A new report from Harvard University's Joint Center for Housing Studies revealed that the current mortgage debacle has added to the number of households competing for low-cost rental properties, and concluded that policymakers at all levels of government should do more to protect affordable rentals. The Ohio Housing Finance Agency is attempting to do just that.

The report, titled "America's Rental Housing: The Key to a Balanced National Policy," examines recent mortgage market events in the context of long-standing affordability problems that plague millions of renters.

"Today, investor-owned one-to-four-family rental properties account for nearly 20 percent of all foreclosures," said Nicolas Retsinas, director of the Joint Center.

"Moreover, because many of the high-risk home purchase and home refinance loans now in default are concentrated in low-income and minority communities, the fallout from foreclosures is hitting the same neighborhoods where many of the nation's most economically vulnerable renters live," he added.

Fueled by record foreclosures and sluggish home sales, the share of households owning a home is declining, while the number of renter households jumped by nearly 1 million last year, or more than four times the pace of renter growth over the 2003 to 2006 period, according to the Joint Center.

And despite the growing signs of economic weakness, monthly rents last year reached a record high of $775.

Monthly rents in Columbus aren't quite that lofty, according to Marcus & Millichap's most recent Apartment Research Report, which predicted that effective rents will finish the year up 2.7 percent to $637 per month.

However, the report did note that the capital city is being impacted as a "weakening housing market and some job losses are expanding the renter pool."

"Although home prices in the area are relatively affordable, vacancy will push lower as the number of former homeowners being relegated to the renter pool due to foreclosures will outweigh renters making the transition into first-time homeownership," the report said.

The elevated costs of financing rental housing construction and preservation is yet another downside to rising foreclosures and the resulting turmoil in credit markets.

Last year, completions of multifamily units for rent fell to 169,000 units , or just two-thirds of completions in 2002 and only one-third of the 1986 record high.

Further, the blighting influence of vacant and foreclosed properties also will accelerate the abandonment of low-cost rental properties in distressed neighborhoods, limiting the supply of affordable housing, according to the Joint Center.

Retsinas said the solution is a balanced national housing policy that focuses renewed energy on preserving the stock of subsidized rental housing, limiting losses of privately-owned, low-cost units, and eliminating land use restrictions and other barriers that needlessly increase the cost of producing homes for sale and for rent.

"The nation now has an unprecedented opportunity to transform the large inventory of foreclosed and vacant properties into the next generation of affordable rental housing," he said.

To that end, through its $150 million "Window of Opportunity" initiative, the John D. and Catherine T. MacArthur Foundation (which supported the Joint Center's study) is looking to preserve 300,000 rental units across the country.

Through that initiative, $35 million in multi-year grants and program-related investments will be awarded to states and localities that "demonstrate innovative public-private initiatives that focus on affordable rental housing" and Ohio is in the running.

On April 30, the foundation announced 21 finalists for the competitive funding and among them was the Ohio Preservation Compact, a collaboration between the Ohio Housing Finance Agency, Ohio Capital Corp. for Housing and the Coalition on Homelessness and Housing in Ohio.

Of the 80 cities, counties and states that responded to a request for letters of interest, those 21 finalists were chosen to compete for up to $5 million each in funding for their preservation plans.

Should the Ohio Preservation Compact be one of the 10 awardees, it will put $4 million toward a $20 million "Preservation Loan Fund" developers throughout the state could use to purchase and retain existing subsidized properties for rehabilitation, said Sean Thomas, director of planning, preservation, and development for the OHFA.

The remaining $1 million the Compact requested from the MacArthur Foundation would fund the creation of a property database for developers, tenants and public officials, as well as training and assistance for nonprofits.

Funding awardees will be announced in early 2009.

In addition to Ohio, the 21 finalists are Atlanta, Ga.; Austin, Texas; Denver, Colo.; Connecticut; Florida; Idaho; Indiana; Iowa; Los Angeles, California; Maryland; Massachusetts; Minnesota; New Mexico; Oregon; Pennsylvania; St. Louis County, Mo.; Seattle, Wash.; Vermont; Virginia and Washington State.

"The diverse cities, counties and states selected as finalists share a commitment to preserving and improving affordable rental housing and have offered ideas that we believe are creative and potentially very effective," said Jonathan Fanton, president of the MacArthur Foundation.