Teachers and nurses are being forced to live in older, smaller rental homes

The coronavirus pandemic has helped thousands of Americans to relocate to more affordable parts of the country thanks to their ability to work remotely from anywhere.

But for people whose jobs still require them to be there in person – such as teachers and nurses – the opposite is true. As a new analysis from Zillow shows, housing affordability is becoming more of a challenge as rent price growth explodes in many areas.

The analysis reveals that more than a decade of underbuilding in the U.S. is having a big impact on renters who need to live close to where they work, and those doing in-person jobs are left to battle for a decreasing slice of the rental market that’s comprised of smaller, older and more affordable homes.

According to Zillow, underbuilding in the U.S. since the Great Recession has contributed to a shortfall of millions of homes, fueling home value growth and increasing rents.

Zillow Economic Data Analyst Nicole Bachaud said that while some renters have been able to keep costs low even as home prices have grown, the fact they can still afford the rent does not make them prosperous.

On the contrary, “a big slice of the rental market is out of reach for workers looking to maintain a comfortable rent burden,” she said. “That often means renting an older home with less space but a smaller price tag, or doubling up with roommates or a partner.”

The analysis found that while rent burdens, which is the share of income people spend on rent, appear to be low in light of the recent growth in rent prices, this is because many renters are living with roommates or a partner. Alternatively they’re moving to less desirable homes that are at least more affordable.

A typical teacher spends around 22% of their income on rent, which is below the 30% that most workers will spend on rent costs. That compares with roughly 20% of teacher’s income spent on rent five years ago, even though rent prices have grown by 24% over the same period.

Zillow says that in order to keep their rent costs this low, teachers are choosing to make do with less adequate housing.

An example of this trend is seen in Boston, where teachers on average spend just 18.5% of their income on rent. That’s less than the average 20% of their income that teachers in the city spent on rent in 2016. But Zillow’s data reveals that to keep their rental costs so low, teachers are forced to choose from the bottom 6% (cheapest) of rental homes available in the city. In most cases, such homes are around 300 square meters smaller than average and 33 years older than the typical rental home available in Boston. Age might not always tell the whole story, of course, but older homes are more likely to present unhealthy or unsafe living conditions.

The story is worse in Tampa, where teachers are forced to spend 28% of their incomes on rent, up from 17.2% of their income five years ago. Yet, just 2.2% of available rental homes in the city can be had at that price, unless teachers are willing to part with even more of their income to pay the rent.

Nurses don’t have it any easier. While the analysis shows that most are able to live affordably according to the 30% rule, they generally rent homes that are at least 100 square meters smaller than the average rental in their area. Nurses in San Diego generally spend 24.5% of their income on rent, but at that rent buren just 8% of rental homes are within reach.

The best housing conditions for nurses appear to be in Portland, Oregon, where almost two-thirds of rental homes are available to the average nurse, who spends 17.3% of their income on rent. Even so, they’ll still be forced to make do with a home that’s 111 square feet smaller than the median Portland rental.

Zillow says that in order for teachers, nurses and others with similar incomes to expand their living options, authorities must act to make it easier to create new housing inventory. It points out that basic supply and demand is the main driver of growing rental costs, so by increasing supply it follows that housing should become more affordable.

One way of doing that is to relax zoning restrictions, Zillow says. Previous research has shown that even modest densification of homes would result in a meaningful slowdown in housing price growth over the long term.

“Boosting supply is the clearest path to improving affordability, and allowing for even small amounts of new density could have a big impact on prices,” Bachaud said.