Rents may increase, and further burden renters, study says
One-fourth of renters, or 10.1 million U.S. households, spend more than half of their pretax income on rent and utilities, and that cost may grow.
A report issued this week by the Joint Center for Housing Studies of Harvard University warned that a sharp increase in demand for rental units, and the long lead times needed to build apartment buildings, could increase rents, putting financially strapped consumers in even more dire straits.
The study found affordability issues are not confined to lower-income renters. Between 2007 and 2009, 1.1 million more middle-income renters faced at least moderate housing cost burdens, spending between 30% and 50% of their incomes on housing. Generally, an affordable cost burden is defined as 30% of income.
The study’s authors said the findings are troublesome given how the recession swelled the ranks of low-income households and how the housing crisis continues to turn homeowners into renters.
“In the last decade, rental housing affordability problems went through the roof,” said Eric Belsky, one of the authors. “And these affordability problems are marching up the income scale. In real terms, it means more people have less money to spend on household necessities such as food, healthcare and savings.”
The rental supply is expected to be further pressured by new demand from consumers who doubled up with family members and friends during the recession. As employment improves, household formation is expected to increase. But because of tight lending requirements, some consumers will be unable to buy homes and will become renters.
