Harvard report shows strong housing market, but low-income renters struggle
Harvard’s Joint Center for Housing Studies provides an annual deep dive into America’s living situation with its State of the Nation’s Housing report. The 2019 edition, released today, suggests a number of trends both positive and negative continue to create a country of housing haves and have-nots.
The humming economy has led to steady growth in household formation, which in turn has kept housing demand strong. Homeownership is ticking upward as a result, yet the increase in homeownership hasn’t put a damper in rental demand, thanks to a growing number of high-income earners who choose to stay renters.
But there are plenty of downsides to the market, too. Housing supply remains constrained, which is driving up home prices and rents alike, particularly at the bottom of the market. Nearly half of all renters spend more than 30 percent of their income on rent, and even those with the cheapest rents are struggling thanks to growing income inequality. And the worst of it is growing homelessness, especially in high-cost coastal cities.
Here are some of the key points made in the report that are shaping what many are increasingly seeing as an affordable housing crisis in America.
High-income renters keeping rental demand strong while low-income renters continue to struggle
With homeownership on the rise, the total number of renter households is dropping. But there remains upward pressure on rents—which rose by 3.6 percent nationwide, led by growth in the west—for a number of different reasons.
First, low vacancy rates mean landlords can push rents higher, since demand still outpaces supply. Second, the number of high-income renters has risen for eight consecutive years. Between 2017 and 2018, alone, 311,000 new high-income renters entered the market, the latest in a crowd of 4.6 million such renters since 2010.
Third, most of the new production of multifamily housing has been to meet the demand of these high-income renters, meaning less production of low- and middle-income options. In 2018, 29 percent of newly completed multifamily housing units came with rents above $2,050, led by the northeast.