Nationwide, rental housing vacancy rates are the lowest they’ve been in 30 years and a record number of renters are spending more than 30 percent of their incomes on housing.
Those were the findings of a report released Dec. 9 by the Harvard Joint Center for Housing Studies in Washington.
The report showed the national trends that are contributing to the housing crisis that West Coast developers are well familiar with, with San Francisco, Seattle and Los Angeles among the cities where even middle-class households struggle to afford rent.
The report found that the number of American families and individuals living in rental housing has risen by almost 9 million since 2005, to 43 million. That was the largest gain in the number of renting households in any 10-year period on record, according to the report. Meanwhile, the percentage of households that rent rose from 31 percent to 37 percent, the highest level since the mid-1960s.
New development of rental housing has failed to keep up with the growing demand, and the new rental properties that have been built have largely consisted of units that rent at above-median prices.
“Record-setting demand for rental housing due to demographic trends, the residual consequences of the foreclosure crisis, and an increased appreciation of the benefits of being a renter has led to strong growth in the supply of rental housing over the past decade both through new construction and the conversion of formerly owner-occupied homes to rentals,” said Chris Herbert, managing director of Harvard’s Joint Center for Housing Studies, in a statement released with the report. “Yet the crisis in the number of renters paying excessive amounts of their income for housing continues, because the market has been unable to meet the need for housing that is within the financial reach of many families and individuals with lower incomes. These affordability challenges also are increasingly afflicting moderate-income households.”
The trend has been exacerbated by a 9 percent decline in renters’ average incomes since 2001, the report says.
That has helped push up the number of renters considered “cost-burdened,” those spending more than 30 percent of their incomes on rent, from 14.8 million in 2001 to 21.3 million last year.
Those that are considered “severely burdened,” paying more than half of their incomes in rent, rose from 7.5 million to 11.4 million.
Overall, 49 percent of renters are cost-burdened, up from 41 percent in 2001, the report said. Twenty-six percent are severely cost-burdened, up from 20 percent.
The report noted that lower-income households that were severely cost-burdened with rent spent, on average, 38 percent less than other households on food, 55 percent less on health care and 45 percent less on retirement savings.
Meanwhile, the number of households that qualify for rental subsidies outstrip their availability by a 4-to-1 ratio.
“In 2015, rental housing in America is a tale of two markets, where upper-income renters are finding a healthier supply of housing choices and landlords and private sector investors are benefiting from higher rents, but too many families earning less than $50,000 per year are having to make trade-offs between putting a roof over their head and food on the table,” Herbert said. “These negative trends are poised to go from bad to worse, as the most cost-burdened populations—minorities and the elderly—grow, and incomes continue to grow more slowly than rental costs.”
In the San Francisco, Oakland and Hayward, Calif., metropolitan statistical area, 48.2 percent of renting households are cost burdened, according to an interactive map the center produced along with its report. Some 24.8 percent are severely cost-burdened.
In the Seattle, Tacoma and Bellevue, Wash., area, 47.3 percent of renting households are cost-burdened and 23.3 percent are severely so.
For renter households considered high-income, earning more than $45,000 a year, 24.4 percent were still cost-burdened in the San Francisco area. The figure ranked it 16th out of 381 metropolitan areas for cost burden for high-earning households.
In Seattle, 16.1 percent of high-earning households were cost-burdened, ranking it 42nd out of 381.