How Rising Rents Are About to Crush American Spending Power - thefiscaltimes

We  just learned America’s rental affordability crisis is as bad as it’s ever been. Unfortunately, it’s about to get a whole lot worse.

The American Community Survey for 2014, released a few weeks ago, found that the number of renters paying 30 percent or more of their income on housing – the standard benchmark for what’s considered affordable – reached a new record high of 20.7 million households, up nearly a half-million from the year before. Despite the improving economy, the increase was nearly five times bigger than last year’s gain.

That means about half of all renters live in housing considered unaffordable. And the latest increase comes on top of substantial growth since 2000 that has seen this number climb by roughly six million households over the period, an increase of about 41 percent.

Worse still are the more than 11 million households with severe cost burdens, paying more than half their income for housing, up from seven million at the start of the century.

Having so many families and individuals struggling to pay their monthly rent is a clear cause for concern. Renters in this situation are forced to make difficult trade-offs to make ends meet, including opting for housing in distressed neighborhoods or in poor condition. In fact, in an analysis of consumer expenditure data we undertook at the Harvard Joint Center for Housing Studies, we found that renters in this situation largely accommodate their high housing costs by spending substantially less on such basic needs as food and health care.

This growing problem needs to be addressed because having a stable, decent home has been found to produce a wide variety of benefits, from better health outcomes to improved school performance among children. There is also growing evidence that providing permanent affordable housing for homeless individuals and families is much more cost effective than paying for temporary housing.

With the housing crash receding from the headlines and prices on the rise again, it is all too easy to believe that as the economy heals, the housing affordability crisis will naturally ebb without the need for greater efforts by our public leaders. 

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 percent. These trends were evident even before the recession and housing bust, but have certainly been exacerbated by the economic travails since. - Read More at the thefiscaltimes

How Rising Rents Are About to Crush American Spending Power

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