According to a report recently released by the Joint Center for Housing Studies at Harvard University (JCHS), renter incomes are not keeping up with the rising costs of housing and utilities. Since 1980, real rents have increased 15%. Yet, real renter incomes are now below 1980 renter income levels.
The divergence of rents and incomes has been particularly pronounced in the past decade. While rents stalled during the most recent recession, they are once again on the rise, with a 2.3% increase in the last quarter of 2010. Renter incomes have not shown any indication of increasing.
Long term analysis of renter cost burdens demonstrates the growing struggle that emerges from these divergent trends. In 1960, 44% of renters in the bottom quintile faced a severe housing cost burden, defined as paying over 50% of their income towards rent. By 2009, 61% of renters in the bottom income quintile faced such a burden.
The incidence of unaffordable housing cost burden among moderate income households is also on the rise. Over the last decade, the percentage of middle income households paying over 30% of their income for rent doubled.
Overall, while only 24% of renters paid over 30% of their income towards rent in 1960, by 2009 49% of renters were in this predicament.
While part of the story is declines in incomes, the report also confirms that there is an insufficient supply of affordable rental homes available to meet the need among the lowest income households. Over 28% of the most affordable, unassisted rental homes have been lost since 1999 and the current supply of seven million assisted rental homes can only serve approximately a quarter of all renters eligible for federal housing assistance. The authors estimate that since 1995, 700,000 homes with assistance attached to them have been lost.
According to the report, the rental market is poised to become increasingly tight in future years and the shortage of affordable homes will worsen. Due to declines in homeownership nationwide, the number of renter households is rising. The number of renter households grew by almost four million between 2005 and 2010. Researchers at JCHS estimate that the number of renter households will likely increase by between 360,000 and 470,000 annually over the next decade.
The report concludes that with the number and the share of renters likely to grow, it is necessary that we identify and promote policies to preserve and expand the supply of affordable rental housing today.
To access the study, entitled America’s Rental Housing: Meeting Challenges, Building on Opportunities, visit the Joint Center for Housing Studies at http://www.jchs.harvard.edu/publications/rental/rh11_americas_rental_housing/index.html