The recent recession pushed the number of renters who pay more than half their income for housing to record levels, according to a report released today by the Harvard Joint Center for Housing Studies (JCHS).
The report, “America’s Rental Housing: Meeting Challenges, Building on Opportunities,” finds even prior to the recession, long-term increases in rents and utility costs combined with falling renter incomes put strain on many renters’ budgets.
The recession made matters worse, increasing the cost burden on working and middle class Americans.
The findings are similar to those reported by VHFA in last week’s “Between a Rock and a Hard Place: Housing and Wages in Vermont” report (“Report: Housing affordability gap grows“).
According to the Harvard report, one in four renters — 10.1 million households — spends more than half their income on rent and utilities. Another quarter of renters (26.2%), spends 30%-50% of their income on rent and utilities.
Severe housing cost burdens are still anchored among those in the bottom fifth of the household income distribution, but over the last decade the number of renters in the next two higher quintiles facing such burdens increased by 1 million households.
“In the last decade, rental housing affordability problems went through the roof,” says Eric Belsky, Managing Director of the JCHS and an author of the study. “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, health care, and savings.”
While the demand for affordable rental housing is greater than ever, the report also finds the supply has been shrinking. Since the mid-1990s, more than 700,000 rentals with federal subsidies tied to them were lost from the subsidized housing stock either through demolition, or owner decision to abandon subsidies and turn the units into market-rate rentals.
Meanwhile, nearly 12% of low-cost market-rate rentals existing in 1999 were demolished or otherwise permanently lost from the housing stock by 2009. With a median age of 38 years, the rental housing stock is older on average than it has ever been.
“While the need for affordable rental housing is growing, the squeeze on government budgets is putting these much-needed programs in jeopardy,” says Chris Herbert, JCHS Director of Research and study co-author.
“Investments to preserve existing assisted housing may be cost-effective, but the public sector can’t tackle this problem on its own. Policy makers must look for ways to support efforts by the private sector to invest in both existing and new rental housing, while keeping prices affordable.”
The MacArthur Foundation provided principal support for the report as part of its $150 million “Window of Opportunity, Preserving Affordable Rental Housing” initiative.
Read the JCHS report online (PDF).