Finding an affordable rental has become increasingly challenging, echoing the sentiments of many individuals currently on the hunt for low-cost apartments. A recent report from Harvard’s Joint Center for Housing Studies sheds light on the growing difficulty in securing homes with rents under $1,000 a month.
Over the past ten years, there has been a noticeable decline in the availability of homes renting for under $600 and those ranging from $600 to $799. In contrast, the number of homes commanding rents exceeding $2,000 per month has more than doubled, exacerbating the prevailing housing affordability crisis faced by numerous cities and towns across the nation.
The real estate landscape is marked by challenges, with a significant portion of Americans grappling with rent affordability and encountering hurdles in their pursuit of homeownership. Even those with the means to cover housing costs find themselves constrained by high mortgage rates and market-rate rents, hindering their mobility.
The root cause of the soaring housing costs in recent years is a severe shortage of homes, estimated to be between 3.8 million and 6.5 million units. The shift to remote work in the wake of the pandemic has further fueled demand, propelling home prices to record levels in various regions.
The Harvard study reveals that half of American tenants allocate more than 30% of their income to rent and utilities, pushing their housing costs beyond accepted affordability standards. Among the record 22.4 million rent-burdened households, 12.1 million earmark more than half of their income for housing, contributing to a rise in homelessness.
Middle-income renters, earning between $30,000 and $74,999 annually, experienced the most substantial increase in housing costs between 2019 and 2022. In California, where younger workers have witnessed a significant drop in homeownership rates, the number of units with rents exceeding $2,000 has more than doubled.
These challenges are reshaping perceptions of homeownership. According to the New York Federal Reserve’s February 2023 Housing Survey, only 41% of renters believe there is a chance they will own a primary residence in the future. Despite this, a majority of renters express a preference for homeownership over renting. With builders racing to complete new multifamily buildings, there is optimism that rent growth may slow down, but the overall outlook for affordability remains grim.
