Housing Affordability Challenges
By Michael Fenner, Monday, 9 December 2013 - 11:11am
A growing number of renters are finding it more difficult to find housing they can afford, according to a new report by the Harvard Joint Center for Housing Studies.
Half of U.S. renters pay more than 30 percent of their income on rent,
which is a 12 percent increase from those who did so a decade earlier.
More startling, 27 percent of renters pay more than half their income on
rent, up from 19 percent 10 years ago.
The report attributes the trend to rising rental prices combined with falling wages: Between 2000 and 2012, median rents increased by 6 percent, while median renter income fell 13 percent. The percentage of Americans who rent housing rose from 31 percent in 2004 to 35 percent in 2012.
Falling ownership rates have boosted demand for single-family rental homes: approximately 3 million existing homes went from owner-occupied to rental occupancy between 2007 and 2011, the study finds. This demand has depleted rental inventory and pushed rents higher, but that has triggered growth in the recently struggling new-home construction market.
“The gravity of the situation for the large proportion of renters spending so much of their incomes on housing is plain,” says Eric Belsky, managing director of the Joint Center for Housing Studies at Harvard.
“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.”
The report attributes the trend to rising rental prices combined with falling wages: Between 2000 and 2012, median rents increased by 6 percent, while median renter income fell 13 percent. The percentage of Americans who rent housing rose from 31 percent in 2004 to 35 percent in 2012.
Falling ownership rates have boosted demand for single-family rental homes: approximately 3 million existing homes went from owner-occupied to rental occupancy between 2007 and 2011, the study finds. This demand has depleted rental inventory and pushed rents higher, but that has triggered growth in the recently struggling new-home construction market.
“The gravity of the situation for the large proportion of renters spending so much of their incomes on housing is plain,” says Eric Belsky, managing director of the Joint Center for Housing Studies at Harvard.
“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.”
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