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Soaring rents put financial squeeze on many Americans

More than one in four renters must devote at least half of their family income to housing and utilities, according to a new analysis of census data by Enterprise Community Partners, a nonprofit that helps finance affordable housing.
More than one in four renters must devote at least half of their family income to housing and utilities, according to a new analysis of census data by Enterprise Community Partners, a nonprofit that helps finance affordable housing.
Published May 2, 2015

WASHINGTON — More than one in four U.S. renters have to use at least half their family income to pay for housing and utilities.

That's the finding of an analysis of census data by Enterprise Community Partners, a nonprofit that helps finance affordable housing. The number of such households has jumped 26 percent to 11.25 million since 2007.

Since the end of 2010, rental prices have surged at nearly twice the pace of average hourly wages, according to data from the real estate firm Zillow and the Labor Department.

"It means making really difficult tradeoffs," said Angela Boyd, a vice president at Enterprise Community Partners. "There are daily financial dilemmas about making their rent or buying groceries."

The crisis reflects one of the shortcomings of the recovery from the Great Recession: Income has failed to match rent increases. At the same time, construction has failed to keep pace with demand from renters. The recession pushed more millennials, former homeowners who faced foreclosure and low-wage workers into rental housing. A result is that 2.3 million more families face pressures that leave them perilously close to homelessness.

More than 30 percent of renters in California, Florida, New Jersey and New York state devote at least half their incomes to housing and utilities, according to the analysis.

The analysis was developed for a "Make Room" awareness campaign sponsored by Enterprise Community Partners, and dovetails with findings from other organizations. The U.S. Department of Housing and Urban Development has estimated that 12 million renters and homeowners spend at least 50 percent of their income on housing.

And Harvard University's Joint Center for Housing Studies found in a 2013 report that roughly 27 percent of renters were devoting half their incomes to rent. Those levels were "unimaginable just a decade ago," the report said.

Average hourly wages have risen just 2.1 percent in the past 12 months, according to the Labor Department, while rental prices have climbed 3.7 percent, Zillow said last week.

Many renters lack the income to pay the cost of maintaining and operating these buildings, said Barry Zigas, director of housing policy at the Consumer Federation of America and a trustee at the nonprofit Mercy Housing.

Mercy Housing has a portfolio of 12,000 units for low-income people and senior citizens. It costs an average of roughly $500 a month to manage each unit, Zigas said. A monthly rent of $500 would mean that anyone working full time for a minimum wage would devote more than a third of his or her income to housing.

The Great Recession caused waves of foreclosures and layoffs that pushed more Americans into renting. More than 36 percent of people now rent, compared with 31 percent before the recession began in late 2007. The increased demand has yet to be matched by construction and renovations.

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In March, the National Low Income Housing Coalition reported a shortage of 7.1 million apartments for low-income renters. The shortages are most pronounced in Florida, Nevada, California, Arizona, Oregon, Colorado and Utah.