Lawmakers in Huntsville, Alabama, approved in April a new affordable housing development project that will serve the city’s most marginalized residents and ensure that its most vulnerable individuals will have access to safe, stable, and affordable housing. The new 42-unit multi-family development – made possible through passage of “Resolution 2024-1359” – will support individuals experiencing or at risk of homelessness while also offering respite to people fleeing domestic violence. Using funds from the American Rescue Plan Act (ARPA), the new development is meant to address a housing crisis in Huntsville that has made it one of the most expensive cities for renters in Alabama.
Since the onset of the COVID-19 pandemic in 2020, demand in Huntsville’s private rental market has increased steadily, though the city is largely made up of homeowners. As of 2023, renters in the Huntsville area make up 43% of the population. Rising costs of homeownership coupled with an increase in the city’s population due to a strong job market have led more individuals to become renters. Notably, Huntsville has succeeded in providing more housing options to prospective tenants. Between 2019 and 2022, the inventory of new apartments in Huntsville increased by 9.3%, exceeding the nation’s average of an 1.8% yearly increase in new apartment inventory. Prior to 2019, the inventory of new apartments in Huntsville was only growing at an average pace of 1.7% yearly.
The sharp increase in the city’s rental developments is largely due to corporate and private equity investment in the city by investors known as “corporate landlords.” Such corporate investments in the Huntsville rental market have caused notable increases in the price of rent across the city. In 2019, the average rent in the city increased by more than 7%, and so far in 2024, Huntsville leads the state in being one of the most expensive places to rent. In 2024, the fair market rental (FMR) price, which is a tabulation of gross rental prices (including utility costs), is $1,248 for a two-bedroom unit, having increased from $1,029 in 2023. With the change in the city’s rental costs, Huntsville’s FMR is now 98% higher than the rest of the state. Housing cost burden is high as a result, as 40% of the city’s renters are now paying more than 30% of their monthly income on rent and utilities. According to HUD, housing is considered affordable if a renter pays no more than 30% of their monthly income towards rent.
Huntsville is not the only jurisdiction to have seen a rise in corporate ownership in the rental market. Across the country, investments made in the rental housing market by private equity firms, corporations, and large real estate developers have increased significantly, as investment in the rental housing market increased from $65 billion in 2000 to $812 billion in 2018. During the pandemic, corporate investments continued to be significant, with the rental housing market seeing a $50 billion increase in private equity investments since in 2020.
Since 2013, private equity firms and corporate landlords have been responsible for 85% of the large apartment complex deals conducted by Freddie Mac, a government-sponsored corporation under the Federal Housing Finance Agency (FHFA) that seeks to make housing more affordable for the lowest-income homebuyers, homeowners, and renters. Not only that, but corporate investors purchased 26% of all low-priced “affordable” homes in the U.S. that sold in the last quarter of 2023 and 28% of all single-family homes sold in the first quarter of 2022.
The rise in corporate investment has led to a “financialization” of the housing market in which housing is considered a financial asset where investors can turn a profit from their tenants. As a result, rental prices have increased at staggering rates (26% since 2020), with rental costs now being out of reach for a majority of U.S. households. The rise in corporate ownership in the rental market has allowed landlords to charge tenants a host of rental fees, known also as “junk fees,” that can appear on a tenant’s rental ledger arbitrarily for services such as pet fees, processing fees, parking fees, and even surprise “January” fees. The accumulation of junk fees can lead to tenants spending hundreds of extra dollars per month, with the strain on a tenant’s budget exacerbating the risk of eviction and even homelessness.
The passage of Huntsville’s new affordable housing development project is widely supported by tenant advocates. Tia Turner, NLIHC’s current field housing organizer and co-founder of Love Huntsville, a grassroots organization working to end homelessness in the Huntsville-area, supports the passage of “Resolution 2024-1359.” “Resolution 2024-1359 represents a monumental step forward for Huntsville, where tireless advocacy and grassroots efforts are paving the way for a future where everyone has access to safe and affordable housing,” says Tia. “This project embodies the collective dedication of our community organizers and tenant advocates, who have long championed the rights and dignity of our unhoused neighbors. Together, we are building a more inclusive, safe, and equitable Huntsville.”
Learn more about the city’s new affordable housing project here.