The share of households considered burdened by high rents is dropping, according to the 2017 National Rental Housing Landscape, a report published by New York University’s Furman Center for Real Estate & Urban Policy. But that doesn’t necessarily mean landlords are slashing rents.
Researchers say the reason for the drop is mostly due to the higher number of wealthier families who are opting to rent. This has allowed landlords to raise prices without renters facing payment shock. The report focused on data from 2012 to 2015.
Twenty-one percent of households who earn at least 120 percent of the area’s median income rented in 2015. That is up from 15 percent in 2006, according to the report.
“More people are choosing to rent, and disproportionately so among the higher-education, higher-income groups,” says Sewin Chan, co-author of the research report and a professor of public policy at NYU. “It seems extremely likely that they’re driving up rents.”
The number of households who spend 30 percent of their income on rent and the share that spend half of their income on rent remains at historical highs. Most economists classify renters who spend more than 30 percent on their rent as “cost burdened.”
The report shows that out of 53 metros with at least 1 million people tracked, one in three saw an increase in the number of cost-burdened households. Miami renters are facing some of the most burdens from high rents. Fifty-nine percent of renters in Miami devoted at least 30 percent of their income to rent; that is the highest in the country, according to the report.
Nearly every major metro—most notably high-cost areas on the coast—saw median rents grow faster than inflation.
Rental affordability, however, has improved across income levels, according to the report. The rent-burden rate fell fastest for households earning between 50 percent and 80 percent of their area’s median income.
Source: “The Rich Are Driving Up the Rent,” Bloomberg (Oct. 5, 2017) and “The Number of Rent-Burdened U.S. Households Is Falling as Populations Shift,” Curbed.com (Oct. 5, 2017)