The Renter Squeeze: Minority and Low Income Renters Feel Pressures from Housing Boom and Weak Labor Market

The Renter Squeeze: Minority and Low Income Renters Feel Pressures from Housing Boom and Weak Labor Market Nathaniel Loewentheil Christian E. Weller, Ph.D. July 2005

The Renter Squeeze: Minority and Low Income Renters Feel Pressures from Housing Boom and Weak Labor Market Nathaniel Loewentheil, Development Director, Roosevelt Institution, and Christian E. Weller, Ph.D. Senior Economist, Center for American Progress. Introduction Since 1995, housing prices have boomed. At the same time, rents have risen to their highest levels in decades. In a weak labor market, many renters spend more of their incomes on paying their rents. This has put many renters, who are disproportionately lower income families, in a bind. Many renters have a harder time moving into their own homes and must spend a growing share of their incomes on rising rents. Poor and minority renters in particular also must cope with worsening public education and transportation systems. A closer look at the data shows the following: Since 1995, when the housing boom began inflation adjusted rents have risen to their highest level in thirty years. Rising rents come at a time of lower inflation-adjusted renter incomes. The typical income for renter families fell by 8.4 percent from 1995 to 2003. Minorities face added obstacles in the rental market due to persistent housing discrimination. Mobility from renting to owning has slowed. The share of owners who were renters in the previous year declined by 13 percent from 1995 to 2003. Renters live in worse neighborhoods and lower-quality homes than owners. Renters have also experienced worsening public education, and many renters, especially African-Americans and poor families, have seen higher costs associated with transportation. The deteriorations for renters were worse than for homeowners. The Housing Boom is Mirrored in Higher Rents Starting in 1995, home prices rose faster than inflation and reached unprecedented levels, even after adjusting for inflation (figure 1). Since March 1995, inflation adjusted house prices rose by 48.0 percent through the first quarter of 2005. The Renter Squeeze 1

Figure 1: Real Housing Costs 190 180 170 160 Index 150 140 130 120 110 100 Mar-75 Mar-80 Mar-85 Mar-90 Mar-95 Mar-00 Mar-05 Date Notes: Real housing costs are the house price index divided by the CPI-U. Authors calculations are based on data from the Bureau of Labor Statistics, 2005, Consumer Price Index, Washington, D.C.: BLS, and Office of Federal Housing Enterprise Oversight, 2005, House Price Index, Washington, D.C.: OFHEO. The sharp appreciation of house prices contributed to homeowners borrowing record amounts of debt. Homeowners regularly took out more new debt than they needed to finance expansions or renovations of their homes. These home equity cash outs added an additional 2.6 percent of disposable income to consumers spending power in this business cycle (figure 2). The Renter Squeeze 2

3% 2% Figure 2: New Mortgages Minus Real Investment Spending as Percentage of Disposable Income 2.6% 1% Percent 0% -1% Aug. '53 Sep. '57 May '60 Jan. '71 Dec. '73 Feb. '80 Aug. 90 Apr. '01-0.5% 0.0% -0.8% -2% -1.9% -1.7% -3% -4% -3.3% -2.9% Business Cycle Start Date Notes: The series describes the difference between mortgages minus additional investments in residential real estate relative to personal disposable income. Business cycle dates are taken from National Bureau of Economic Research, 2005, Business Cycle Dates, Cambridge, MA: NBER. Authors calculations based on Board of Governors of the Federal Reserve System, 2005, Release Z.1 Flow of Funds Accounts of the United States, Washington, D.C.; BOG. Many homeowners also used the additional money to invest in real estate (Deane, 2005; NAR, 2005). They either bought properties with the intent to sell them quickly with a profit or to reap a steady income from renting them out. This meant, however, higher rents as homeowners investing in real estate needed to cover ever larger mortgage payments. In recent years, the costs of inflation adjusted rents and the debt service for mortgages have moved fairly close together (figure 3). By early 2005, the debt service for mortgages for homeowners had risen to 10.4 percent of disposable income, while inflation adjusted rents had climbed to their highest level since 1974. The Renter Squeeze 3

Figure 3: Rents vs. Mortgage Service Costs 115 12 110 10 Real Rental Index 105 100 95 8 6 4 Percent 90 2 85 Mar-80 Mar-84 Mar-88 Mar-92 Mar-96 Mar-00 Mar-04 Date 0 Real Rents Debt Service Ratio Notes: Real rents are the consumer price index for rental properties divided by the CPI-U. Authors calculations are based on data from the Bureau of Labor Statistics, 2005, Consumer Price Index, Washington, D.C.: BLS. Source for debt service ratios is Board of Governors of the Federal Reserve System, 2005, Household Debt Service and Financial Obligations Ratios, Washington, D.C..: BOG. Higher house prices also translated into higher rents because landlords wanted to be compensated for the loss of capital gains through higher rents. The question, though, is why landlords could increase rents since vacancies were at record highs. Since 2003, the rental vacancy rate hovered at or above 10 percent for the first time since the Census collected this information in the 1960s (Census, 2005). The answer is that rising rents were possible because many renters could not afford to move into their own homes. As we discuss below, mobility from renting to owning slowed during the housing boom. Renters Squeezed Between Rising Rents and Low Income While renters dedicated more than 30 percent of their disposable income in recent years to meeting their financial obligations, including rent payments, homeowners paid only around half of that, 16.1 percent (figure 4). * This difference reflects the fact that renters typically have lower incomes than homeowners (table 1). In 2003, the median family income for homeowners was $51,061, whereas renters had a median family income of less than half that with $24,313. In fact, a full fourth of all renters lived below the poverty line in 2003 compared to 7 percent of homeowners. Financial obligations relative to * Another explanation for the greater rise in financial obligation ratios for renters is that low-income families, who are disproportionately renters, are increasingly borrowing debt in more costly forms of credit than higher income earners (Ausubel, 1997; Bird et al., 1999; Black and Morgan, 1999; Gross and Souleles, 1998; Manning, 2000). Importantly, renters do not have access to tax advantaged forms of credit, such as mortgages and home equity lines (Dunsky and Follain 2000, Stango 1999). The Renter Squeeze 4

disposable income have also grown much faster for renters than for homeowners because renters have seen less income growth (table 1). While financial obligations for homeowners rose by 1.4 percentage points relative to disposable income from March 1995 to March 2005, it grew more than three times faster for renters, by 5.0 percentage points (figure 4). Homeowners saw an increase of 8.9 percent from 1985 to 2003 in their inflation adjusted incomes and renters saw a decline from $24,727 in 1985 to $24,313 in 2003. Figure 4: Financial Obligations Relative to Disposable Income 35 30 Percent 25 20 15 10 Mar-80 Mar-84 Mar-88 Mar-92 Mar-96 Mar-00 Mar-04 Date Renters Owners Notes: Financial obligations include all interest and principal payments on debt, leases, and rents. Source is Board of Governors of the Federal Reserve System, 2005, Household Debt Service and Financial Obligations Ratios, Washington, D.C..: BOG. The Renter Squeeze 5

Year Percentage of U.S. population Table 1 Characteristics of Renters and Owners Percentage African- Living Below American Poverty Line Percentage (as percent of (as percent of respective respective population) population) Median Family Income (2003 dollars) Hispanic Percentage (as percent of respective population) Median Size of Property (sq. ft.) Rent Own Rent Own Rent Own Rent Own Rent Own Rent Own 2003 29% 71% 24313 51061 25% 7% 21% 9% 24% 9% 1299 1821 2001 29% 71% 25235 51002 24% 8% 22% 9% 20% 9% 1297 1799 1999 30% 70% 25502 50480 26% 8% 21% 9% 20% 8% 1293 1795 1997 31% 69% 23858 48896 29% 9% 21% 9% 19% 7% 1275 1824 1995 32% 68% 26539 48121 29% 9% 21% 8% 18% 7% 1270 1814 1993 32% 68% 24139 46458 29% 8% 20% 8% 16% 6% 1274 1805 1991 33% 67% 25237 46744 26% 8% 20% 8% 15% 5% 1255 1775 1989 33% 67% 26894 49054 25% 7% 19% 8% 15% 5% 1272 1766 1987 32% 68% 26293 48927 26% 7% 20% 8% 13% 5% 1248 1725 1985 33% 67% 24727 46911 29% 8% 19% 8% 12% 5% 1245 1712 Notes: All dollar values are in 2003 dollars. Percentages are relative to the relative renter or owner population. Median property size only includes occupied detached 1-family homes and 1-family mobile homes. Source is the U.S. Census Bureau, American Housing Survey, various years, Washington, D.C.: Census.

Minorities Face Additional Obstacles Due to Discrimination Minorities are disproportionately represented among renters. African-Americans constituted 21 percent of renters and Hispanics another 24 percent in 2003, compared to 9 percent each of homeowners. Minorities face additional obstacles in moving from renting to owning due to discrimination. Discrimination can take many forms, including withholding information about available incentives, redlining, and geographic steering. Geographic steering is when real estate agents show prospective clients housing units in neighborhoods where the client s race is predominant, show minorities to neighborhoods with a lower socioeconomic value, or show homes located in better school districts to one particular racial group (HUD, 2000). HUD (2000) found evidence of consistent adverse treatment, i.e. the percentage of landlords, real estate agents, etc. who treat white and minority home-seekers unequally. For African-American renters, the incidence rate of adverse treatment was 21.6 percent in 2000. For Hispanic renters, that number was 25.7 percent. The upper-bound estimates showed that African-Americans and Hispanics experienced adverse treatment half of the times they visit rental offices or real estate agents. Housing discrimination has in general remained relatively constant, while some forms, such as geographic steering, have grown. Geographic steering occurred for 15.8 percent of whites and 12.1 percent of African-Americans. Both of these percentages increased since 1989, the percentage of whites being steered increasing by a startlingly 9.8 percent (HUD, 2000). Similarly, Hispanics were steered to predominantly Hispanic neighborhoods 15.6 percent of the time, a 7.1 percentage point increase since 1989. As a result of discrimination, among other factors, the U.S. is heavily segregated. In the largest 69 urban areas, more than two-thirds of whites live in neighborhoods which are less than 5 percent African-American, while more than half of all African-Americans live in neighborhoods which are more than 50 percent African-American. Furthermore, 41 percent of African-Americans live in hyper-segregated neighborhoods, which are located near other all African-American neighborhoods (NFHA, 2005). Mobility has Slowed, Especially for Minorities Many renters face serious obstacles to moving from renting to owning. The booming housing market and the weak labor market pose added obstacles. Increases in homeownership have substantially slowed since 2000. The growth rate in homeownership rates slowed from 2.3 percentage points annually for whites, 3.3 percentage points for African-Americans, and 3.4 percentage points for Hispanics from 1995 to 2000, to 1.7 percentage points per year for whites, 1.8 percentage points for African-Americans, and 1.9 percentage points for Hispanics from 2000 to 2004. This meant a slow-down in the growth rate of homeownership by 25 percent for whites, by 42 percent for African-Americans, and by 45 percent for Hispanics (table 2). The Renter Squeeze 7

Table 2 Average Rate of Change in Homeownership Business cycle dates Total Whites African-Americans Hispanics 1970-1973 1.50 1.70 1.80 n.a. 1974-1979 0.64 0.80 0.40 n.a. 1980-1989 -0.56 0.40-0.60 n.a. 1990-2000 1.24 0.62 1.56 2.18 1990-1995 0.00-1.36-0.48 0.72 1995-2000 2.27 2.27 3.27 3.40 2000-2004 1.60 1.70 1.90 1.80 Notes: All figures are average quarterly percentage point changes. Source is Weller (2005). n.a. indicates that data was not available. Another way to look at the slowing mobility is the rate at which people move from being renters to being owners. The share of new owners relative to existing owners has declined since the mid-1990s. In 1995, 3.8 percent of homeowners were renters in the prior year. This share had declined to 3.3 percent by 2003 a decline of 12.7 percent. This slowdown was especially noticeable for African-Americans and the poor. In 1995, 5.1 percent of all African-American owners were previous renters, while this share had fallen to 3.9 percent in 2003. This is a relative slowdown of 23.3 percent over a period of eight years. Also, for households below the poverty line, the share of homeowners who were renters in the previous year declined from 3.1 percent in 1997 to 2.5 percent in 2003 a relative slowdown of 17.1 percent (table 3). Table 3 Share of Homeowners Who Were Renters in Prior Year Total African-American Hispanic Below poverty line 2003 3.3% 3.9% 6.7% 2.5% 2001 3.5% 4.7% 6.9% 2.5% 1999 3.5% 4.1% 6.9% 3.0% 1997 3.4% 5.2% 6.7% 3.1% 1995 3.8% 5.1% 6.6% 2.1% 1993 3.7% 3.0% 7.5% 2.9% 1991 3.4% 3.8% 4.6% 2.6% 1989 3.6% 4.3% 5.7% 3.2% 1987 4.0% 4.0% 7.3% 3.1% 1985 3.8% 4.4% 5.5% 2.8% Note: Authors calculations based on data from the U.S. Census Bureau, American Housing Survey, various years, Washington, D.C.: Census. The data for Hispanics for 1995 appears to be an outlier in comparison to all other observations. The Renter Squeeze 8

Low-Income Families, Minorities Squeezed in the Rental Market Since the mid-1990s, rental costs have risen steeply. For example, for rental units occupied by families living below the poverty level, real housing costs in 1993 were almost exactly equal to real housing costs in 1985 (table 4). Since then, the inflation adjusted median monthly cost has risen by over 40 dollars or 9 percent. The same holds true for African-American renters, who saw real median monthly rents fall from 1985 to 1993, and rise by 12 percent thereafter (table 4). Importantly, since the 1980s, rent increases have continuously outpaced income growth (tables 1 and 4). Table 4 Renters Median Monthly Rental Costs Year Total African-Americans Hispanics Below Poverty Level Median rent (2003 dollars) Percent of income Median rent (2003 dollars) Percent of income Median rent (2003 dollars) Percent of income Median rent (2003 dollars) Percent of income 2003 651.00 30 596.00 31 674.00 34 494.00 68 2001 656.62 28.9 602.59 31.3 668.05 31.6 495.58 64.7 1999 640.58 28 575.42 31 643.89 31 506.94 64 1997 629.38 28 550.28 31 628.23 32 487.22 65 1995 631.00 29 553.78 31 645.48 34 471.74 62 1993 620.12 29 532.26 31 651.95 34 453.31 58 1991 624.14 28 537.68 31 644.40 33 436.36 55 1989 629.16 27 535.68 29 638.06 31 416.97 53 1987 646.27 29 563.66 32 644.65 32 461.62 66 1985 622.45 27 536.95 31 596.80 30 454.87 65 Total Change 1985-2003 5% 3% 11% 0% 13% 4% 9% 3% 1985-1995 2% 2% 3% 0% 8% 4% 4% 6% 1995-2003 1% 1% 8% 0% 4% 0% 5% -3% Notes: Dollar values are deflated by the CPI-U and indexed to 2003. Change in dollar values refers to percent change and change in share of income refers to percentage point change. Authors calculations are based on data from the Bureau of Labor Statistics, 2005, Consumer Price Index, Washington, D.C.: BLS, and the U.S. Census Bureau, American Housing Survey, various years, Washington, D.C.: Census. A key sign of the renter squeeze is that renters, especially poor ones, are dedicating a growing share of their income to paying rent. While African-Americans and people living in poverty saw a rise in inflation adjusted rents of 11 percent and 9 percent respectively, between 1985 and 2003, Hispanics paid 13 percent more in 2003 than they did in 1985. Overall, from 1985 to 2003, the percentage of income spent on housing by renters jumped by three percentage points. Poor renters saw the share of income used for rents jump by 6 percentage points from 1995 to 2003 (table 4). The National Low Income Housing Coalition (NLIHC, 2004a) has found that in 2003, 47 percent of renter households paid over 30 percent of their income for rent and that at least one third of the renter population in every state was living in unaffordable housing, i.e. housing that costs more than 30 percent of income. The Renter Squeeze 9

Higher rents have had detrimental effects on many households, particularly on lowincome families. A study by the Joint Center for Housing Studies at Harvard University (2004) found that fully half of lowest-income households spend at least 50 percent of their incomes on housing. This leads to cuts on other items, like food and medical attention. While families in the bottom income quintile living in unaffordable housing spend a monthly average of only $161 on food and $34 on healthcare, families in the same quintile that spend less than 20 percent of income on rent devote a monthly average of $80 more on food and $49 more on healthcare (JCHS, 2004). The situation is even worse for extremely low-income families. The NLIHC (2004b) reported that 70 percent of extremely low-income renter households lived in unaffordable housing, and 56 percent of these poorest renter households paid more than half of their incomes for rent plus utilities. Another way the renter squeeze has manifested itself is in much smaller properties and smaller increases in property size for renters than for homeowners. In 2003, the median size of owner occupied units was 1821 square feet compared to 1299 square feet for rental properties. That is, owners typically lived in properties that were 40 percent larger than that of renters. Moreover, the typical homeowner in 2003 lived in a property that was 6.4 percent larger than that of a typical homeowner in 1985, while the typical rental property grew by only 4.3 percent during that time (table 1). Renters Experience Worsening Education and Higher Transportation Costs Furthermore, rented homes are still in worse condition than owned homes and located in worse neighborhoods, although both have seen improvements in recent years. The American Housing Survey (AHS) includes questions on overall opinion of structure and neighborhood, rated on a scale of 1 (worst) to 10 (best). In 2003, the average neighborhood quality for owners was 8.2, while the overall average for renters was 7.5. Also, African-Americans and people living in poverty all ranked their neighborhoods lower than renters on average (table 5). Although the quality of neighborhoods has improved for renters since 1995, these improvements often only recovered some of the ground lost in the prior decade. Yet, the gap between homeowners and renters remained (table 5). By 2003, the neighborhoods where the average home owner lived ranked about 10 percent higher in terms of quality as compared to the average neighborhood where renters lived. The trends look slightly different when considering housing quality. In 2003, renters lived in substantially poorer housing stock than homeowners. Only about 0.5 percent of homeowners said they lived in poor quality housing in comparison to 3.5 percent of renters. Also, homeowners saw a continued improvement in their housing stock since the 1990s, while there were no improvements for all renters, although minorities and lowincome renters saw continued advances in the quality of their homes. The Renter Squeeze 10

Table 5 Select Neighborhood and Home Quality Measure, Select Years Average neighborhood quality Share living in poor housing Total Black Hisp. Poor Total Black Hisp. Poor Own Rent Rent Rent Rent Own Rent Rent Rent Rent 2003 8.2 7.5 7.1 7.5 7.3 0.5% 3.5% 5.3% 3.7% 5.8% 1995 8.2 7.3 6.9 7.0 6.9 0.8% 3.5% 5.8% 4.7% 6.2% 1985 8.4 7.5 7.1 7.2 7.2 1.0% 5.3% 9.7% 8.1% 8.7% Notes: Neighborhood and home quality rankings range from 1 (worst) to 10 (best). All home quality rankings from 1 through 3 are considered poor in quality. Authors calculations based on U.S. Census Bureau, American Housing Survey, various years, Washington, D.C.: Census. Overall quality measures, though, may blur important differences. Two aspects in particular matter for renters, especially low-income renters ability to advance economically: good schools and access to adequate transportation. The quality of schools for renters tends to be worse than that for owners and it has deteriorated sharply over time, especially for African-American and poor families with children (table 6). While only 1.5 percent of owners and 1.7 percent renters ranked public elementary schools as unsatisfactory in 1985, these shares had climbed to 6.9 percent and 7.2 percent, respectively, by 2003. Moreover, 9.8 percent of African-American renter households and 8.6 percent of poor renter households with children ranked public elementary schools as unsatisfactory in 2003. The deterioration in public school quality for African-American and poor families with children deteriorated faster after the housing market boomed than before. The share of African-American families that ranked public elementary schools as unsatisfactory rose by 1.7 percentage points from 1985 to 1995, but by 5.6 percentage points from 1995 to 2003 (table 6). Table 6 Share of Families with Children Who Rank Public Elementary Schools as Unsatisfactory, Select Years Year Owners Renters Total African- American Hispanic Poor 2003 6.9 7.2 9.8 4.8 8.6 1995 2.8 2.9 4.2 3.4 4.1 1985 1.5 1.7 2.5 3.1 2.8 Notes: All figures are in percent. Authors calculations based on U.S. Census Bureau, American Housing Survey, various years, Washington, D.C.: Census. Another point to consider is whether the quality of transportation or the time of a commute worsens, since both could lead to higher costs of obtaining or holding on to a job. Renters, especially the poor and minorities, disproportionately depend on public transportation. Often employment opportunities do not exist where poor families and The Renter Squeeze 11

minorities live, a situation referred to in the literature as spatial mismatch. In addition, many poor people do not have a car, and minorities are substantially less likely than whites to own one (Sanchez, et al. 2003). The empirical evidence indicates that lowincome and minority workers with access to their own car, or at least with a driver s license, are more likely to get a job (Sanchez et al., 2003; Kawabata, 2002; Bania et al., 2003). Consequently, having access to quality public transportation is crucial for many low-income renters to get a job. While only 5.5 percent of homeowners took public transportation at least once a week in 2003, 21.9 percent of renters did (table 7). Those numbers are even higher for minority renters (around 33 percent) and poor renters (around 25 percent). Improvements in public transportation have slowed in recent years, and for poor renters, public transportation has actually worsened. From 1985 to 1995, the share of regular users of public transportation who were dissatisfied declined by 4 percentage points. From 1995 to 2003, it fell only by 1.5 percentage points. Instead, the improvements in public transportation for homeowners continued at an accelerated pace. From 1985 to 1995, the share of homeowners that regularly used public transportation and that were dissatisfied fell by 2.8 percentage points. From 1995 to 2003, it declined by 4.0 percentage points (table 7). Moreover, African-Americans renters saw only very small gains in public transportation quality during the housing boom. Poor renters actually saw a slight deterioration. Interestingly, at the time that the quality improvements in public transportation slowed, the length of the commuting time for many renters rose (table 7). This is especially true for African-American renters, where the share of commuters with commutes of more than 44 minutes rose by 1.7 percentage points from 1995 to 2003. In comparison, poor renters saw shorter commutes at a time of worsening public transportation conditions. It is important to keep in mind that these figures only include people who have a job. Poor renters need to live close to their jobs (Allard and Danziger, 2000; Holzer et al., 2003). Worsening public transportation conditions could make it harder for poor renters to get a job. While the average commute time for poor renters who have a job may decline, renters who cannot find or keep a job because of worsening public transportation may no longer be counted in the relevant statistic. Although these data are far from conclusive, they suggest that African-American and poor renters potentially saw rising transportation costs and thus larger obstacles to getting to their jobs during the period of the housing boom from 1995 to 2003. The Renter Squeeze 12

Table 7 Select Transportation Measures Year Owners Renters Total Total African- American Hispanic Poor Share using public transportation at least weekly (as percent of total) 2003 5.5 21.9 32.8 34.3 25.8 1995 5.3 20.5 35.2 36.6 29.5 1985 7.9 22.9 42.7 39.6 31.5 Share that uses public transportation at least weekly and reports it unsatisfactory (as percent of those who use public transportation at least weekly) 2003 4.7 5.2 6.2 4.3 6.8 1995 8.7 6.7 8.3 4.7 6.2 1985 11.5 10.7 9.9 11.3 8.9 Share of all workers who spend more than 44 minutes on their way to work 2003 10.7 9.8 13.4 11.4 9.0 1995 10.1 9.1 11.7 12.7 10.4 1985 9.6 8.7 11.1 11.2 9.2 Notes: All figures are in percent. Authors calculations based on U.S. Census Bureau, American Housing Survey, various years, Washington, D.C.: Census. The Renter Squeeze 13

Conclusion and Policy Considerations Recent public policies have tended to weaken, rather than strengthen, support for many renters. For instance, President Bush proposed to cut over $1 billion from the rental subsidy voucher program under Section 8, which already has large gaps in coverage. Only about 1 in 4 families that are eligible receive funding. Another example can be found in the President s proposed 2006 budget, which included the lowest support for the Fair Housing Initiatives Program (FHIP) since its creation, only $16 million. FHIP promotes fair housing laws and equal housing opportunity awareness through support for public and private local and state fair housing programs. In addition, President Bush has moved to eliminate the Community Development Block Grant Program from the HUD budget - the only federal program other than FHIP funding fair housing initiatives. A further instance of weakening support for renters ability to escape the renter squeeze and move into their own home is the weakening of the standards of the Community Reinvestment Act of 1997, which has served as a crucial tool to improve access to affordable credit and thus homeownership for many low-income and minority borrowers. Recent changes could mean that a large number of banks will be exempt from this regulation. In the housing boom, renters have been squeezed. Higher house prices and slow income growth, exacerbated by housing market discrimination have contributed to a slowdown in mobility from renting to owning. As a consequence, many renters, especially African- American renters and low-income renters have experienced deteriorating quality in their neighborhoods, as reflected in worsening schools, longer commutes and lack of improvements in public transportation. Consequently, renters need stronger not weaker support mechanisms as mobility into homeownership has declined and they are increasingly caught in the renter squeeze. The Renter Squeeze 14

References : Allard, S., and Danziger, S., 2000, Proximity and Opportunity: How Resident and Race Affect the Employment of Welfare Recipients, unpublished manuscript, Maxwell School of Citizenship and Public Affairs, Syracuse University, Syracuse, NY: Syracuse University. Ausubel, L. (1997) Credit card defaults, credit card profits, and bankruptcy, American Bankruptcy Law Journal, 71 (Spring): 249-270. Bania, N., Coulton, C., and Leete, L., 2003, Public Housing Assistance, Public Transportation, and the Welfare-to-Work Transition, Cityscape: A Journal of Policy Development and Research 6, No. 2: 7-44. Bird, E. J., Hagstrom, P.A. and Wild, R. (1999) Credit card debts of the poor: high and rising, Journal of Policy Analysis and Management, 18 (1): 125-33. Black, S. and Morgan, D. (1999) Meet the new borrowers, Current Issues in Economics and Finance, Federal Reserve Bank of New York, February (New York: FRBNY). Board of Governors of the Federal Reserve System, 2005, Release Z.1 Flow of Funds Accounts of the United States, Washington, D.C.: BOG. Deane, D., 2005 Middle Class Drives Soaring Purchases of Second Homes, Washington Post, March 02. Dunsky, R. and Follain, J. (2000) Tax-induced portfolio reshuffling: The case of the mortgage interest deduction, Real Estate Economics, 28 (4): 683-718. Gross, D. and Souleles, N.S. (1998) An Empirical Analysis of Personal Bankruptcy and Delinquency, Financial Institutions Center Working Paper (98-28-B) (Philadelphia, PA: The Wharton School, University of Pennsylvania). Holzer, H., Quigley. J., and Raphael, S., 2003, Public Transit and the Spatial Distribution of Minority Employment: Evidence from a Natural Experiment, UC Berkeley University of California Transportation Center Working Paper, Berkeley CA: UC Berkeley. Joint Center for Housing Studies at Harvard University, 2004, The State o f the Nation s Housing, Cambridge M.A.: JCHS. http://www.jchs.harvard.edu/publications/markets/son2004.pdf. Kawabata, M., 2002, Job Access and Work: Transportation Barriers among Autoless Adults on Welfare in Los Angeles, unpublished manuscript, Tokyo University, Japan. Manning, R. (2000) Credit Card Nation: The Consequences of America s Addiction to Credit (New York, NY: Basic Books). The Renter Squeeze 15

National Association of Realtors, 2005, 2005 National Association of Realtors Profile of Second-Home Buyers, Washington, D.C.: NAR National Fair Housing Alliance, 2004, Fair Housing Trends Report, Washington, D.C.: NFHA.http://www.nationalfairhousing.org/html/trends/trends%202004/NFHA%202004 %20Trends%20Report.pdf. National Low Income Housing Coalition, 2004a, Up Against the Wall: Housing Affordability for Renters An Analysis of the 2003 American Community Survey, Washington, D.C.: NLIHC, http://www.nlihc.org/pubs/uaw04/upagainstawall.pdf. National Low Income Housing Coalition, 2004b, Losing Ground in the Best of Times: Low Income Renters in the 1990 s, Washington, D.C.: NLIHC. http://www.nlihc.org/research/losingground.pdf. Sanchez, T., Stolz, R., and Ma, J., 2003, Moving to Equity: Addressing Inequitable Effects of Transportation Policies on Minorities, A Joint Report of the Center for Community Change and the Civil Rights Project of Harvard University, Cambridge, MA: Harvard University. Stango, V. (1999) The tax reform act of 1986 and the composition of consumer debt, National Tax Journal, 52: 717-39. U.S. Census Bureau, 2004, Income, Poverty, and Health Insurance Coverage in the United States 2003, Washington, D.C.: Census. U.S. Census Bureau, 2005, Housing Vacancy Survey, Washington, D.C.: Census. U.S. Department of Housing and Urban Development, 2000, Discrimination in Metropolitan Housing Markets: National Results from Phase I of HDS2000, Urban Institute report commissioned by the U.S. Department of Housing and Urban Development, Washington, D.C.: HUD http://www.huduser.org/publications/pdf/phase1_executive_summary.pdf. Weller, C., 2005, For Middle-Class Families, Dream of Own Home Drowns In Sea of Debt, CAP Economic Policy Report, May, Washington, D.C.: Center for American Progress. The Renter Squeeze 16

About the Authors Nathaniel F. Loewentheil, a junior at Yale University, is currently the Director of Development for Roosevelt Institution National. He was one of the founding members of Roosevelt in the 2004-2005 academic year, working with fellow students at Yale and Stanford to develop the concept of a national student think tank. He is majoring in Ethics, Politics and Economics, an application-only major at Yale focused on an interdisciplinary approach to socio-political problems. He spent the first part of the summer of 2005 interning for the Center for American Progress, and is spending the second half in the office of Senator Barbara Mikulski. In the summer of 2004 he served as an Association of Yale Alumni Community Service Summer Fellow in New York City, and is involved in numerous other nonprofit organizations in New Haven. Christian E. Weller, Ph.D. is a Senior Economist at the Center for American Progress, where he specializes in Social Security and retirement income, macroeconomics, the Federal Reserve, and international finance. Prior to joining American Progress, he was on the research staff at the Economic Policy Institute, where he remains a research associate. Dr. Weller has also worked at the Center for European Integration Studies at the University of Bonn, Germany, in the Department of Public Policy of the AFL-CIO in Washington, D.C., and in universal banking in Germany, Belgium and Poland. His publications appear in publications ranging from the Cambridge Journal of Economics, the Journal of Policy Analysis and Management, the International Review of Applied Economics, the Journal of Development Studies, and the Journal of International Business Studies to the Atlanta Journal Constitution, USA Today, Detroit News, Challenge, and the American Prospect. Dr. Weller is often cited in the press and he has been a frequent guest on news programs on ABC, NBC, CNN, MSNBC, CNBC, Fox News and Bloomberg Television. Dr. Weller holds a Ph.D. in economics from the University of Massachusetts at Amherst. The Renter Squeeze 17

As the first generation of students to come of age in the 21st century, it is our task to develop and prepare to implement a progressive platform for the future that will meet the many challenges facing our society and the world. The Roosevelt Institution is a national network of student think tanks which connects students ideas to the political process and serves as the incubator for tomorrow s leaders. Students are already producing policy through classes, research papers, extracurricular activities, and undergraduate and graduate theses but their innovative ideas have yet to reach the national discourse. Each Roosevelt chapter collects students who already do relevant and ground-breaking work into topic-oriented policy Centers. Centers combine discussion groups for individual work, project teams for collective efforts, and networking tools to give students access to on-campus and off-campus resources. Through our efforts, the Roosevelt Institution will develop a national network of students dedicated not to any specific political party but to progress. ABOUT THE CENTER FOR AMERICAN PROGRESS The Center for American Progress is a nonpartisan research and educational institute dedicated to promoting a strong, just and free America that ensures opportunity for all. We believe that Americans are bound together by a common commitment to these values and we aspire to ensure that our national policies reflect these values. We work to find progressive and pragmatic solutions to significant domestic and international problems and develop policy proposals that foster a government that is of the people, by the people, and for the people. Center for American Progress 1333 H Street, NW, 10 th Floor Washington, DC 20005 Tel: 202.682.1611 Fax: 202.682.1867 www.americanprogress.org