U.S. Has Lost 4 Million Low-Cost Rental Homes Since 1990

A working paper from the Joint Center for Housing Studies at Harvard University, Documenting the Long-Run Decline in Low-Cost Rental Units in the US by State, finds the number of rental homes renting for less than $600 per month (in constant 2017 dollars) has fallen by nearly 4 million since 1990. The share of low-cost rental homes in the housing stock fell in every state and the District of Columbia between 1990 and 2017, and the speed of the decline has accelerated since 2012.

The authors based their report on the 1990 and 2000 Decennial Census and American Community Survey (ACS) 1-Year Estimates between 2000 and 2017. The overall rental stock grew by 10.9 million homes over this period, but about 95% of that growth was in homes renting for more than $1,000 per month. The number of homes renting for less than $600 in inflation-adjusted terms fell by 4 million. In 1990, 46% of rental homes were low-cost (renting for less than $600); in 2017, only 25% of rental homes were low-cost.

This decline did not occur at an even pace. Between 1990 and 2000, the number of low-cost rental units fell by 1.7 million. The recession of 2008 and 2009 was followed by a brief rise in the number of low-cost rental homes, which the authors attribute to the foreclosure crisis. Since 2012, however, the rate of decline has increased sharply. Between 2012 and 2017, the housing stock lost 3 million low-cost rental homes. 

Every state and the District of Columbia saw a decline in the share of rental homes renting under $600 per month, but the decline was smaller in high-cost states such as California and New York. The share of homes renting for under $600 was already low in 1990 in such states, but they saw larger relative declines in units renting at or below $1,000 per month.

The authors note that, whatever the reason for this decline in low-cost units, it has a significant negative impact on households at the bottom of the income distribution. The authors found a strong correlation between losses of low-cost rental homes and increases in housing cost burdens for low-income households. The states with the steepest decline in the share of low-cost homes typically also saw the greatest increases in cost burdens.

The working paper is available at: https://bit.ly/2kHX9QT