Costs of Renting Are Going Up

real estate, tips for buyers and renters  /   /  By Tracy

For the average renter, finding an apartment with a reasonable commute to work, space and relatively low costs can be a real challenge. This is especially true in urban areas or those experiencing an economic boom. As rents continue to rise in face of increasing demand and limited supply, it seems as if affordable living is becoming a thing of the past.

Costs of renting continue to increase

According to the Harvard Joint Center for Housing Studies and Enterprise Community Partners, there are over 40 million renters in the U.S., but approximately 11.2 million are considered severely burdened by rent. “By 2025 that number could grow to 15 million severely burdened renters nationwide out of a projected total of 48 million,” said Christopher Herbert, a housing and urban policy expert and the joint center’s managing director.

This translates into a quarter of all renters spending at least half, if not more, of their paycheck just to keep a roof over their heads. Factor in utilities and food, it quickly becomes apparent that a significant chunk of renters are finding it difficult to make ends meet.

costs

So what is causing this affordability crisis? Simply put, the original housing crisis that created a new group of renters from homeowners, plus stagnate incomes and the lingering effects of long term unemployment have kept incomes from seeing significant growth. Additionally, with stagnant incomes means less ability to save for a down payment, putting home ownership on the back burner. As demand for available rental housing has increased to accommodate those creating new households, the rental housing market has been unable to keep new units coming online at the pace of demand. Rent costs have seen significant increases as a result.

This perfect storm of economic facts means that many rental families are struggling to find safe affordable housing to meet their needs. Younger generations are not the only ones who are suffering from this problem. Baby boomers living on fixed incomes are also falling into this camp, as fixed incomes stretch thin to accommodate rental costs in addition to basic living expenses. Those living in poverty find themselves particularly hard hit, because they have limited opportunities to increase income to offset increased rental costs.

Obviously, affordable housing continues to be an issue of great concern to housing advocates and non-profit agencies. Many see families only a paycheck away from having no housing at all.

But is government intervention to keep housing affordable the best way to go? Some would argue that the middle class is squeezed even more, as landlords raise rents to offset the affordable units. The same middle class gets hit again as they pay taxes to offset the government subsidies for affordable housing. Yet, without those same assistance programs, many would be unable to keep a roof over their heads and care for their families.

Attacking poverty and its effects involves a multipronged solution of increasing wages and stable housing costs. Households also need to be in a position to pay down debt, save both for emergencies and retirement, by maintaining steady employment with wage increases that match or surpass inflation. How to achieve these objectives that would result in giving renting families a break is still being pieced together through various programs but the lack of a comprehensive plan means that renters will still struggle to make a paycheck stretch.

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