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The Joint Center for Housing Studies of Harvard University has released its latest America’s Rental Housing report, shedding light on the challenges faced by U.S. tenants despite softening rental markets. The study reveals that while rent prices are showing signs of coming down in certain areas, a significant number of renters continue to grapple with high housing costs, impacting their ability to meet other essential expenses.
Key Insights from the Harvard Report:
1. Cost-Burdened Renters:
– Half of U.S. renters spent more than 30% of their income on rent and utilities in 2022, according to the America’s Rental Housing report.
– Individuals spending 30% or more of their income on housing are classified as “rent-burdened” or “cost-burdened,” indicating potential challenges in meeting other essential expenses.
2. Increased Burden Over Time:
– The share of cost-burdened renters increased by 3.2 percentage points from 2019 to 2022, reflecting an ongoing trend of housing affordability challenges.
3. Impact on Lower-Income Households:
– While the cost burden has increased across income levels, the consequences are more pronounced for low-income households.
– Renter households with annual incomes below $30,000 experienced a record-low median residual income of $310 a month in 2022, significantly limiting funds available for non-housing needs.
4. Affordability Crisis:
– The study underscores the overarching issue of housing unaffordability in the U.S., emphasizing the risk of potential homelessness for individuals experiencing life crises.
5. Shift in Living Patterns:
– Young adults are increasingly opting to stay with their parents or move back in due to the high cost of living.
– The share of young adults aged 18 to 29 living at home with parents is approaching 50%, a level not seen since the end of The Great Depression in the 1940s.
6. Affordability Challenges for Young Adults:
– Lack of affordable housing is identified as a key factor contributing to the shift in living patterns for young adults, surpassing the historical trend where lack of employment opportunities played a role.
7. Competing in Rental Market:
– Young adults are competing for rental housing with potential homebuyers who are facing challenges in the single-family housing market due to pricing.
– The spillover demand from the home mortgage market is contributing to the affordability crisis in the rental market.
8. Humanizing the Problem:
– The study emphasizes the decline in average residual income for lower earners, highlighting the human aspect of the affordability crisis and its impact on meeting essential needs.
9. Historical Perspective:
– The affordability crisis is described as making the U.S. a “very unaffordable country,” emphasizing the historical significance of the current challenges.