Despite the continuous boom in the American economy, families across metro cities in the US are struggling to afford their homes. Rental rates have far outpaced the household incomes of many, especially among the lower- and- middle- income renter households. Such lopsided economic growth and income distribution has resulted in high rates of the cost burden, forcing many to cut back on expenses in other vital areas, with a spending of more than 30 percent of their incomes on rent.
According to the 2018 Cost burden Report by Apartment List, the share of cost-burdened renters fell slightly from 49.7 percent in 2016 to 49.5 percent in 2017, wherein the cost burden rate is the lowest since 2007. However, it is important to note that this decline is due to the upsurge of high-income households in the rental market. Affordability still remains far out of reach for many who do not belong to the dominant lobby of high- income earners.
The report reveals that while some trends are reflective of genuine improvements such as the narrowing gap between incomes and rent rates, others are merely compositional changes that do not paint the most accurate picture. For instance, the report found that while the number of renter households earning less than $35,000 witnessed a decrease from 20.5 million in 2007 to 19.7 million in 2017, there has also been a steady increase in the share of cost-burdened households from 76.6 percent in 2007 to 83.2 percent in 2017.
The issue is further exacerbated in the wake of limited impact of political initiatives to provide rent relief to working families struggling to pay their bills. Out of the housing-related bills introduced in the current 115th Congress, just 22 percent is centered on renters, none of which have been passed into law.
The report also highlights the bleak image of renters in 20 of the 25 metros, who are cost-burdened by median rent. Miami has the highest cost-burden rate with 62.7 percent, the highest of the nation’s 100 largest metros. Other cities where median rents are far higher than incomes include Philadelphia, San Diego, Los Angeles, Boston, Orlando, and New York, to name a few. Florida is the state with the highest cost burden rate at 56.4 percent.
Elucidating on this further, Chris Salviati, Apartment List’s housing economist stated, “There are only five metros — Dallas, Minneapolis, Charlotte, St. Louis and Houston — where the average renter can comfortably afford the median rent.” The report confirms that rental housing affordability affects not just low-income households, but also millions in the middle-class.
Formulating policies around inclusion, creating more awareness around the issue, and addressing the underlying causes of drastic shifts in affordability over the years is necessary in order to bring about substantial changes. While there is progressive development in some areas since 2014, the ground reality is that millions are still constrained in their housing choices on account of declining affordability, and often face evictions.