According to Harvard’s Joint Center for Housing Studies [ht: ja], more than one out of four renter households is spending a whopping 50 percent or more of their income on paying the landlord. Another 18 percent faced moderate cost burdens, spending between 30 and 50 percent of their income on housing rent. Thus, just under half of all renters were cost burdened in 2013.
This is happening at the same time that the share of renter households in the United States has increased significantly—as homeownership rates have fallen from a high of 69.2 percent in the second quarter of 2004 to 63.4 percent in the second quarter of 2015, the lowest level since 1967.
So, what’s going on?
According to the report,
There are a number of factors contributing to the high rates of renting. Former homeowners who lost their homes to foreclosure are still largely out of the ownership market, and tight lending standards have made it difficult for those with anything but stellar credit to buy a home. Economic uncertainty has made it attractive for many households to stay as renters, unwilling to take on the financial risks of ownership or to be locked into a specific home in a specific place. The combined effect of the rapid rise in both cost-burdened rates and the share of households renting resulted in a nearly 60 percent rise in the number of severely cost-burdened renters from 7 million in 2000 to 11.2 million in 2013, while those with moderate burdens rose from 6.6 to 9.6 million.
Many people can’t or don’t want to buy a home. New construction of rental housing hasn’t kept up with the rising demand. And the incomes of renters still haven’t recovered from the long slide that began at the start of the millennium.
And the projection going forward? “Under the more likely scenario that rents will continue to outpace incomes, the number of severely rent-burdened households would increase by a range of 1.7 – 3 million” in the next decade.