A decade of unprecedented growth in the rental housing market may be coming to an end, according to the 2017 America’s Rental Housing report. Fewer new renter households are being formed, rental vacancy rates have risen, and rent increases have slowed.
At the same time, renter demographics are changing and nearly 21 million households continue to pay more than 30 percent of their income for rent.
Released by the Joint Center for Housing Studies of Harvard University, the report shows that rents continue to take a significant chunk out of a households’ monthly income—more than what most experts consider “affordable.”
“This year’s report paints a complicated picture of the rental market,” says Christopher Herbert, managing director of the Joint Center. “We’re finally seeing the record growth in renters slow down, but while the market has responded to rental housing needs for higher-income households, there are alarming trends that suggest a growing inability to supply housing that is affordable for middle- and working-class renters, let alone those with very low incomes. Addressing these challenges will require bold leadership and hard choices from both the public and private sector.”
While renters tend to skew younger and have lower incomes, a growing share are older and more financially stable, the report shows. The number of renter households earning more than $100,000 per year rose from 3.3 million in 2006 to 6.1 million in 2016. And more rental inventory is catering to the high end of the market.
The share of new units renting for $1,500 or more rose from 15 percent in 2001 to 40 percent in 2016, according to the report. Meanwhile, the share of new units renting for less than $850 per month dropped from 42 percent to 18 percent.
Affordability continues to be a major problem in the rental market. Nearly half of the nation’s 21 million renter households are considered “cost-burdened,” devoting more than 30 percent of their income to housing. About 11 million households pay more than 50 percent of their income toward housing.