Rent Affordability Challenges to Intensify Over Next Decade
Households spending more than 50 percent of their income on rent could rise by as much as 11 percent over the next decade, a new report said.
Research by Harvard University’s Joint Center for Housing Studies and Enterprise Community Partners Inc. projected the number of households spending more than 50 percent of their income on rent to rise from 11.8 million to 13.1 million by 2025. The study, Projecting Trends in Severely Cost-Burdened Renters: 2015-2025, said demographic groups most affected would be older adults, Hispanics and single-person households.
Christopher Herbert, managing director of the Joint Center, said the findings suggest that even if trends in incomes and rents turn more favorable, a variety of demographic forces–including the rapid growth of minority and senior populations–could exert continued upward pressure on the number of severely cost-burdened renters.
“Even in the unlikely event that income growth greatly outpaces rent gains, the number of severely cost-burdened renters will remain near current record levels,” Herbert said.
The report said in 2013, one in four renters, or 11.2 million renter households, were severely burdened by rents that took up over half their incomes. This total represented a slight reduction from the record level of 11.3 million set in 2011, but was dramatically higher than the start of the past decade, having risen by more than 3 million since 2000.
“With substantial growth in renter households expected over the next decade and little sign of a turnaround in the income and rent trends that produced these record levels of cost burdens, there is little prospect for substantial improvement in these conditions over the coming decade,” the report said.
Under the report’s base case scenario for 2015-2025, the number of rental households could increase by 4.2 million; the number of severely burdened households aged 65-74 and those aged 75 and older rise by 42.1 percent (830,000 to 1.2 million) and 38.9 percent (890,000 to 1.2 million); the number of Hispanic households with severe renter burdens increases 27.3 percent (2.6 million to 3.4 million); and the number of severely burdened single-person households jumps by 12.0 percent (5.1 million to 5.7 million).
Meanwhile, the study said the private sector has been unable to supply new homes at rents low enough to reach low-income renters: The median rent of a newly constructed apartment of $1,290 was equal to about half the median renter’s monthly household income. Additionally, the study said the need for affordable housing is “overwhelming” the capacity of federal, state and local governments to supply assistance.
“Only under the most optimistic of these scenarios, where household incomes outpace rent growth by 1 percentage point annually over the next decade, do we project fewer severely cost-burdened renter households than today,” the study said. But even under that scenario, the authors only expect a decrease of 169,000 households (1.4 percent), as income gains are largely offset by demographic trends.
“It is critical for policymakers at all levels of government to prioritize the preservation and development of affordable rental housing as there are simply not enough quality, affordable rental units to provide housing for the millions of households paying over half their income in rental costs,” Herbert said.
“People aged 50 and over will become increasingly vulnerable to the growing rental housing crisis,” said Doris Koo, AARP board member and former president and CEO of Enterprise Community Partners. “As defined pension plans and other sources of retirement income shrink or disappear, it’s of utmost importance to increase the supply of affordable housing so that seniors have a stable, affordable place to call home.”
The study can be found at http://www.jchs.harvard.edu/sites/jchs.harvard.edu/files/projecting_trends_in_severely_cost-burdened_renters_final.pdf.
