There is a new housing crisis in many U.S. markets. This time it has to do with sky-high rents that are eating into household incomes at an unprecedented rate.
A new comprehensive study of the rental market finds that there are now 9 million more renters than ten years ago, and that’s the biggest jump on record. Unfortunately, they are also paying more rent than ever, according to the new report by Harvard’s Joint Center for Housing Studies. Others pay half their incomes.
The share of all U.S. households that rent rose from 31 percent to 37 percent, the highest level since the mid-1960s, the study found.
Moreover, rising demand has put upward pressure on rents and reduced vacancies. Of the 43 million families and individuals who rent their homes, 1 in 5 are considered “cost-burdened,” or paying more than 30 percent of their incomes on rent.
The Joint Center for Housing Studies explains it this way: “The A number of factors have fueled soaring demand. The bursting of the housing bubble played an important role, with nearly 8 million homes lost to foreclosure since the homeownership rate peaked in 2004. Household incomes have also fallen back to 1995 levels and access to mortgage credit has tightened, making the transition to homeownership more difficult for many who might otherwise buy homes.”
How high are rents? The report found that the median asking rent for new market-rate apartments hit $1,372 last year, a 26 percent increase from 2012 and “well above what the typical renter could afford under the 30-percent-of-income standard.”
Only 10 percent of newly constructed units had asking rents under $850, a level that about half of all renters could afford.