The “America’s Rental Housing” report from the Joint Center for Housing Studies (JCHS) of Harvard University paints a gloomy reality of the rental market as 22.4 million renters are cost burdened, and evictions and homelessness are on the rise.
While rent growth slumped for professionally managed apartments to 0.4% in the third quarter of 2023 from 15.3% in early 2022, rents remain above pre-pandemic levels, according to the report. Last measured in 2022, 22.4 million renter households spent more than 30% of their income on rent and utilities.
Of cost-burdened households, 12.1 million had housing costs that consumed more than half of their income—an all-time high for severe burdens, the report notes. The strain, which is being felt across all income ranges, has risen the most for middle-income renters earning $30,000 to $44,999 annually or $45,000 to $74,999 annually at 2.6 percentage points and 5.4 percentage points, respectively.
Chris Herbert, managing director of the JCHS, says, “What I have observed in Massachusetts, and I think it’s been true of California too, is one thing that changed is the fact that the issue of housing affordability is no longer a problem just of the poor.”
Higher-income renters saw their burden rate increase 2.2 percentage points. As for low-income households, the report reads: “Households earning less than $30,000 annually, a population already grappling with persistently high burdens, recorded a 1.5-percentage-point increase. The dwindling supply of low-rent units is only worsening cost burdens. In 2022, just 7.2 million units had contract rents under $600—the maximum amount affordable to the 26% of renters with annual incomes under $24,000.”
When adjusting for inflation, this marks a loss of 2.1 million units since 2012, or more than half a million low-rent units lost just between 2019 and 2022 due to pandemic asking rent spikes. Since 2001, median rents have risen nearly continuously in inflation-adjusted terms and are 21% higher as of 2022. Yet, incomes have risen only 2% in the same period.
Ethan Handelman, deputy assistant secretary for multifamily at the Department of Housing and Urban Development (HUD), says, “Enduring patterns of segregation, the enduring cost challenges that are getting worse ... we see it in cost, we see it in quality, we see it in availability, and we see in the people who are left out. And those people are part of our community in all sorts of ways, but we need to make sure there are safe, affordable, inclusive homes for all.”
As pandemic protections and eviction moratoriums have long expired, eviction filings returned to pre-pandemic levels by mid-2023. Building on the concern of unstable housing, homelessness has grown, hitting an all-time high of 653,100 people in January 2023. This includes 256,610 experiencing homelessness in unsheltered locations—the highest on record.
“We have to be willing to invest in affordable housing and preserve what we have,” Jacqueline Waggoner, president, solutions division, at Enterprise Community Partners, says. “As we look to solve homelessness, there are no shortcuts.”
Between 2015 and 2023, the number of unhoused people staying outside of shelters increased by 48%, populations growing quickly in areas where resources were already strained including California, Washington, and Oregon. Arizona, Ohio, Tennessee, and Texas also saw large growth in unsheltered homelessness, according to the report.
“Social Security is an entitlement. Medicare is an entitlement. Housing assistance ‘ain’t,’” Handelman states. “It’s a lottery. And it shouldn’t be.”
The housing safety net that once assisted low-income renter households is deteriorating as the number of low-income households grew by 4.4 million between 2001 and 2021, but the number of assisted households increased by just 910,000.
Sixty percent of very low-income households who were eligible for rental assistance—but did not receive it—spent more than half of their income on housing or lived in severely inadequate housing conditions, sometimes both, the report outlines. This was a substantial increase from the 47% of unassisted households with worst-case housing needs in 2001.
“I completely agree that homelessness is a solvable problem. It requires us to do two things, many things, but two important things. Create more affordable housing and provide support services to people when they move into new housing,” says Neera Tanden, director of the White House's Domestic Policy Council.
However, while the pipeline of units under construction should help provide new supply in the near term, declining starts could worsen the existing supply shortage. And the slowing of construction compounded by the aging of existing units only exacerbates the issue.
“All the COVID money is gone. So where is the subsidy going to come from to build this housing? You know, a lot needs to be done there,” adds Peter Cannava, head of multifamily capital at Wells Fargo.
Nearly 4 million rental units fall short of basic habitability, the report cites.
Waggoner notes, “I think some of the solutions are around making sure that we all recognize that housing has become an issue for all of us, and it’s visible now. I think that it’s a hint that we also have a moral crisis, and we have housing that’s not meeting the needs of people in this country.”
Others topics of concern for existing stock is climate change and the overall rising costs of insurance. As environmental hazards and disasters pose a serious threat, a full 18.2 million occupied rentals (41% of occupied rentals) are in areas exposed to substantial weather- and climate-related threats.
“In terms of thinking about climate change and impact on housing, we have a very reactive policy, so mostly what we’re talking about is the disaster happened and how do we spend money to clean up afterward. And we need to have a policy that says the disaster is coming, how do we make sure that this damage doesn’t happen in the first place,“ says Herbert. “So, we need to talk about adaptation and mitigation in climate change. Mitigation means decarbonizing the housing stock. We’re doing work on that. We need to do a whole lot of work on that, and we need to do more on the adaptation.”
Many units under threat are low-rent or subsidized, including 3.2 million units with rents below $600, 1.2 million units supported by the low-income housing tax credit, 960,000 project-based HUD units, and 200,000 U.S. Department of Agriculture subsidized rentals, the report says.
This, of course, raises insurance concerns and the costs affiliated. Waggoner shares, “Some of our affordable housing providers have claimed two, three, four times the rates going up. So, if you think about that, they can’t pass that along to the low-income renters or if it’s a permanent supportive housing project, you have to figure out how to absorb it.”
HUD's Handelman adds, “We need to recognize housing, especially rental housing, only works if insurance is available. Every loan, every equity investment, every renter assumes that a building is insured. And if there is not adequate insurance, the lender is not going to make the loan. The equity investor is not going to put the money in there.”
The report states that a larger commitment from the federal government is required to expand support, preserve and improve existing affordable housing, and build new supply.