Contrary to popular conception, the trend of rising rents and diminishing inventory has minimal negative impact on mid- and high-earning renters.
“The story tends to be generalized that’s it’s tough for all rental households. The top-earning groups have not been particularly challenged,” Greg Willett, chief economist at property management software maker RealPage, told Bloomberg.
Although 26 percent of American renters now pay at least half their income for housing — up 6 percent since 2001 — median incomes have also risen, according to a new study published by Harvard University’s Joint Center for Housing Studies.
Most market-rate tenants, therefore, are keeping up with rent growth. For the most part, they can lease apartments that fit their budgets and even put away savings for buying their first homes.
Between now and 2010, the median rent-to-income ratio has remained between 22.9 and 23.3 percent. During that same period, median income of market-rate renters grew from $44,000 to nearly $58,0000.
But for those below the median mark, things are not looking swell. At the bottom of the rental market, the median renter is spending more than 30 percent of income on rent. Not to mention, affordable housing supply is staggering behind the growing number of low-income households.
In 2014, more than 10 million renter households earned 30 percent or less of their area median income. But only about 5 million affordable apartments were available for them. And as new construction largely caters to luxury renters, cheaper units take time to enter the market.
And as the number of poor households have been on a steady incline in the past 30 years, the number of households receiving rental assistance has remained the same. Federal subsidies for rent hasn’t increased in 15 years. [Bloomberg] — Cathaleen Chen