More Renters Can't Afford Apartment Living

A new report from the Joint Center for Housing Studies at Harvard University describes two rental markets in the U.S. One, with the greatest demand, has limited supply and rising rents. The other, with high vacancy, has excess supply and slow rent growth.

For the first category, “rental affordability is the worst on record,” the report stated bluntly. “The number of renters with cost burdens has hit an all-time high, and the stock of low rent units has continued to fall.”

The study defines cost-burdened households as those that spend more than 30% of income on housing and utilities.

An all-time high of 22.4 million renters qualified as cost burdened in 2022, and another record was set by the 12.1 million households identified as severely cost-burdened. The result was that half of U.S. renter households were cost burdened in 2022 – a level the report called alarming.

Renter households at all income levels were hit. Two-thirds of households earning $30,000 to $45,000 a year felt the pinch. Those earning $45,000 to $75,000 saw the highest increases, up 5.4% to 41% — nearly double the 2001 rate. The rate even for those earning more than $75,000 a year rose 2.2% to 11%. Renter cost burdens are rising fastest among middle-income households, the report found.

Among households earning less than $30,000 a year, the cost burden rose 15% to 83% while 65% were severely burdened. The effect was to leave households in this group with just $170 for other expenses, the report stated.

It noted that over the past decade, the supply of low-rent stock has continued to decline, leaving low-income households with few options. During the decade, 2.1 million units renting for less than $600 were taken off the market, as were four million units renting between $600 and $1,000. The losses were felt throughout the nation in 47 states and the District of Columbia.

However, while lower-income renters struggled to find affordable rentals, more higher-rent units came on the market. “The number of units with rents between $1,000 and $1,399 increased by 400,000, while those with rents between $1,400 and $1,999 grew by 4.3 million, and those with rents of $2,000 or more increased by 4.1 million,” the report found.

It attributed the increase to the fact that most of the new supply of apartments comes from large multifamily buildings, which have the highest median rents at $1,300 in 2022. Between 2012 and 2022, they added 3.1 million units, compared to 267,000 new units in midsized buildings and 14,000 new units in smaller buildings with the lowest median rents.