JCHS: Apartment Demand Exceeds Construction
Though apartment construction now stands at its fastest pace in nearly 30 years, those deliveries will not meet the surging demand for rental housing, the Harvard Joint Center for Housing Studies reported.
The Center said 43 million households live in rental housing, up by nearly 9 million households in the last 10 years–the largest gain in any 10-year period on record. The share of all U.S. households that rent rose from 31 percent to 37 percent, its highest level since the mid-1960s.
“This provides another reminder that rental housing markets remain extremely tight,” said MBA Vice President of Commercial and Multifamily Research Jamie Woodwell, who provided information to the Joint Center’s report, America’s Rental Housing: Expanding Options for Diverse and Growing Demand. “Even with the strong development pipeline, demand has outpaced supply in many markets, and many households’ incomes cannot support the cost of building and maintaining an apartment.”
Rental vacancy rates recently fell to their lowest point since 1985 while inflation-adjusted rents rose at a 3.5 percent annual rate, the Center said. These trends plus a decline in renters’ incomes since 2001 pushed the number of renters paying more than 30 percent of income for housing up from 14.8 million in 2001 to 21.3 million in 2014. The number of households paying more than half their incomes for housing went from 7.5 million to 11.4 million, a record figure. The Joint Center considers nearly half of renters cost burdened, up from 41 percent in 2001.
“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 Joint Center for Housing Studies Managing Director Chris Herbert.
Herbert said affordability challenges increasingly afflict moderate-income households as well. He called the current state of rental housing a tale of two markets. “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 the their heads and food on the table,” he said.
Looking ahead, Herbert said these negative trends could 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.
