings with 5 or more units, with more than 40 million people living in this hous- ing.
Only 25 percent of those eligible to receive housing subsidies actually receive any form of assistance. Thirty-eight percent of renters are cost-burdened, meaning they spend more than 50 percent of their monthly income on rent. And this number con- tinues to grow: according to HUD, this population increased by 1.
In general, renters have lower incomes than homeowners. There is no county in the United States in which a minimum wage worker can afford a one-bedroom apart- ment at the fair market rent. The current stock cannot meet the demand for affordable housing, and the need continues to grow. According to the National Multi Housing Council, there will be an additional 6 million renter households between 2008 and 2015. Construction of and investment in multifamily properties has been severely curtailed amid the hous- ing market crash. Multifamily housing starts in 2009 were just over 100,000, well below the annual average of 300,000 between 1995 and 2004. According to the Joint Center for Housing Studies at Harvard University, in 2009 there were 10. Existing rental housing is older, and much is in need of rehabilitation and repair or outright replacement.
This data demonstrates the tremendous need and demand for affordable housing in this country. Both the public and private sectors have critical roles to play in the affordable rental market. Without support from the GSEs, much of the supportive, affordable, and workforce housing built in the past decade would not exist. The GSEs have been a constant and reliable source for the much-needed liquidity for the multifamily housing sector. They have been a long-term, reliable source of financing, especially for complex real estate developments in hard-to-serve areas, including rural and Native American communities. The only net additions to outstanding multifamily debt since 2008 have come from Fannie Mae, Freddie Mac, and the FHA. During the past decade, the LIHTC program has produced 90 percent of all affordable multifamily housing in the United States. Before the financial crisis, the GSEs provided 40 percent of LIHTC investments, producing countless rental homes.
But the financial crisis has meant the withdrawal of Fannie Mae and Freddie Mac, along with other financial institu- tions, from the LIHTC market. House Financial Services Committee Hearing on the Fu- ture of Housing Finance.
House Financial Services Committee Hearing on the Future of Housing Finance. I would like to take a moment to explain what these numbers mean for some of your constituents. It was made possible in part by permanent debt originated by Enterprise and purchased by Fannie Mae, as well as Low Income Housing Teix Credit equity that was purchased in part by Freddie Mac through an Enterprise multi-investor fund. Residents have access to playgrounds and computer centers. Importantly, residents also have access to a day care center, providing a safe place for children while their parents are at work. Were it not for the support from the Government-sponsored secondary market, this development and many oth- ers would not exist.
Principles for Housing Finance Reform: Liquidity, Stability, and Afford- ability Any new housing finance system must provide liquidity, stability, and afford- ability. Access to capital for underserved communities — whether small rural towns, tribal communities, or low-income urban neighborhoods — must be preserved. In gen- eral, we believe that the Government should have a role, albeit more limited, in the housing system. CDFIs, small community banks, credit unions, regional banks, large national banks.