In a recent article reported online by Michael Hoban from UrbanLand, rents have increased significantly and vacancy rates for rental housing have plummeted. Since 2005, 9 million rental households have been added and 42.6 million families and individuals are now renting. The vacancy rates have dipped to 30-year lows and rents have annually increased by an average of 3.5%. Since rents have been rising and there have been no real changes in wages or income, a lot of people have been struggling to have affordable rent prices.
The number of people who are paying more than 30 percent of their income on housing has increased from 14.8 million in 2001 to 21.3 million in 2014. There has been an increase in multifamily housing permitting and construction since 2010, but the supply is still behind the demand in majority of the markets. The number of people spending more than 50 percent of their incomes on housing has increased from 7.5 million in 2001 to 11.4 million in 2014.
Lower-income households have been especially affected. The cost burden was 77 percent for households earning $15,000 to $29,999 per annum. This causes households to spend less on necessities. Households who are spending more than half of their incomes on rent, spend 38 percent less on food, 55 percent less on health care, and 45 percent less on retirement savings.
New product is being constructed but this also comes some challenges. The new construction is mostly aimed at higher- income groups. Median asking rent has risen in recent years to $1,372 in 2014 which is up more than a quarter from 2012. For 60 percent of the newly constructed apartments rents have gone over $1,250 per month, while only 10 percent on the market are under $850 per month.
Click here for the full article: http://urbanland.uli.org/economy-markets-trends/housing-9-million-new-renters-united-states/
Hoban, M. (2016, 02 26). Housing 9 Million New Renters in the United States. Retrieved from UrbanLand: http://urbanland.uli.org/