According to a recent analysis of Census data by the Harvard Joint Center for Housing Studies, 49% of renters in 2021 were considered cost-burdened, meaning that their rent consumed 30% or more of their income, the highest recorded level since data collection began in 2001. This is due to rising rent prices and declining incomes, particularly affecting renters with lower incomes. Data from Rent.com showed a 15% increase in median nationwide rent prices in 2021, outpacing the 3% increase in average weekly earnings for workers.
A recent analysis of Census data by the Harvard Joint Center for Housing Studies revealed that the struggle to cover the cost of renting a home has become increasingly difficult for Americans. In 2021, 49% of renters were considered cost-burdened, meaning that their rent consumed 30% or more of their income, the highest recorded level since data collection began in 2001. This is due to a combination of rising rent prices and decreasing incomes, as the analysis of American Community Survey data from the Census Bureau shows.
The pandemic economy particularly affected renters with lower incomes, as the report highlights. Those who are cost-burdened face difficulties in covering basic expenses such as food and transportation, according to the Department of Housing.
Data from Rent.com revealed a sharp increase in rent prices during the pandemic, with the median nationwide rent rising 15% in 2021 alone, significantly higher than the typical 2% to 4% annual increase seen in normal years. This came at a time when renters’ income was declining, dropping 2.3% to $43,500 from $44,500 in 2019, according to the Census.
Jon Leckie, a Rent.com researcher, pointed out that the rush for real estate during the pandemic was responsible for the rapid rise in rent prices, as those priced out of the overheated housing market turned to renting.
The housing market was going nuts. And rent will follow the housing market,” Leckie said.
In 2022, rent increases moderated as the housing market cooled, with a typical rent increase of 4.8% year-over-year as of December, according to Rent.com’s recent report. While this improvement is substantial, it still exceeds the 3% increase in average weekly earnings for workers, as reported by the Bureau of Labor Statistics. With the pandemic-era rental price hike showing no signs of subsiding, the financial pressure on renters is expected to continue.
Leckie stated, “It’s unlikely that rents will return to previous levels. The only solution, I believe, is an increase in wages. If wages don’t rise, the outcome may not be favorable.”
View Article Sources
- Number of Renters Burdened by Housing Costs Reached a Record High in 2021 — Harvard Joint Center for Housing Studies
- Is Renting a Waste Of Money? (You’ll Be Surprised) — SuperMoney
- How to Get Out of Your Apartment Lease in 5 Steps — SuperMoney
- How to Save for a House While Renting — SuperMoney
- Mortgage Industry Study — SuperMoney
- Housing Affordability Study — SuperMoney