Cambridge, Mass. (CBS DC) — Income levels hurt from the Great Recession and an increase in rental demands has left millions of severely cost-burdened just trying to rent affordable housing.
A new study from the Joint Center for Housing Studies of Harvard University finds that nearly 50 percent of renters are “cost-burdened,” meaning they pay more than 30 percent of their income to rent housing. This is nearly double from the less than one-quarter of renters who paid that much in 1960.
“Severely cost-burdened” means a person is paying more than half of their income to rent.
“By 2011, 28 percent of renters paid more than half their incomes for housing, bringing the number with severe cost burdens up by 2.5 million in just four years, to 11.3 million,” wrote the authors of the Harvard study, conducted with partial funding from the MacArthur Foundation.
With housing prices too high for many to afford after the 2007-09 recession, many have been pushed into rentals. Between 2004-2012, the renter share of all US households climbed from 31 to 35 percent, totaling about 43 million. The increase in demand for rentals has created a “seller’s market,” with prices being set as high as the seller desires.
“Significant erosion in renter incomes over the past decade has pushed the number of households paying excessive shares of income for housing to record levels,” wrote the researchers. “Assistance efforts have failed to keep pace with this escalating need, undermining the nation’s longstanding goal of ensuring decent and affordable housing for all.”
Soaring demand for rental properties after 2007 was enough to absorb the 2.7 million single-family homes that fell into the rental market.
“From a record high of 10.6 percent in 2009, the vacancy rate turned down in 2010 and has continued to slide, averaging 8.4 percent in the first three quarters of 2013.”
The study notes that cost-burdened renters spend about $130 less on food each month, and make similar reductions to spending in healthcare, clothing and savings. Even those who select longer commutes in order to avoid high housing costs end up spending so much on transportation that the combined cost still offsets spending in other areas.
“The shortfall in the number of units affordable to extremely low-income renters in the U.S. (those earning more than 30 percent of the area median) more than doubled from 1.9 million in 2001 to 4.9 million in 2011,” writes Chris Herbert, Research Director at the Harvard Joint Center for Housing Studies.
“The situation just keeps getting worse.”