Harvard study flags severe affordability problems for renters

More Americans are renting today, but affording a place to live is more difficult as half of all renters—21.1 million households—pay 30 percent or more of their income towards rent, according to a new report from the Harvard Joint Center for Housing Studies.

December 09, 2013
Harvard University's Joint Center for Housing Studies 2013 Rental Housing Report

More Americans are renting today, but affording a place to live is more difficult as half of all renters—21.1 million households—pay 30 percent or more of their income towards rent, according to a new report from the Harvard Joint Center for Housing Studies.

That figure compares with 38 percent of renters that were housing cost burdened a decade ago. Two-thirds of the increase in cost burdened renters occurred among fully-employed householders. Rising rents combined with stagnant or declining income is squeezing renters, particularly low-income households, to cut back on food, healthcare, and savings just to keep up.

“For many low-income families, the rental housing affordability crisis is like a game of musical chairs in which there is never a chair left for them,” said Chris Herbert, Research Director at the Harvard Joint Center for Housing Studies. “The shortfall in the number of units affordable to extremely low-income renters in the U.S. (those earning no more than 30 percent of the area median) more than doubled from 1.9 million in 2001 to 4.9 million in 2011. The situation just keeps getting worse.”

According to the bienneal rental housing report, renters with $15,000 in annual income would have to find housing that costs no more than $375 a month to meet the 30-percent-of-income affordability standard. By comparison, the 2011 median monthly cost for housing built within the previous four years was more than $1,000. Less than 34 percent of these new units rented for less than $800, and only 5 percent for less than $400.

The share of Americans renting increased to 35 percent in 2012 from 31 percent in 2004. A portion of that surge was homeowners who lost their houses through foreclosure or financial hardship. Consequently, competition from higher income households further limited the supply of affordable rentals available to low-income households. Of the units that extremely low-income renters could afford in 2011, households with higher incomes occupied more than a third. For every 100 extremely low-income renters, only 36 units were both affordable and available.

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