Good news in the nation’s battle for housing affordability—a decrease in the percentage of U.S. renters considered rent-burdened, defined as spending more than 30 percent of their income on housing—may in part be shaded by the fact that an increasingly wealthy group of Americans have entered the rental population.
Those are a few of the observations drawn from the 2017 National Rental Housing Landscape, a report released this afternoon by the Furman Center at New York University. The report, which focused on data from 2012-2015, the recovery years of the recession, highlights the breadth of the affordability crisis, and the ways that imbalances in supply across the housing market are exerting cost pressures.
Despite positive signs, such as the drop in rent-burdened households in the nation’s 53 biggest metro areas from 48.9% to 47.7% between 2012 and 2015, other data points underlined the nation’s housing challenges. Despite the drop, the number of rent-burdened households is still far above pre-recession figures. Median rent grew faster than inflation in nearly every major metro area, especially already high-cost areas on the coasts. In many cases, renters paid what researchers calls a premium for newly available units; apartments that entered the market in the previous year cost more than others, making it more expensive to move. The largest such discrepancy was found in San Jose, where units on the market rented for $610 more a month than those currently occupied.
During a livestreamed presentation and panel discussion about the results, housing experts—including Laura Kusisto, U.S. Housing Reporter at The Wall Street Journal, Sewin Chan, Associate Professor of Public Policy at NYU, Alanna McCargo, Co-Director of Housing Finance Policy Center at the Urban Institute, and Marion Mollegen McFadden, Vice President of Public Policy, Enterprise Community Partners, Inc.—discussed the results and what they meant for the rental population.
While the national picture has improved, lingering after-effects of the recession still make life hard for many renters, especially those looking to buy their first homes, says McCargo. Pressures on and changes in the mortgage industry have made it harder for potential buyers to qualify for home loans, non-housing debt is at record levels, and low vacancy rates—due in part to pressure to stay and rent longer, due to a shortage of starter homes—are really impacting rents. The panel agreed that both federal and local policy needed to focus on subsidizing more affordable units, and changing regulations, such as parking minimums, to make construction of such units more profitable; “the market won’t do it on its own,” said McFadden.
Many of the foreclosed homes from the recession have been turned into rental units, constricting the supply of affordable entry-level homes, and forcing more buyers to remain renters as they work to earn down payments, which puts more pressure on the rental market, especially as more high-income households become renters and put upward pressures on rent.
The lowest earning segment of the rental population feels these pressure the most acutely. In many metros, 10 percent or less of the available rental units are affordable for those with very low incomes (defined as half the metro’s median income), and the share of affordable rental units for rent-burdened families actually decreased during the period studied.