Since the recession, the surge in rental demand has been good for the rental market and new, multifamily construction has provided a boost to the housing market. But a recent report finds that over the past decade, a combination of rising rents and decreasing income has put the financial squeeze on renters.
Half of U.S. renters pay 30 percent or more of their income on rent, an increase of 12 percent from a decade earlier, while 27 percent of renters shell out half their income for rent. Ten years ago, 19 percent of renters paid half their income on housing, according to the report from Harvard Joint Center for Housing Studies.
Digging a deeper hole
Eric Belsky, managing director of the center, says in a statement that the situation is grave. "We are losing ground rapidly against a chronic problem that forces households to cut essential spending," he notes. "With little else to cut in their already tight budgets, America's lowest-income renters with severe cost burdens spend about $130 less on food each month and make similar reductions in healthcare, clothing and savings."
The rental market has been steadily increasing since the recession, partly because some homeowners were forced out of homes they could no longer afford and partly because potential homeowners either couldn't obtain a mortgage or were shell-shocked by how far and fast housing values could collapse.
More rental demand, higher rents
In 2004, 31 percent of Americans rented; in 2012, that percentage rose to 35. From 2007 to 2011, approximately 3 million existing homes went from owner-occupied to renter-occupied. This surge in the rental market has led to a decreased number of vacancies and more expensive rental costs. Between 2000 and 2012, the report says, median rents, adjusted for inflation, rose by 6 percent nationwide. During the same period, median income of renters fell by 13 percent.
Assistance efforts for low-income renters have failed to keep pace with demand, the report says. While there is no clear solution as of yet, proposals from a number of organizations and government agencies, including the U.S. Department of Housing and Urban Development, for assistance programs and revitalization projects are on the table, awaiting congressional action.
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