Harvard’s Joint Center for Housing Studies released its annual State of the Nation’s Housing report on June 16. The report shows that 37% of American households - more than 43 million households — now rent, marking a 50-year high. The supply of rental housing has not kept pace with demand. As a result, the rental market has a vacancy rate of 6.9%, a 30-year low, and 11 million renters spend more than half of their incomes on housing.
Older householders fifty-five years of age and over accounted for 44% of renter household growth between 2005 and 2016; renters under the age of thirty-five accounted for another 25% of the growth. In addition to demographic changes, the unaffordability of homeownership also contributes to the demand for rental housing. The lack of sufficient supply of starter homes, the tight mortgage market overall, and high student debt are barriers for young potential homebuyers. The lack of information about mortgage options also deters households from becoming homeowners.
Most new rental development is at the luxury, high-end of the housing market; the typical asking rent for a new apartment climbed by 5.6% in 2016. High-income households earning at least $100,000 accounted for 22% of the growth in renter households between 2005 and 2016. The number of rental units renting for at least $2,000 per month increased by 97% between 2005 and 2015, while the stock of rental units renting for less than $800 per month declined by 2%.
Rent price increases continue to outpace inflation, impacting renters at all income brackets. Rent burdens, however, disproportionately impact low income households and racial and ethnic minorities. More than 70% of renters with annual incomes less than $15,000 and 25% of black households – compared with 13% of white households – spend more than half their incomes in rent.
Even if federal funding for affordable housing programs remains constant, rising housing costs mean that fewer low income households would be assisted in the future. Housing unaffordability and lack of supply remain central issues for America's housing policy.
The State of the Nation's Housing is available at: http://bit.ly/1kKwpkW