Earlier this month Harvard's Joint Center for Housing Studies released its report "America's Rental Housing:Evolving Markets and Needs." While the report sees good news for landlords of rental properties (significant demand), the report also finds that renters are being squeezed due to a lack of affordable housing.
Escalating affordability problems come at a time when the share of Americans that rent has increased from 31 percent in 2004 to 35 percent in 2012. In fact, the 2000s marked the strongest numerical growth in renter households in the last fifty 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 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 nationally (adjusted for inflation) increased by 6 percent, while over the same period the real median income of renters dropped by 13 percent. More than ever before, the private market struggles to provide decent housing that is affordable for people of even modest means.
"The gravity of the situation for the large proportion of renters spending so much of their incomes on housing is plain," said Eric Belsky, Managing Director of the Joint Center for Housing Studies at Harvard, which publishes its report on the state of rental housing in the U.S. every other year. "We are losing ground rapidly against a chronic problem that forces households to cut essential spending. With little else to cut in their already tight budgets, America's lowest-income renters with severe cost burdens spend about $130 less on food each month, and make similar reductions in healthcare, clothing, and savings. And while many choose longer commutes to lower their housing costs, the combined cost of housing and transportation means even less remains for other expenses."
"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. "The shortfall in the number of units affordable to extremely low-income renters in the U.S. (those earning no more than 30 percent of the area median) more than doubled from 1.9 million in 2001 to 4.9 million in 2011. The situation just keeps getting worse. Assistance efforts have failed to keep pace with escalating need, undermining the nation's longstanding goal of ensuring decent and affordable housing for all."
Download the entire report free (or view portions thereof) at: www.jchs.harvard.edu/americas-rental-housing.