U.S. in ‘Worst Rental Affordability Crisis’ Ever

As rental demand grows, about half of renters spend more than 30 percent of their income on rent, up from 18 percent a decade ago, according to newly released research by Harvard’s Joint Center for Housing Studies. Twenty-seven percent of renters are paying more than half of their income on rent.

“We are in the midst of the worst rental affordability crisis that this country has known,” says Shaun Donovan, U.S. Secretary of Housing and Urban Development.

Rising rents mixed with a stunted wage growth has created an affordability problem, the study notes. Between 2000 and 2012, real median rents rose nationwide by 6 %. However, over that same time period, the real median income of renters fell by 13 %.

“Over four years, [there’s been] a 43 percent increase in the number of Americans with worst-case housing needs,” says Donovan. “Let’s be clear what that means: They’re paying more than half of every dollar they earn for housing.”

“There is no question that the will toward home ownership remains there — [the problem is] the way,” says Eric Belsky, director of Harvard’s Joint Center for Housing Studies. However, rising home prices and mortgage rates, high student loan debt, and tightened credit is holding many back and forcing them to continue to rent.

Source: The Harvard Joint Center for Housing Studies and “Skyrocketing rents hit ‘crisis’ levels,” CNBC (Dec. 9, 2013)

“Low-income Renters Struggle” to Find Affordable Housing!

A study by the National Low Income Housing Coalition has found that for every 100 families considered “extremely low income,” there are only 30 affordable units available to rent nationwide. “Extremely low income” renters are considered those who earn less than 30 percent of the median income in the metro area which they live. 

The NLIHC has called for more affordable rentals to meet the growing demands of low-income families. It will be interesting to see what happens! Please provide comments?  

The number of extremely low income renters has grown in recent years. In 2010, the number swelled to 9.8 million — nearly a quarter of all renters nationwide.  

“What we’ve seen is a decline in the home ownership rate since 2008, and we’ve seen rent being pushed up,” pushing rent out of each for more low income people, says Sheila Crowley, NHLIHC chief executive. (For nearly a quarter of all renters nationwide)  

The problem appears to be the most evident where the largest gaps exist between the rich and poor, such as in states like Arizona, California, Florida, Michigan, Nevada and Oregon according to the study. Our “Northern California” region is near the top!

“There’s no doubt that there’s a gap, and it’s significant, and it’s getting worse,” said Becky Koepnick, an adviser to HUD Secretary Shaun Donovan. (As many of us know)

Source: “Lowest-Income Renters Left Behind in Housing Crisis,” The Wall Street Journal (Feb. 15, 2012)

Home Affordability is at “1971 levels”

Due to falling home prices and record low mortgage rates, pushing home ownership in reach to more families, according to the U.S. Department of Housing and Urban Development (HUD).

Home owners are bringing in nearly double the median income they need to cover the cost of an average home, HousingPredictor reports. 

“With interest rates at historically low levels and markets across the country beginning to improve, home ownership is within reach of more households,” Bob Nielsen, chairman of the National Association of Home Builders, said in a statement.

However, some consumers are finding more stringent lending standards for getting a mortgage a roadblock to home ownership, and some housing experts have blamed tighter underwriting standards in recent years for continuing to hold back the housing market. 

Source: “Home Affordability Reaches 1971 Level,” HousingPredictor (Jan. 11, 2012)

More news from the “Sierra Foothills” of El Dorado, Placer, Amador and Sacramento Counties of California at: www.sierraproperties.com or www.dougandbudzeller.com