Rental Crisis in the US
There are more renters now than in the history of the United States.
43,267,432 households with 110,175,847 residents
Unfortunately, we’re also in “the worst rental affordability crisis that this country has ever known,” per the U.S. Secretary of Housing and Urban Development.
That’s a bad combination.
Let’s take a look at what happened.
Thanks to:
The Housing Crisis
The Great Recession
Stagnant Wages
Home ownership is at a 48-year low.
Year Avg. Rate
1965 63.025
1966 63.45
1967 63.625
1968 63.85
1969 64.325
1970 64.175
1971 64.25
1972 64.375
1973 64.525
1974 64.65
1975 64.6
1976 64.725
1977 64.8
1978 64.95
1979 65.225
1980 65.575
1981 65.425
1982 64.775
1983 64.65
1984 64.475
1985 63.9
1986 63.775
1987 63.975
1988 63.8
1989 63.9
1990 63.95
1991 64.05
1992 64.15
1993 64
1994 63.975
1995 64.75
1996 65.375
1997 65.7
1998 66.275
1999 66.8
2000 67.375
2001 67.825
2002 67.925
2003 68.25
2004 69
2005 68.875
2006 68.775
2007 68.15
2008 67.825
2009 67.375
2010 66.85
2011 66.15
2012 65.45
2013 65.125
2014 64.475
2015 63.55
Meanwhile, 2004-2014 saw the strongest 10-year growth in rentals since the late 80s.
Average Annual Growth in Renters
1990s: 274,000
2000s: 507,000
2010-13: 1,250,000
This includes surges across age demographics
[approx. % increases 2004-13]
25 and under: 3%
25-29: 6%
30-34: 9%
35-39: 10%
40-44: 7%
45-49: 6%
50-54: 6%
55-59: 5%
60-64: 4%
65-69: 3%
Overall: 4%
and race and ethnicity.
[% increases 2004-20012]
White: 2.3%
Hispanic: 3.4%
Black: 4.2%
Asian/Other: 3.6%
All Minorities: 3.6%
But here’s the problem:
[2000-12]
Median Gross Rents: +6%
Median Renter Income: -13%
Those numbers don’t add up.
Traditional Affordability Rule:
Rent + Utilities < 30% Income Median income earners – aka the middle class – can no longer afford rental housing in nearly 90 cities across the United States. In total, nearly half of American renters spend more than the maximum suggested percent income on rent, and more than 1 in 4 rental households spend over 50% of income on rent. That rose 12 percentage points in one decade, and more than doubled in 50 years. Still, we’ve only looked at middle-class renters, really. It gets worse.
% Renters with incomes less than $30,000: 46
Nearly half of all renters earn less than $30,000 a year.
% Renters with incomes less than $15,000: 22
Nearly a quarter of all renters earn minimum wage or less.
That means to reach the affordability standard:
– Housing cost must be <$375/month – <%5 rentals built in last 4 years <$400/month – 50% rentals available for <$400/month are more than 50-years-old – 14% of those fail American Housing Survey’s adequacy criteria — which leads to a major affordable housing squeeze– 11.8 million low-income renters 6.9 million low-income rental units 4.9 million unit shortfall …which leads to an affordable housing gap that grew 169% in just over a decade. And it’s about to get worse.
Possible Projected Growth of Severely Burdened Households
2015: 11.8 million
2025: 14.8 million
That’s a 25% increase in households paying more than 50% in rent.
Age % Increase of Severely Burdened
15ñ24 6.00%
25ñ34 24.60%
35ñ44 30.90%
45ñ54 11.80%
55ñ64 21.50%
65ñ74 62.00%
75+ 56.70%
Race/Ethnicity
White 14.2%
Black 23.5%
Hispanic 45.1%
Asian 37.8%
Including rapid growth across all demographics, with the elderly and Hispanics taking the worst hit.
Even at baseline estimates, 13.1 million Americans could be severely cost-burdened by rent in 10 years.
Suddenly, basic expenditures become problematic.
Expenditure ; % Spending Decrease
Food: 38%
Transportation: 65%
Retirement Savings: 50%
Healthcare takes the biggest hit.
Care ; % who skip b/c of rent costs
Dental: 40%
Follow up care: 13%
Mental healthcare: 8%
Prescription medicine: 23%
See a doctor: 25%
See a specialist: 16%
Rental availability and affordability is in a full-blown crisis, capable of sending the country back into a economic spiral if not properly addressed. Until then, more than 1 in 3 Americans will continue to struggle getting their rental checks in on time.
Citations:
- http://www.jchs.harvard.edu
- http://blogs.wsj.com/economics/2015/07/28/u-s-homeownership-rate-hits-48-year-low/
- http://qz.com/416474/homeownership-is-no-longer-the-lynchpin-of-the-american-dream/
- http://www.bloomberg.com/news/articles/2015-04-28/homeownership-rate-u-s-falls-to-63-7-lowest-since-1993
- http://nmhc.org/Content.aspx?id=4708
- http://www.zillow.com/research/rent-affordability-2013q4-6681/
- http://blogs.wsj.com/economics/2015/07/28/where-rents-are-eating-up-a-bigger-share-of-income/
- http://www.zillow.com/research/rent-burden-sacrifices-9969/
- http://www.nytimes.com/2014/04/15/business/more-renters-find-30-affordability-ratio-unattainable.html?_r=1