A new Harvard study reveals escalating rents are leaving a record number of Americans cash-strapped because they're spending more than half of their income to cover rent.
As escalating rents significantly outpace wage growth in the United States, many Americans end up cash-strapped trying to keep a roof over their head.
Of the 43 million families and individuals who live in rental housing, nearly half (21.3 million renters) are now considered cost-burdened tenants, meaning they spend more than 30 percent of their income to pay for rent, according to the latest biannual rental report by Harvard’s Joint Center for Housing Studies.
What’s worse, more than 26 percent of those renters are defined as “severely cost burdened” because they’re pay more than half their income to cover rent. The strain on renters’ budgets means families are forced to make sacrifices in other areas. In 2014, severely cost burdened renters spent 38 percent less on food and 55 percent less on health care, according to the report.
The rental crisis is exacerbated by increasing demand and the lowest vacancy rates in more than three decades.
“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,” said Chris Herbert, managing director of the Joint Center For Housing Studies at Harvard, in a press release. “These affordability challenges also are increasingly afflicting moderate-income households.”
According to the report, inflation-adjusted rents climbed 7 percent from 2001 to 2014, while renters’ household incomes dropped by 9 percent.
Other highlights from the rental report include:
- The number of renter households increased from 34 million in 2005 to 43 million in 2015.
- The median rent for a new apartment hit $1,372 last year, a 26 percent hike compared to 2012.
- More than half of the growth in renters in the last decade occurred among baby boomers (born 1946-1964). Their renting numbers increased by more than 50 percent, from 10 million to more than 15 million.
Unfortunately, the rental crisis in America is only expected to get worse.
“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 heads 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.”
Check out “10 Cities With the Highest Rent Hikes in the Nation.”
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