A decade of unprecedented growth in the rental housing market may be coming to an end. Fewer new renter households are being formed, rental vacancy rates have risen and rent increases have slowed. At the same time, renter demographics are changing and nearly 21 million households continue to pay more than 30 percent of their income for rent, according to a new report from the Joint Center for Housing Studies of Harvard University.
“This year’s report paints a complicated picture of the rental market. We’re finally seeing the record growth in renters slow down, but while the market has responded to rental housing needs for higher-income households, there are alarming trends that suggest a growing inability to supply housing that is affordable for middle- and working-class renters, let alone those with very low incomes,” Christopher Herbert, the Joint Center’s managing director, said in a statement. “Addressing these challenges will require bold leadership and hard choices from both the public and private sector.”
Highlights of the 2017 findings include:
Signs of a slowdown: Overall, rents increased more slowly in most markets across the country. Starts of new multifamily units reached a plateau in 2016 and have now fallen by about 9 percent through October 2017.
The changing nature of renters: While renters are disproportionately younger and lower-income, growing shares of renters are older and higher-income. For example, the number of renter households earning more than $100,000 per year increased from 3.3 million in 2006 to 6.1 million in 2016.
The changing nature of rental units: Additions to the rental stock are increasingly concentrated at the high end of the market. The share of new units renting for $1,500 or more (in real terms) soared from 15 percent in 2001 to 40 percent in 2016. Additionally, the share of new units renting for less than $850 per month fell from 42 percent of the rental stock to 18 percent.
Affordability continues to be a major problem: Despite rising incomes, nearly half (47 percent) of all renter households (21 million) are cost burdened – meaning they pay more than 30 percent of their income for housing, including 11 million households paying more than 50 percent of their income for housing.
Availability of rental assistance has shrunk: Even as low-cost housing units are disappearing, rental assistance is becoming harder to access for very-low-income households. The share of very-low-income households who receive rental assistance declined from 28 percent in 2001 to 25 percent in 2015.
Addressing these challenges – particularly expanding the availability of low- and moderate-cost housing options – will require that all levels of government ensure that the regulatory environment does not stifle innovation, and that tax policy and public spending support the efficient provision of moderately-priced housing.
