While rents in some sections of the country appear to have topped out, costs overall remain generally burdensome with upwards of 22.4 million tenants now spending more than 20% of their incomes on basic housing and utilities.
So says a comprehensive new report just released by the Joint Center for Housing Studies of Harvard University, which also notes that a record 12.1 million people are shelling out more than half of their incomes on rent.
The report, America’s Rental Housing 2024, acknowledges that for all of the forbidding numbers, rents in general appeared to reach a peak last year, with rent growth for “professionally managed apartments” at the 0.4% level.
That’s a significant decrease from where things stood in early 2022 when the number came in at 15.3%. Perhaps contributing to the decline has been the growing number of new apartment construction. As of the final quarter of last year, some 436,000 new units had been completed.
“This abrupt deceleration was geographically widespread,” notes Whitney Airgood-Obrycki, a senior researcher at the Harvard program and lead author of the new report.
In a press release, Airgood-Obrycki added: “While the slowdown is a welcome change for renters, asking rents still remain well above pre-pandemic levels.”
Even though the increase in new apartment construction is being seen in all regions of the country, the report notes that the nation’s rental stock is “older than it has ever been,” up from 34 years on average two decades ago, to around 44 years as of the end of 2021.
“And many of those units fall short of baseline habitability and safety,” says the report. “Nearly 4 million renter households live in physically inadequate units.” Many of the units additionally are in need of energy efficiency and electrical system upgrades.
Not helping matters is the ongoing decline in the number of low-rent units nationally. Rentals of $600 a month or less have declined by 2.1 million in recent years. Says the report: “Since 2012, the market also lost an astounding 4.0 million units with rents between $600 and $999.”
In total, the market has seen a drop of some 6.1 million units under $1,000, with the Harvard report noting that “various market forces have contributed to those losses, including rental increases among existing units, building condemnations and demolitions, and tenure conversions.”
While the problem of rent affordability won’t go away overnight, the report ends on a somewhat encouraging note, remarking that “state and local governments are seeking to reduce barriers to building housing that is more affordable and located in desirable neighborhoods.”
These moves are leading to the reforming of zoning laws “to allow for a greater variety of housing types.” At the same time, suggests the report, the building industry “must continue to innovate less costly ways to build homes. If successful and achieved at the needed scale, these efforts could address the affordability challenges facing middle-income renters.”
By Garry Boulard
