American renters are getting squeezed. Though construction of new multi-family units is moving forward at the fastest pace in three decades, that’s not enough to keep up with growing demand, according to a new report from Harvard’s Joint Center for Housing Studies (JCHS).
Since 2005, the number of renters in the United States ballooned from 34 million to 43 million, and vacancy rates are lower than they’ve been since 1985. Once renters do find housing, they pay a steep price. Rents are climbing an average of 3.5% annually, the study found, while renters’ incomes have declined 9% since 2001.
That means housing costs are taking up an increasing portion of renters’ budgets. Today, 49% of all U.S. renters devote more than 30% of their income to housing costs. Generally, households spending more than 30% of their earnings on rent are said to be cost-burdened. Just over one quarter of U.S. renter households are severely burdened, spending more than half of their income on rent.
Low-income households are most likely to be cost-burdened, with more than three-quarters of those earning less than $30,000 falling into that category. But housing costs are also eating up a big chunk of many middle-income renters’ budgets. Roughly half of renter households earning between $30,000 and $45,000 a year spend more than 30% of their income on rent, and 10% spend more than half.
“In 2015, rental housing in America is a tale of two markets, where upper-income renters are finding a healthier supply of housing choices … but too many families earning less than $50,000 per year are having to make trade-offs between putting a roof over the their heads and food on the table,” Chris Herbert, managing director of the JCHS, said in a statement.
People living in traditionally expensive cities aren’t the only ones struggling to pay rent every month, either. When the JCHS looked at which U.S. metro areas had the highest proportion of cost-burdened middle-income renters, New York and Los Angeles didn’t even break the top 10. Instead, smaller metros dominated the list of the 10 U.S. cities where middle-class renters are most likely to be spend more than 30% of their income in rent.
Note: Data encompasses the city listed and the surrounding Metropolitan Statistical Area.
10. Bridgeport, Connecticut
Median monthly housing cost: $1,240
Seventy-nine percent of renters in the Bridgeport metro area are spending 30% of more of their income on housing. Of those, 29% are severely burdened.
9. Burlington, Vermont
Median monthly housing cost: $1,100
Eighty percent of renters (4,900 households) are burdened by high housing costs. Of those, 800 are paying at least 50% of their income in rent.
8. Washington, D.C.
Median monthly housing cost: $1,290
Eighty-one percent of D.C.-area renters, or 86,300 households, are getting squeezed by high rent payments, and 29% are severely burdened.
7. Honolulu, Hawaii
Median monthly housing cost: $1,600
It costs a lot to live in paradise. Eighty-two percent of renters in the Honolulu area (roughly 16,900 households) are struggling to pay rent, and 49% are severely cost-burdened.
6. California-Lexington Park, Maryland
Median monthly housing cost: $1,230
There aren’t that many renters in this pair of cities about 60 miles outside of Washington, D.C. But 83%, or 800 households, are cost-burdened, including 300 who suffer from severe cost burdens.
5. Kingston, New York
Median monthly housing cost: $1,100
The Big Apple may not be the toughest place for renters to find an affordable apartment in New York State. In Kingston, 83% of renters (or 3,600 households) are cost-burdened, 15% severely so.
4. Santa Cruz, California
Median monthly housing cost: $1,540
Eighty-five percent of households in the Santa Cruz and Watsonville area are paying more than 30% of their monthly income in rent, and 41% are severely cost-burdened.
3. San Jose, California
Median monthly housing cost: $1,490
Silicon Valley rents are high, and though the area has a reputation as a bastion of tech-area wealth, not everyone is a startup millionaire. Eighty-seven percent of renters are cost-burdened, and close to half (14,800 households) are severely burdened.
2. Napa, California
Median monthly housing cost: $1,430
Almost all renters in Napa are cost-burdened. Roughly 91% are spending more than 30% of their monthly income on rent, and 29% spend more than 50%.
1. Anchorage, Alaska
Median monthly housing cost: $1,250
Anchorage might not immediately spring to mind when you think of expensive U.S. cities, but the costs for renters are high in Alaska’s biggest metro. Ninety-one percent of renter households pay more than 30% of their income on housing, and 32% spend more than 50%.
The JCHS also ranked the Mircopolitan Statistical Areas (which have a population of less than 50,000) where middle-income renters are likely to struggle with housing costs. Here are the 10 small cities where renters face the greatest burden, along with the percent of renters paying more than 30% of their income in housing costs.
- Key West, Florida: 82%
- Ketchikan, Alaska: 76%
- Juneau, Alaska: 76%
- Kapaa, Hawaii: 70%
- Craig, Colorado: 67%
- Steamboat Springs, Colorado: 67%
- Glenwood Springs, Colorado: 66%
- Ukiah, California: 64%
- Clearlake, California: 64%
- Truckee-Grass Valley, California: 63%