Harvard Study: Rent Really is Too Damn High
A new Harvard study has found that rent prices have soared while incomes have fallen, leaving millions of Americans cost burdened and struggling to make ends meet. Half of all renters in the United States are now considered “cost-burdened,” paying more than 30 percent of their income for rent, compared with 25 percent of renters in 1960.
The problem has only gotten worse since the recession as wages have fallen even faster but rent prices continued to rise. Not only are half of American renters paying more than 30 percent of their income for rent, 28 percent of renters pay more than half of their incomes to cover their housing. That’s more than 11 million Americans, an increase of 2.5 million people in just four years.
Analysts had expected the foreclosure crisis to flood the market with affordable rental housing but the demand for rentals remained high even after 2.7 million single-family houses hit the rental market in 2007. The vacancy rate of rental homes has fallen from 10.6 percent in 2009 to 8.4 percent in 2013. Of course, the foreclosure crisis turned many home owners into renters which created even more demand for rental housing.
Experts worry that Congress may rush to eliminate the Low-Income Housing Tax Credit which supports building or preserving affordable rental housing and has helped create more than 2 million affordable rental units.
According to the Harvard study, rental affordability peaked in 2000 when the average renter income was around $37,000 and the average rent was around $800 per month. Today, the average renter income has plummeted to $32,500 while the average rent price has increased to more than $850.
In New York City, the rent problem has turned into a crisis as the average rent for a new apartment has risen to over $3,000 per month while the average New Yorker pays well over $1,100 per month for their existing apartment. Of course, many of the apartments that bring the average down are rent controlled and residents have lived in them forever. There is affordable rental housing out there, you just can’t get it anymore.
(Image courtesy of David Shankbone)