The Conversation has published an article on the budding “rental crisis” afflicting the US, whereby the number of renters paying 30% or more of their income on housing reached a new record high of 20.7 million, with 11 million households of those households paying more than half their incomes on rent:
Since 2001, the median monthly rental price in the US has climbed significantly faster than inflation, while the typical renter’s pretax income has fallen by 11%. These trends were evident even before the recession and housing bust, but have certainly been exacerbated by the economic travails since.
The article also notes that the situation could get worse despite a boom in new apartment construction:
Now that the economy is nearing full employment and holding out the prospect of a rebound in incomes and construction of new apartments is reaching levels not seen since the 1980s, there would seem to be some hope that the extent of rental cost burdens would start to abate. But at the same time, there are also demographic forces at work that are likely to make matters worse.
The two fastest-growing segments of the population in coming years will be those over age 65 and Hispanics, both of which are more likely to experience cost burdens…
As we document in our recent report, we found that demographic forces alone will push up the number of renters with severe rent burdens by 11% to more than 13 million by 2025, with a large share of the growth among the elderly and Latinos. That’s assuming incomes and rents both grow in line with overall inflation.
The ABS’ latest Housing Occupancy and Costs report, released earlier this month, also showed a dramatic lift in the number of lower income households in Australia experiencing so-called “rental stress”, with half paying in excess of 50% of their incomes on housing costs:
…lower income households renting from private landlords paid an average of $313 a week on housing costs, which represented 34% of their gross weekly income.
A common measure of rental stress is to look at the proportion of lower income households paying more than 30% of their income on housing costs. According to this measure, in 2013–14, 50% of lower income renter households were in rental stress, as shown in Graph 3.
It’s also interesting to note that despite the worsening rental situation in the US, its rental vacancy rate was still 6.8% as at June 2015, which is something we Australians could only dream of:
