Rental Housing Becoming Less Affordable
Cambridge, MA, Dec. 11, 2013 -- Affordability problems for renters have skyrocketed over the past decade both in number and the share of renters facing them, according to a new report on rental housing from the Harvard Joint Center for Housing Studies.
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The inability of so many to find housing they can afford dramatically impacts the health and well-being of U.S. renters, as lower-income households cut back on food, healthcare, and savings, just to keep up.
The report, America’s Rental Housing: Evolving Markets and Needs, finds that half of U.S. renters pay more than 30% or more of their income on rent, up 12 percentage points from a decade earlier.
Much of the increase was among renters facing severe burdens (paying more than half their income on rent), boosting their share to 27%. These levels were unimaginable just a decade ago, when the share of American renters paying half their income on housing, at 19%, was already a cause for serious concern.
Escalating rental affordability problems come at a time when the share of Americans that rent has increased from 31% in 2004 to 35% in 2012. In fact, the 2000s marked the strongest numerical growth in renter households in the last 50 years. As ownership rates fell, housing markets have adjusted dynamically to the increased demand for single-family rentals, with about 3 million existing homes switching from owner to rental occupancy from 2007-2011 alone.
On the strength of the surge in rental demand, rental vacancies have fallen, rents have climbed, and construction of new rental housing has picked up sharply, giving an important spur to the struggling residential construction market.
Rising rents combined with softness in wages has put the squeeze on affordability. The report points out that between 2000 and 2012 real median rents (adjusted for inflation) nationally increased by 6%, while over the same period the real median income of renters dropped by 13%.
“For many low-income families, the rental housing affordability crisis is like a game of musical chairs in which there is never a chair left for them,” said Chris Herbert, Research Director at the Harvard Joint Center for Housing Studies.