Key Highlights
- Perfect storm for steeper rental costs
- Lowest vacancy rates in decade
- Influx of high-income renters
- Constraints on building new apartments & houses
- Disappearance of low-cost rental units
The new report on US rental markets just released by Harvard University’s Joint Center on Housing Studies (JCHS) informs us of the growing number of high-income renters that is adding even more strain to low income and increasingly middle-income renters.
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“Despite the strong economy, the number and shares of renters burdened by housing costs rose last year after a couple of years of modest improvement,” said Chris Herbert, managing director of the JCHS. “And while the poorest households are most likely to face this challenge, renters earning decent incomes have driven this recent deterioration in affordability.”
Today’s renter pool is wealthier today than a decade before
- Renters earning $75,000 and up were 22% of the rental pool in 2019, the highest share of high-earners on record.
- The number of high earning renters increased +45% between 2010-2018.
- The average real income of 20% of top renters is up +40% in the last 30 years.
- The number of low earning renters (under $30,000) decreased more than 5%, a reduction of nearly 1M households.
- The average real income of 20% of high-earning renters increased more than +40% in the last 30 years while the bottom 20% of low income renters saw their incomes decrease – three decades ago, the top 20% high earners made 12 times more than the bottom 20% and today, the income disparity has increased to 18 times more than the bottom 20%.
Today’s household renters are older and larger:
- Between 1994-2019, there are now +4.5% renters from ages 35-44 years.
- During the same time period, there are now +5.3% more renters from ages 45-54 years.
- Married couples with children who rent have increased +14%, +680,000, now totaling 5.9M new renters.
Today’s rental stock reflects today’s wealthier rental pool:
- The new wave of downtown multi-family buildings “…typically offer amenities, including locations in the core parts of metro areas, that put their rents out of reach for even middle-income households,” according to the JCHS report.
- The national median rent between July 2018-July 2019 increased to $1,620/month, an increase of +37% from 2000.
- Between July 2018-July 2019, the rent for newly built apartments increased +20% to $2,450 while the lowest median for low-tier rentals increased +12% to $1,050/month.
- The supply of low cost units ($600/month or less) dropped from 33% of the housing stock in 2012 to 25% of housing stock in 2017.
- According to the National Low Income Housing Coalition, there are now 37 affordable units per every 100 “extremely low income” households needing those units.
Thanks to Curbed’s Patrick Sisson, Harvard University’s Joint Center on Housing Studies and the Department of Housing and Urban Development.
Also read: What Are Owners Fixing in Their Houses?, 2020 Smart Homes, Cities Where Renters Can Actually Save To Buy
