Long-term increases in rental housing prices and utility costs combined with stagnant or falling incomes are creating escalating affordability pressures for U.S. renters. "Rental markets are now tightening, with vacancy rates falling and rents climbing," finds a new report by the Joint Center for Housing Studies of Harvard University. "With little new supply of multi-family units in the pipeline, rents could rise sharply as demand increases."
Maintaining an adequate supply of affordable rental housing is important because nearly all Americans rent at some point in their lives. While renters reflect the diversity of the nation, they are more likely to be young, single, and low-income, which makes them particularly sensitive to increases in housing costs, according to the MacArthur-supported report.
"Over the course of the last decade, rental housing affordability problems went through the roof, with more renters spending half or more of their income on their housing costs, and these affordability problems are marching up the income scale," said Eric Belsky, the Center's Managing Director and an author of the report.
Between 2010 and 2020, the number of renter households could increase by 360,000–460,000. Given the long lead time required to replace depleted affordable rental housing, such a sharp increase in demand – driven by demographic trends, an economic upturn, or new directions in homeownership policies – could quickly reduce vacancy rates and put further upward pressure on rents.
While new rental units are needed to meet this uptick in demand, preserving current rental stock remains integral to meeting the overall rental housing needs, particularly for low- and moderate-income households.