The recently-released 2017 National Rental Housing Landscape report has found that the number of rent-burdened households in the United States is falling as populations shift. At the same time, while the data may seem positive on the surface, the same report finds that recent affordability gains may be masked by an increase in the number of wealthier individuals renting apartments.
Rent-Burdened Renters on the Decline
Recent reports have found that the number of rent-burdened renters is on the decline, with “rent burdened” being defined as those who are spending more than 30 percent of their income on housing. In fact, within the nation’s 53 biggest metro areas, the number of rent-burdened households fell from 48.9 percent to 47.7 percent between 2012 and 2015.
Painting a Darker Picture
Despite the drop in the percent of rent-burdened households, other data points indicate that problems still persist. For instance, the number of rent-burdened households is still greater than they were prior to the recession. Furthermore, median rent grew faster than inflation in nearly ever major metro area, particularly in areas on the coasts that were already considered to be high-cost areas. In many cases, new apartments that entered the market in previous years were more costly than others. As such, it is increasingly more expensive to move. San Jose had the largest discrepancy found in the 2017 National Rental Housing Landscape report, with units on the market renting for $610 more per month than those that were currently occupied.
In short, the lingering after-effects of the recession have still made it difficult for many renters. This is particularly true for those who are trying to purchase their first home. While changes in the mortgage industry have made it difficult for potential buyers to qualify for home loans, non-housing debt is also at record levels.
With many of the foreclosed homes from the recession having been turned into rental units, the supply of affordable entry-level homes has been diminished. This has forced many potential buyers to remain renters as they work to save the money for a down payment. This, in turn, places more pressure on the rental market, which is further aggravated by high-income households becoming renters and placing additional upward pressures on rent.
All of these factors combined have contributed to increased rent costs, further creating a cyclical pattern that make it difficult for renters and potential buyers to escape or for the market to correct itself. It is particularly difficult for the lowest earning segment of the rental population, with 10 percent or less of available rental units in many metro units being affordable. The share of affordable units for rent-burdened family continues to be on the decline.
Addressing the Problem
While there isn’t one simple answer to address these issues, most experts agree that federal and local policies need to focus on subsidizing more affordable units. Other steps, such as changing regulations, including making construction of units more affordable and implementing parking minimums, may also be necessary.