Growth Opportunities Trends in: Affordable Multifamily Housing & Rural Business Markets
Pathway Lending Mission: To provide lending solutions and educational services that result in the creation, development, and preservation of small businesses, affordable housing, and sustainable communities. Certified as a Community Development Financial Institution by the US Treasury – Target markets: 1) low-income census tracts and those with high poverty and unemployment rates; 2) African American- Owned Businesses; 3) Low-income entrepreneurs (a minimum of 60% of loans required to target markets) – Women, Hispanic and Veteran-owned Businesses • SBA Tennessee Microlender of the Year • 2008 and 2010 FFIEC National Community Reinvestment Awardee – “Innovative and Collaborative Approach to Economic Development” • Endorsed by the Tennessee Bankers Association • 37 Financial Institution Investors • 25 Public and other Private Stakeholders Results as of March 31, 2018 • Total Assets: $125.6 MM • Net Assets $29.1 MM – 23.2% • Loans Outstanding: $90.1MM • 2017 Loan Activity - 142 loans originated totaling $40.2MM • 2017 Client Impacts – 4,573 hours of 1-on-1 Consulting and 3,580 hours of classroom training 2
Agenda I. Affordable Housing: 1. Discuss what it is and who needs affordable housing 2. Discuss rent burden and impact of paying too much rent 3. Discuss trends in rental market a) National b) Southeast c) Tennessee II. Economic Analysis Urban vs. Suburban vs. Rural III. Economic Growth through Business retention and unlocking local capital sources in Rural Markets 3
What is affordable housing? How much of your income should go to your housing cost? a) 20% b) 25% c) 30% d) 35% e) 50% 4
What does it mean to be rent burdened? How much of your income is going to rent? a) >30% b) >40% c) >45% d) >50% e) >55% 5
So who needs affordable housing? Teachers: $42K - $61K (median $51,751) ($1,294 per month for housing) Police Patrol Officer: $49,628 ($1,240/Mo) Fire Fighter: $41,527 ($1,038/Mo) Median Low-income: $35,000 (60% family of 4/80% family of 1) ($875/Mo) Certified Nursing assistant: $29K - $34K ($725 - $850/Mo) Waiters/waitresses: $18K - $35K ($450 - $875/Mo) Housekeeper: $23K ($575/Mo) 6
Percent of renters that are cost burdened: Urban Areas Cost Burdened Renters >30% Rural Areas Cost Burdened Renters >30% 7
How does rent burden occur? THDA – Housing Needs Assessment 2012 8
National Trends - JCHS • Since 2004, the number of rental households has grown by 30% - 10 million new renters. • 30% of the increase comes from those earning over $100,000/year • And 50% of the growth was from those over 50 years of age • Since 2006 there has been 7.2 million net new units, but none of these rent for less than $850/ month (affordable to a household earning $35,000) • 40% of Rural Renters are cost-burdened • Low income renters now have almost 20% less income to spend on other things as they did in 2001. • 2001 to 2011 rental housing cost rose 17% while median renter incomes fell 15% 9
May 2016 FRB-Atlanta Report No. 03-16 – May 2016 Declines in Low-Cost Rented Housing Units in Eight Large Southeastern Cities – by Immergluck, Carpenter, Luenders • Median rents rose 23.4% in the South from 2012 to 2015 versus 17.4% nationally Census Bureau • After great recession number of rental households increased from 34 million to 43 million (31% to 37%, respectively) • Single family portion of rental stock has grown from 34% to 40% from 2005 to 2014. However many of these homes are large and low-income families cannot access • A growing number of households spend over 50% of their income on rent, making them severely cost-burdened. • The percentage of such severely cost-burdened households with incomes below $35,000 reached 80% in eight central cities in the Southeast. (Atlanta, Birmingham, Jacksonville, Memphis , Miami, Nashville , Orlando and Tampa • The increase in cost burdened households is due in large part to the widespread losses in the supply of affordable multifamily units 10
Loss of Low-Cost Rented Units 2010-14 5,000 0 -5,000 -6.7K -10,000 -7.2K -15,000 -20,000 -25,000 -23K -30,000 -35,000 -40,000 -45,000 Below $500/month rent $500-750/month rent 11
Housing Cost Burdens by Household Income Household Income % Households Burdened 2001 % Households Burdened 2016 < $15K 83% 83% $30K - $45K 37% 50% $45K - $75K 12% 23% 12
Housing Cost Burdens % of Households earning less than Total Cost Burdened Households $35,000 that are Cost-Burdened MSA 2009 2016 Change 2009 2016 Change Atlanta 316,120 366,193 50,073 79.7% 81.5% 1.8% Austin 130,798 141,985 11,187 81.5% 82.1% 0.6% Birmingham 65,196 57,057 (8,139) 68.6% 67.7% -0.9% Charlotte 104,712 131,494 26,782 71.4% 72.5% 1.1% Chattanooga 30,239 32,441 2,202 62.3% 72.0% 9.7% Jacksonville 89,216 86,493 (2,723) 77.2% 75.8% -1.5% Knoxville 40,173 43,485 3,312 65.3% 60.4% -4.8% Memphis 95,094 99,292 4,198 73.6% 73.7% 0.1% Miami 464,483 515,787 51,304 82.8% 82.6% -0.2% Nashville 88,741 104,085 15,344 69.5% 75.5% 5.9% Orlando 159,722 179,646 19,924 83.9% 81.1% -2.8% Tampa 192,184 212,621 20,437 79.1% 80.9% 1.8% 13
Changes in Rental Housing Units Below $500/Month $500-750/Month Over $1500/Month MSA 2009 2016 Change 2009 2016 Change 2009 2016 Change Atlanta 49,601 42,095 (7,506) 118,077 87,598 (30,479) 41,727 119,978 78,251 Austin 12,798 13,311 513 55,336 20,178 (35,158) 22,309 79,724 57,415 Birmingham 24,045 20,358 (3,687) 37,067 30,906 (6,161) 4,217 7,348 3,131 Charlotte 26,736 25,663 (1,073) 67,402 58,352 (9,050) 10,409 29,449 19,040 Chattanooga 18,225 10,769 (7,456) 23,025 20,374 (2,651) 1,674 3,663 1,989 Jacksonville 18,096 12,965 (5,131) 31,037 28,398 (2,639) 12,471 25,240 12,769 Knoxville 19,900 19,822 (78) 31,141 29,768 (1,373) 2,082 5,957 3,875 Memphis 26,939 20,201 (6,738) 53,672 46,349 (7,323) 7,630 15,554 7,924 Miami 54,108 56,739 2,631 74,691 50,304 (24,387) 128,293 270,789 142,496 Nashville 24,523 23,940 (583) 59,281 36,053 (23,228) 8,026 31,175 23,149 Orlando 13,102 12,473 (629) 33,433 29,601 (3,832) 25,989 59,662 33,673 Tampa 28,512 23,736 (4,776) 73,007 61,431 (11,576) 30,536 64,014 33,478 Data: ACS 2009, ACS 2016 14
2016 Rental Need Based on Population Change 35% of Nations renter 62% of nation’s renter 22% of nation’s renter households had income households had income households had income below $25K below $50K above $100K 33% (832K) of TN households rent 35% of (832K) of TN households had incomes below $25K – 291K households 62% of (832K) of TN households had incomes below $50K – 515K households Need: TN Population Change 2005 – 50K new rental units 2016 increased 10% (600K) 17K units for low-income 31K units for households <$50K 15
Changes in TN Units by Rent Amount 16
Where does TN Stand on Affordable Rental Units 2012 THDA Study indicated a shortage of 111K units for low- income residents TN needs 142K affordable units Populations Growth indicates a need for 31K affordable units What happened lost 12K units of affordable housing 17
What does this mean to the TN economy? If you are paying 50% of your income on housing instead of 30% and you make $35K a year your additional rent burden is $7,000 . That is money not going into personal spending and personal savings It is also causing households to not have a safety net so in an emergency they take out payday loans 18
Nashville: Change in Rental Households by Income & Unit Changes Need for Units • increases by 55K • Units increase by 73K in units over $850/mo and decreases 18K units under $850 for a net of 55K 19
Knoxville: Change in Rental Households by Income & Unit Changes Need for Units increases • by 54K • Units increase by 12K in units over $850/mo and no change in units under $850 for a net of 12K 20
Memphis: Change in Rental Households by Income & Unit Changes Need for Units • increases by 50K • Units increase by 42K in units over $850/mo and 5K for units under $850 for a net of 47K 21
Chattanooga: Change in Units by Rent 13K 6.5K Net Increase 6.5K 22
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