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The nation’s affordability crisis is not just affecting the lowest bracket of renter households, it’s climbing the income ladder to impact more modest-income households, according to the “America’s Rental Housing 2020” report by Harvard’s Joint Center for Housing Studies (JCHS).

“Ultimately, we are in a rental affordability crisis,” says Whitney Airgood-Obrycki, a research associate at the JCHS. “We have seen another worsening of the affordability crisis this year, evident in the rising cost-burdened numbers as well as the increasing numbers of people experiencing homelessness.”

According to the latest biennial report, while the number of cost-burdened renter households, those paying 30% or more of their income on rent and utilities, declined from 2014 to 2017, that number inched back up in 2018, rising by 261,000 to 20.8 million. In addition in 2018, 10.9 million—or 1 in 4—renters were severely cost burdened, spending more than half of their income on housing and utilities. This includes some 72% of renters who earn less than $15,000 and 43% of renters who earn between $15,000 and $29,999 annually.

The largest jump in cost-burdened households has been among middle-income renters earning between $30,000 and $44,999 annually, with their share up 5.4 percentage points from 2011 to 2018 to 55.7%. Renter households earning between $45,000 and $74,999 also saw an increase at 4.3 percentage points to a share of 27%.

“Despite the strong economy, the number and share of renters burdened by housing costs rose last year after a couple of years of modest improvement,” says Chris Herbert, JCHS managing director. “And while the poorest households are most likely to face this challenge, renters earning decent incomes have driven the recent deterioration in affordability.”

Renter household growth appears to have plateaued, according to the report, with the number of renters falling by 222,000 between 2016 and 2018 but then making up ground with 350,000 just in the first three quarters of 2019.

However, it’s higher-income households that are continuing to drive rental demand and causing national vacancy rates to remain at their lowest level since the mid-1980s and rents to continually increase and outpace general inflation.

This high-income renter growth is changing the demographic profile of renters. Between 2016 and 2018, the number of higher-income renter households increased by 545,000. Those with incomes at or above $75,000 accounted for three-quarters of the growth in renters between 2010 and 2018. On the other hand, the number of renter households earning less than $30,000 fell by nearly 1 million during this period, a reversal from the trends in the 2000s.

Multifamily construction is strong and remains near the highest levels in three decades, with a growing share targeted to the higher end of market.

After a 6% rise in 2018, multifamily starts through the third quarter of 2019 were at an annual rate just under 380,000 units, one of the highest totals since the 1980s. Not only is construction up, but the share of units intended as rentals also is up from 1980s. “The multifamily pipeline is the fullest it’s been since 1973, with over 600,000 units currently under construction,” adds Airgood-Obrycki.

But with the growing share at the high end of the market, the median asking rent for unfurnished units completed between July 2018 and June 2019 was $1,620, 37% higher than the median, in real terms, for units completed in 2000, and about 1 in 5 newly built apartments had an asking rent of at least $2,450. The number of units renting for $1,000 or more increased by 5 million between 2012 and 2017. However, units with rents less than $600 fell by 3.1 million, and units with rents between $600 and $999 also declined by 450,000.

Another constraint on the market, according to the report, is that renting has become more commonplace for those traditionally more likely to own a home. Families with children make up a larger share of renter households, 29%, than owner households at 26%.

“Rising rents are making it increasingly difficult for households to save for a downpayment and become homeowners,” says Airgood-Obrycki. “Affordability is a major barrier even if you’re making a solid income of $75,000 a year.”

While rising costs of construction, land, and labor as well as regulatory barriers and NIMBY response to high-density development are impeding production of affordable and market-rate housing, the report urges more significant buy-in from all levels of government and a concerted effort by public and private sectors. In addition, allowing by-right development of multifamily could expand the supply of rental in a wider array of neighborhoods to create more housing equality.