These numbers are staggering: During the span of about two generations, Americans who rent their homes have become twice as likely to be “house poor.” In 1960, 24% of renters were “cost burdened;” today, that figure is 50.6 percent, according to ApartmentList.com. This, at a time when America has increasingly become a nation of renters.
About 44 million households — 37 percent of the country — now live as renters.
In some metropolitan areas, there is a flicker of hope: affordability among renters has improved by a few percentage points in places like Columbus and Kansas City, and even in some pricey cities with strong employment like Seattle and San Francisco. And overall. the number of renters defined as “cost burdened” nationally dipped 1.2 percent from 2014-2015, and it’s down 2.8% from its high in 2011.
Still, the rate is stunning compared to historical levels.
“Despite the improvements, affordability continues to be a challenge for millions of renters. Even in relatively affordable metros, cost-burden rates are significantly higher than the nationwide average from fifteen years ago,” the firm said in a statement.
The term “cost-burdened” indicates a household spends more than 30 percent of its income on rent; “severely cost burdened” means rents eat up 50% or more of income. The good news in the latest data from ApartmentLists.com is that the severely cost burdened group is falling the fastest. But that means the moderately cost burdened group has remained essentially steady since the 2011 high.
And, despite the improvement, about one-quarter of all renters in America fit this worst-off category of spending half their income on rent. Compare that to 1960, when one quarter paid only 30% or more towards rent.
The high cost of rentals impacts homeowners, too. Because it’s challenging for cost-burdened tenants to save money, they have a harder time putting money away for down payments. As I’ve written before, starter homes have disappeared from many Americans at an alarming rate. These two factors impact the supply of would-be first-time home buyers, which makes it harder for families to sell.
If things are looking up some, that’s because renter income has ticked up faster than rental costs since 2011. Also, in places like Seattle and San Francisco, rents had climbed so fast they were bound for a pullback.
The cost-burdened rent story isn’t necessarily tied to geography. The rates of “house poor” renters are above 50 percent in Chicago and Detroit; while Columbus has dipped to 45% and Kansas City, 42%. Things are actually getting worse in Las Vegas, which shot up to 52% this year, and Albuquerque (53%), while in Phoenix and Salt Lake City, rents are more affordable.
Florida has some of the least affordable cities. Miami’s share of cost-burdened residents is a whopping 64%; Orlando is 56%, and Tampa is 53%. Californians struggle with this problem, too. Los Angeles sits at 59% while San Diego is 57%.
“If the situation does not improve in Florida and Southern California, renters may continue to migrate to cities on the interior in the coming years.
If you are looking for a less-expensive place to rent, look at areas with lighter tan colors on this map. North Dakota might not sound appetizing to you right now, but it would be appetizing to your budget.
You can click on the map to visit ApartmentList.com’s analysis; scroll down for an interactive map where you can learn more about each region.
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