In Los Angeles and New York City, more than half of renters are now what’s called “cost-burdened,” which means they’re spending more than 30% of their income on rent. But this isn’t just a question of high rents in big, expensive cities: In Troy, Alabama, population 19,000, more than 62% of renters now spend too much on rent.
“This is a really geographically dispersed problem, and it pops up in different places for different reasons, but it’s basically a national issue,” says Whitney Airgood-Obrycki, the lead author of a new report from Harvard’s Joint Center for Housing Studies that maps out where Americans struggle most to pay for rental houses and apartments across the country. The report, one in a series that comes out every two years, analyzes how rental markets are changing.
There are a few key factors. Vacancy rates are at record lows. Rents are growing faster than incomes. Many low-cost rentals are disappearing from the market, in some cases because property owners are making improvements and raising rents, or because demand is so high that they can charge more even without making changes. Most newly built apartments are higher-end; at least one out of five built between July 2018 and July 2019 had a rent of at least $2,450. The number of middle-income renters paying more than 30% of their incomes is quickly rising.
As people with higher incomes spend more on rent, that also means that fewer people can save enough to buy a house—and the cycle leaves fewer affordable apartments left on the market, and more incentive for developers to keep building expensive apartments. Between 2000 and 2017, the Joint Center for Housing Studies found that more than 2 million low-cost rental units were lost from the market; a separate study based on the American Community Survey calculated that another 410,000 were lost in 2018.
Among the lowest-income renters—households earning less than $15,000 a year—nearly three-quarters were spending more than half of their incomes on rent in 2018, with little money left for food and other necessities. Climate change poses another threat, with hundreds of thousands of renters displaced by climate-fueled disasters in the last few years, and that number likely to increase. If units are destroyed, that leaves even fewer renters available—and tenants have fewer protections after disasters than homeowners.
Better housing policy could help. “Only one in four renters who are very low income and would be eligible for federal assistance actually receive it,” says Airgood-Obrycki. “So there’s a problem there of just having a mismatch between the rental assistance that’s available and the number of households that could use it.” Similarly, a low-income housing tax credit has helped spur the development of millions of new units of affordable housing over the last two decades, but it hasn’t gone far enough to meet the need. States and cities are beginning to adopt better policies; California, for example, has helped make it easier to build new backyard apartments and recently passed a (somewhat limited) statewide rent control bill. Developers are beginning to embrace technology that makes construction faster and cheaper. But all of this needs to happen more quickly.
“We aren’t forecasters,” Airgood-Obrycki says. “But based on the trends that we’ve seen over the last few years, we need a much stronger approach if we really want to address cost burdens and housing affordability.”