Renters who’ve found themselves priced out of the housing market aren’t finding much relief by renting their home either, according to a new report by Harvard’s Joint Center for Housing Studies.
“Despite the strong economy, the number and share of renters burdened by housing costs rose last year after a couple of years of modest improvement,” said Chris Herbert, managing director of the JCHS. “And while the poorest households are most likely to face this challenge, renters earning decent incomes have driven this recent deterioration in affordability.”
The JCHS said its data shows that the number of “wealthier” renters in the U.S. is growing. Some 22% of households earning at least $75,000 per year in 2019 are renting their homes, which is the highest figure for people in that earnings bracket on record. Meanwhile the number of high-income renters increased by 45% between 2010 and 2018. The share of low-income households who’re renting, defined as those earning less than $30,000 per year, fell by 5% over the same period.
JCHS said the evidence suggests that more higher-income families are being pushed into renting due to the growing costs of homeownership. Between 1994 and 2019, the number of middle-aged families who’re renting grew significantly. For example, the number of 35 to 44-year olds who are renting grew by 4.5%, while the number of renters aged between 45 and 54 rose by 5.3%. And the number of married couples with kids that are renting has risen by 14% since 2004.
What’s worse is that the number of “cost-burdened” renters, or those that pay at least 30% of their income on rent, is rising too. Some 6 million more renters fell into this category between 2001 and 2018, according to JCHS. In total, around 20.8 million Americans are now said to be rent-burdened, with around half of that number “severely rent-burdened”, which means they spend over half their income on housing.
The problem is unlikely to get better any time soon, the JCHS said. Although new rental construction is close to its highest level in almost three decades, there remains a significant need for more housing, especially at lower price points, the JCHS said.
Between 2012 and 2017, the number of units renting for $1,000 a month or more increased by 5 million. On the other hand, the number of units renting for $600 or less decreased by 3.1 million. The percentage of low-cost units nationwide decreased to 25% of the nation’s overall housing stock in 2017, the report shows.