In this week’s No Sh*t Sherlock News, a study out of Harvard has found that housing is unaffordable for half of all renters in the US. Whitney Airgood-Obrycki, the fabulously-named senior research associate and lead author of the report, says the team was surprised to see that this untenable trend held true across all income brackets. So, yay for equity, I guess. This was in the making long before Biden took office, and was exacerbated by the pandemic. So please: take in this grim news, but don’t take it out on Democrats in November.
30-50% or more of people’s income is going to rent: In fact, more such households and many others also now struggle to pay rent, according to a newly released report from the Joint Center for Housing Studies of Harvard University. It finds that in 2022, as rents spiked during the COVID-19 pandemic, a record half of U.S. renters paid more than 30% of their income for rent and utilities. Nearly half of those people were severely cost-burdened, paying more than 50% of their income.
Renters are cost-burdened: “We actually saw increases across every single income category that we look at, which sort of surprised us,” says Whitney Airgood-Obrycki, a senior research associate with the center and the report’s lead author. Since 2019, the biggest jump in unaffordability was for households making $30,000 to $74,999 a year. Even among those working full time, a third of all renters were still cost-burdened. For renters making under $30,000 — who already faced the most severe struggle to afford housing — Airgood-Obrycki “didn’t think it could possibly get that much higher.” But the report found it did nudge up, to an all-time high of 83% who are cost-burdened. She says the amount of money they have left over for all other household expenses has plummeted by nearly half, to just $310 a month.
People are paying more for fewer perks: And she says the compromises people traditionally make to get cheaper rent aren’t guaranteed these days. “So you might not be living in as good of a neighborhood. You might be commuting farther. You might be sacrificing the quality of your school system,” Airgood-Obrycki says. “And often what we’re seeing is that even when people are attempting to make these trade-offs, they still end up paying too much for housing.”
Not enough homes that people can afford: As the Harvard report notes, U.S. homelessness rates hit a record high last year. The Biden administration and housing experts link that squarely to a severe housing shortage that has helped drive up prices. “We simply don’t have enough homes that people can afford,” says Jeff Olivet, executive director of the U.S. Interagency Council on Homelessness. “And when you combine rapidly rising rent — that it just costs more per month for people to get into a place and keep a place — you get this vicious game of musical chairs.”
What’s being built probably won’t fill the need: Still, prices for many people are still higher than before the pandemic, and the building boom is not likely to change that. “What we are building is at the high end, because of the increased cost of construction and because we have a lot of demand from higher-income renters,” says Airgood-Obrycki. Most new apartments over the last decade have gone for $1,400 a month or higher, “and that’s not affordable to the majority of renters.” At the same time, she says the market has lost millions of low-rent units for $600 a month or less. And these trends are continuing a long-term, growing gap in what people can afford. Since 2001, the Harvard report notes, median rents have risen by 21% while the median annual income for renters has risen just 2%. The upshot is that millions more people qualify for federal housing subsidies. But those have been chronically underfunded, and the amount available has fallen further behind the need.
“The upshot is that millions more people qualify for federal housing subsidies.” Oh NPR, thanks for trying. I guess the “P” stands for “Pollyanna.” But veering back to Scrooge-colored glasses, this phenomenon of new high end construction is playing out all over my neighborhood. I get emails from my city’s housing lottery (there’s that upshot!) and well over half of the listings require that you make a minimum of $90-$100,000 annual income to qualify — for the reduced rent! Granted, I’m in NYC, but still. We’ve reached the point where they’re marketing reduced-rent lotteries to people making $100K or more. But I still submit to the rare apartments that I do qualify for, because a) a girl can dream, and b) my best friend actually got into one five years ago. He found the golden ticket! So now he’s in a luxury studio and paying about a third of market rate. Meanwhile I’m left envious of his dishwasher, garbage disposal, trash room on every floor, and laundry room in the building. Brother, can you spare a few hundred thousand dimes?
Photos credit: Ketut Subiyanto, Tima Miroshnichenko, Mikhail Nilov, Kampus Production and Lisa Fotios on Pexels
My partner and I make 83,000 total before taxes. Living in Oklahoma (unfortunately) we struggle to afford rent in a nice apartment not overrun with college students. We certainly don’t even qualify for any new build in our town, or anything on the market currently. We can’t afford to move but can’t afford to stay. This really sucks, being middle of the road office workers with no specific skills means no choices. The world is a mess.
I’m also in a college town in Oklahoma and last year my rent went from $625 to $855. I’m barely scraping by at this point and I know a lot more people who are doing far worse.
This is the result of the fed printing money as their main response to govt debt burden.
When inflation is high, assets like real estate increase in value- Even tho the relative buying power of the populace has decreased and salaries are not keeping pace w inflation.
Eventually the profligate spending of the US gov is going to eat the tail of our economy. Term limits, end lobbying, and slash govt spending (I suggest starting w the military).
The bull market has not really benefited the middle and lower classes bc they most likely didn’t hold tech stocks.
I hold congress responsible for the mess- they just keep approving ridiculous bills full of nonsense to the tune of trillions and it never stops bc as lon as they keep their seats they’re cool cool
No it’s not. I’m an economist. The vast majority of the economic burden connected to increased rent, globally, is tied to the rise of short term rentals and the offsetting of rental space, leading to greedflation.
REIT and and other corporate/institutional real estate buyers are buying up properties that come on the market, and raising rents across the board; (see the numerous articles about increasing concentration of housing ownership) other RE investors are also buying up year-round housing stock rentals and converting them to ST rentals like AirBnB, reducing available residential rentals available
And as the article points out, new housing construction almost always is done aimed at the higher end market, not the affordable market, barring intervention at the city or state level either requiring affordable housing or incentivizing builders to focus there.
^^ Things will only get much worse as corporations and management companies buy up property.
In the UK the Govt is actually legislating against private landlords by increasing taxation so that individual landlords leave the market. In theory that sounds like that works in the favour of individuals, rather it has meant tax favourable policies mean large corporations and financial organisations are now buying up property.
This also means that there will be a rise in slum areas and ghettos as more and more people are pushed out of good quality housing.
My mother’s house was $67K when she bought that house in ’96. It’s now valued at $250K. That’s a roughly 400% increase. Even with all the work she’s put into it and adjusted for inflation, it’s well overpriced for what it is now, especially since she lives in an area that is losing population rather than gaining it. This is just greed, plain and simple.
Large real estate firms buy up property and artificially limit availability. Cash wealthy boomers leveraged their more affordable homes to flip them for higher worth and historically voted against expanding housing in large urban areas (hello San Francisco!). Real estate agencies work with mortgage operators to inflate prices. Tariffs have been added to imported lumber under the last administration. Wages have barely budged in thirty years. This is just the cumulative effect of decades of unfettered capitalism coming home to roost.
The rich know what they’re doing. They need to keep their wage slaves somehow, and the best way to do is to make the basics unattainable.
This is certainly a take. A very misguided one. LOL. Lack of affordable housing has nothing to do with the government printing money; it’s a disaster that’s been about a 30 years in the making. Side note, even the inflation the US was/is experiencing was more about corporate greed than anything else.
I live in north Florida and my little 25 year old nephew pays over $1,000 MORE for his apartment rent than my monthly mortgage payment costs. It’s insane.
Ok, this is real and horrible. When I was young interest rates were high, my first house was 10% and I was thrilled. But the house price was still affordable. It was a nice house and if I had stayed there I would have over a million in equity. But that million for a 2400 sq ft is unaffordable for most people. Renting is even worse, the company’s do credit checks, they look at your other bills-exactly as if you were buying a house. Rents in my area are up over $2500 for a two bedroom. People are screaming about boomers causing the housing crisis but where are we supposed to go? We can’t afford new builds or even rent. When my father died I used the inheritance to make sure my kids could buy houses. But that was ten years ago, now it wouldn’t help, prices are too high.
I lucked out. I moved across the country from NYC to Southern California and found a very nice two-bed, two-bath apartment with with balcony in a senior citizen complex with great amenities for $2100 a month, ten minutes away from my family. I hear about a one-bedroom hole-in-the-wall in Manhattan renting for $7000 a month. (Pick that same apartment up and set it down across the East River in Queens and the rent would be $3000 a month.) I knew when I moved to SoCal that I couldn’t afford a single family home out here and I was ready to downsize anyway. So I got a small apartment and it’s fine for me alone. But there are plenty of older people out here with big houses who want to downsize because the kids are out and grown, but they are reluctant to sell because the capital gains taxes will eat up most of their profit, and new smaller houses cost almost as much as they can sell their larger houses for. Something’s gotta give.
The only way I was able to buy my tiny townhome was because my parents helped me. They started a joint account for me and put money into it for years until there was enough for a down payment. Then they started sending me listings. I’m extremely thankful that they were very forward thinking and planned it out for me because I sure as hell wasn’t. There was no way I would have been able to do it on my own. That said, I got the loan, pay the monthly mortgage and pay for my home’s upkeep (which can get extremely pricy at times).
This is an issue in Canada too. The wealth inequality is wild. Rich people bid up the price of homes and rent them back at prices the majority cannot afford. There’s such little inventory and no rent control on new units in Ontario. Feudalism is coming back.
This is an issue across Europe too. I’m Portuguese and the rents here have become astronomical mostly because people from other wealthier countries coome here to live off their retirement. They earn 3 or 4 times more than the average Portuguese and the rents are increasing to a point where you can’t afford a 1-bedrooom flat. Where I live the rents for a 1-bedroom flat used to be 200 or 300 euros, now it’s 700 or plus euros. Minimum wage is 760 euros.. It’s impossible…
No rent control in Ontario is thanks to Doug Ford. If we vote a liberal in next time, we can possibly reverse this.
This is what happens when our laws allow hedge funds and private equity to buy up all the apartment complexes and single family homes! Meanwhile, there are millions of square feet of office buildings sitting empty.
^^^Mostly this, plus a housing shortage. I know Boomers don’t wanna here it but we need to build more.
Also, there needs to be a cap on how much you can sell your house for if you sell it within 5 years of buying it. Like, if you bought your house 3 years ago for 300K you do not get to now sell it for 600K–I don’t care how low the rate is.
We went through this when we bought a couple years ago–yes we secured the impossibly low rate but people were literally overpaying by hundreds of thousands of dollars–it was insanity.
Ultimately, we don’t feel like we overpaid because it’s ocean views in Massachusetts where affordable single families are scarce. But a lot of people did, which negates the low rate in some ways.
Yes. This is a long-standing policy issue. There are nearly 30 unoccupied housing units in the US for every one unhoused person living on the streets. It’s sheer corporate greed, income inequality, and corruption.
This is crazy. I just saw a local report (pittsburgh) about Wall Street conglomerates buying up huge swaths of neighborhoods and making everything rental. My mortgage is 1600 a month on 3 bedroom 2bath. It terrifies me every month and I pray nothing breaks the scary thing is I have it better than alot of people. Choke Wall Street with regulations.
I live in France and we have the same issue. Everything is so damn expensive! I’m lucky because my work pays a big chunk of my rent but otherwise I’ll be very short to pay it fully. I almost have up on the idea of buying a place where I live. I’m thinking of buying a small apartment to rent out so at least the children I’ll have may have some equity to start with.
Building luxury apartments is part of the solution.
Hear me out! High rents are due to the mismatch between supply and demand, but housing isn’t a widget. There are these complicating factors: Location (we need housing near jobs,) Interest Rates, Hedge Fund Ownership, Tax Laws, etc.
I know “trickle down” economics reminds most people of Lucy-with-the-football, but studies prove that adding any rental housing AT ALL (as long as it’s occupied by long term renters not AirBNB) actually DOES decrease nearby rents, as long as the population stays static.
That’s a ton of What-Ifs. But I promise you – it’s a fact that if cities STOP allowing the luxury housing, the problem gets WORSE.
And finally – it’s really hard to build anything but luxury housing. Landowners want to sell their land for what the market will bear, which means that the builder has to sell units for what the market will bear or they might stop building at all… and now we are back to square one.
Signed, nonprofit affordable housing developer employee, who has been the project manager for hundreds of rental units for homeless families and seniors, defending luxury housing development.
Not opposed to building multi-unit luxury apartments/condos but they HAVE to be occupied, FULL-TIME. Because in many cities like Boston, these units are empty, serving merely as an investment vehicle for foreigners.
Exactly Kitten!
Yes! I’ve lived in “luxury” apartments most of my adult life. (I’m an elder millennial) The rents are high to ”keep out the rifffaff” according to a leasing agent. The word luxury doesn’t actually mean anything about amenities or the building itself. So so many units sit vacant for months and years. They would rather evict people and let it be empty than charge a reasonable rent. I assume there is some tax break that makes this more profitable but I don’t really know. It’s a complete mess
At the height of the pandemic, I moved from Orlando to the Midwest in order to buy a home with a backyard. I couldn’t afford that in FL and rent kept increasing, so I had to leave. There are a lot of nice homes in the Midwest, but they are in very rural areas. It’s a trade off. Since I work a hybrid job, it’s doable. I can’t image paying $2500 for a studio apartment.
However, my energy costs (gas/electric) gave DOUBLED in the last three months…something has to give.
I was very lucky to buy my home, and I got some help from my parents. It kills me that one of my friends had her rent go up $1,650 this year! And normally the landlord would only increase $100-250/ year. It’s getting ridiculous.
Really appreciated this story. I’d like to see more stuff like this on here. It’s not a ‘politics’ blog but it would be nice to have more stuff like this–about real issues and things people are dealing with on a day to day basis.
In the middle of the US in a small to moderately sized city, and rent starts at about 1,000 a month, nothing included utility wise, for a modest, 500sq ft one bedroom apartment. Meanwhile, utilities have also skyrocketed in the years since the pandemic. I have no idea how anyone makes it who doesn’t have a household income of at least 65k, I really don’t. It’s horrible. No one should have to work so hard for such a low quality of living or have to live in constant fear of eviction when they’re pulling 50 hour work weeks. Horrible. I’m so fortunate I bought my house when I did in an up and coming area and I’ve already had investors and real estate hawks try to make me offers and pry it from me. Over my dead body! I get so much pleasure out of telling them it’s not for sale. I know people blame inflation but no, something else is at work. Unprecedented income inequality and foreign investors buying up random sqmi and housing everywhere in the nation, for starters…
None of this is news to real people.
My question is WHEN will the PtB do something to correct this?
Real problems for the majority of people.
I’ve put everything I have into paying off my house. It is not a wealthy house by any means. But the cost of repairs, etc. is crippling. And I now can’t afford to sell it and rent. The rent is more than the cost of my house. In Minnesota, in a town that 20 years ago was cow pasture with standing water fgs!
i live in NYC area my salary is capped and cost of living rises every year – I am in a rent stabilized building but it gets harder every year. I have no family in the area so I am on my own for the most part in life. No inheritance, no family helping buy a home. Just me.
Honestly, I am just hoping things work out and like many other Gen Xrs our retirement plan is going to be sketchy to make it work. I have no path to retire before early 70’s if I can make it.
Sigh. I’m an Xennial and your experience is a reality for so many our age. I saved for 7 years to buy a home and we STILL had help from both of our parents. Even then, I didn’t buy my first home until I was 42, after renting for 25 years. For a long time, it was cities like LA, NYC, Boston, SF etc that were plagues with unaffordable, skyrocketing rents but it seems to be spreading to Austin, Denver. and so many other US cities.
I think often about the help we got from my parents, the dependable bonuses I get from my employer, my relative lack of debt and how difficult it STILL was for me to buy a house. I don’t know how anybody does it TBH. I know I always say this but our society is so effin cruel–housing is a human right god damn it.
It’s even tougher when you’re trying to find a place in the playground of the rich–say a mountain community like Lake Tahoe or Santa Barbara, along the coast. Forest Service employees have known this for a long time, particularly those just starting out after college & getting their first jobs as GS4s or 5s. Most National Forests used to have housing available for their employees, particularly seasonal employees (a lot of work can only be done in the snow-free summer months), but 20ish years ago Congress passed a law telling them to sell off their underutilized admin sites–a large chunk of which were ranger station housing. And they were only underutilized at the time (staffing ebbs & flows at the whim of Congress & timber market forces); we need them now with all this infrastructure funding (which takes, surprise!, lumber for construction) but we can’t get employees because they can’t find housing. It’s a conundrum with no solution in sight.
The solution is regulation, taxing the shit out of the wealthy and corporate conglomerates buying up these properties, cap how much real estate one entity or individual can or purchase within a span of time, and also eliminate ways to hide with shell companies, offshore investment holdings, and tax havens. Also placing limits on how much high income housing can be developed in one area. A rent ceiling at the national level for families earning under a certain amount of dollars proportionate to cost of living, lowering this ceiling even more for families with children or the elderly? Paying folks a living wage after rent caps are established. There are solutions all over the place. The problem is, rich people would have to share and they’re the biggest, greediest, most power hungry, most narcissistic, most sociopathic babies on earth.
I’m always reminded of Aspen’s worker shortage issues, which exist primarily because of the real estate costs – and artificially so. Years ago, the local government and several businesses there floated putting in affordable dormitories/small temp apartments for seasonal workers to rent. Sensible, right? Nobody wants to pay $2000+ for an apartment for a few months labor. But nope, the real estate owners fought it because, of course, they wanted those workers to be locked into their expensive rents. The problems will continue as long as the government fails to step in to curb capitalist greed, simple as that.
Same issue where I live — it’s a bedroom community to a very high income metro area, but what’s being built is all high end. So the service workers who would staff the restaurants, medical facilities, and shops are all now about 15 miles out. It’s not affordable for them to drive in, so the shops and restaurants close two days a week on average (some are at three), and the medical facilities have random closures. People complain and the business owners keep saying “make housing affordable so our staff doesn’t have to drive so much” but all that’s built are luxury and high-end units because the people moving in are making six figures in tech. And the developers (for once being honest) claim the cost to build puts them at a loss unless they price over area median income by a good amount. I mean, when the business owners/Chamber of Commerce are asking for government subsidies for housing as has happened here, you know there’s a massive problem.
A lot of people in my profession seem to own rental property and the attitudes I hear towards renters is really disheartening. Lots of no qualms in making the renters responsible for repairs, replacing appliances, etc. Of course no one wants renters to have pets. It’s like they lose sight of people who rent as human beings.
Making them responsible for repairs or replacing appliances? That’s so evil. They’re already living paycheck to paycheck. Can’t believe this is okay.
I thought the pet rent and nonrefundable pet deposit was normal until I moved to Ontario and never had to pay those things again!
I live in a lower-middle-class neighborhood, in a terrible school district. At least 1/4 to 1/3 of my neighborhood is homes bought out by rental conglomerates and I’ve lost count of how many A*rBnBs there are – including my next door neighbor. (I now hate that company, and refuse to ever, ever use them). There are 3 apartment complexes situated at the entrance to my neighborhood as well – for all of them, the rents for a 1 bedroom is as much, or more, than the mortgage for my house. For another apartment complex down the road, a STUDIO is as much as my mortgage. I got lucky. My parents helped me buy my first house at 26, and when I sold it 10 years later, it gave me enough equity to afford a hefty down-payment on this one. I have two people living with me – a cousin and my sister – because they can’t find anything affordable. A friend of my cousin works two jobs to pay her rent, and it’s in an absolutely terrible complex.
My BFF’s boyfriend’s apartment complex is now trying to convert most of their apartments into A*rBnB’s. In his “block” of 8 apartments, he is the last long-term rental standing. As such, they are trying to drive him out – maintenance (deliberately IMO) flooded his apartment, refuse to fix the AC or heater, refused for 3 months to fix the sewer drainage issue he was having, etc. They also increased his rent nearly 30% last year. He’s done, but is having a hard time finding a place he can afford.
I actually *don’t* put the blame on Boomers. The vast majority I know either live in some kind of senior housing complex, or have one home they’ve lived in for ages. I place the blame squarely on short term rentals and the rich who want even more “passive” income. A smaller portion of the blame goes to housing “flippers” who take a perfectly serviceable house, and then try and make it a “luxury” home with as little money as possible, and sell it for an exorbitant price.
I have lived in NY, VA, and NC in the past and now have lived in Ontario for 12 years now. I looked up the rents of my old apartment prices in NY and VA and am gobsmacked by the increase since last I lived there because I know the salaries have not increased as much. I looked into moving back to NC because alot of my friends live there, but between the low salaries, no universal healthcare, and all the added renters fees (pet rent, pet deposit, water, garbage, etc—i dont pay for any of those up here) plus electricity is 2-3 times higher than I am paying in Ontario and car tax that I dont have either, I determined it wouldn’t be worth it to move back. I would only move back if I married someone who could provide me substantially good healthcare.