Record numbers of U.S. renter households are spending more than 30 percent of their income, and in many cases more than half their income, on housing costs, according to a study published on Wednesday.
In its biennial report on rental housing, the Harvard Joint Center for Housing Studies said both lower and moderate income households were overburdened by higher rents, which have been rising 3.5 percent annually after accounting for inflation.
The lingering effects of the housing market collapse, which have seen the homeownership rate falling to levels last seen in 1965, and better employment prospects for Millennials, have fanned a rental market boom. An aging population has also spurred demand for rental accommodation.
While developers have stepped up the construction of multifamily homes and some previously owner-occupied homes have been turned into rentals, these dwelling have mainly catered for middle and upper income groups.
“Yet the crisis in the number of renters paying excessive amounts of their income for housing continues, because the market has been unable to meet the need for housing that is within the financial reach of many families and individuals with lower incomes,” said Chris Herbert, managing director of the Joint Center For Housing Studies at Harvard.
In 2014, a record 21.3 million renter households were spending more than 30 percent of income on housing costs, up from 14.8 million in 2001. The number paying more than half their income for housing increased to an all-time high of 11.4 million from 7.5 million.
“Upper-income renters are finding a healthier supply of housing choices and landlords and private sector investors are benefiting from higher rents,” said Herbert.
About 43 million families and individuals currently live in rental housing, an increase of nearly 9 million households since 2005 and a record gain in any 10-year period, the study showed. The share of households renting rose to 37 percent, the highest level since the mid-1960s, from 31 percent.
The study found that government housing assistance programs were falling short. It said the funding for the largest housing assistance programs remained below 2008 levels, despite an 18 percent jump in the number of very low-income households to 18.3 million between 2007 and 2013.
It said while the number of vouchers had increased to about 2.2 million in 2014 from under 2.1 million in 2004, the increase was offset by the loss of 105,700 public housing units and 145,600 units with project-based rental assistance.
(Reporting by Lucia Mutikani; Editing by Tom Brown)