Growth in income lags very far behind rises in rent: report
Household income grew by 18% in the past 50 years, while rents soared by 60%
If you haven’t heard, it’s not easy for renters these days. But the complaints are not an exaggeration.
Examining census data from 1960 to present day, a new report has illustrated the drastic — but very real — drop in housing affordability nationwide.
Though median rents have increased by 64 percent between 1960 and 2014, median household incomes grew by only 18 percent in the same time, according to an analysis by rental listing website Apartment List cited by the Wall Street Journal.
And unless something major happens, the trajectory will continue.
Renters had the worst of it between 2000 and 2010, according to the Journal — thanks in part to a recession and then a housing bust, inflation-adjusted household incomes fell by 9 percent while rents increased by 18 percent during that period.
Economic crises notwithstanding, reasons for today’s challenging housing situation include land-use restrictions, rising construction costs and disproportional migration trends, in which more people are moving to already-expensive cities like New York and San Francisco. Whereas globalization has driven down the cost of other products, housing still relies on domestic resources, according to the Journal.
Predictably, Apartment List cites the worst cities for renters as San Francisco, New York City, Boston and Washington D.C. There are, however, cost-effective options. For instance, in Austin, income growth has matched that of rent in recent years. And not all renters are flailing.
A report by property management software maker RealPage found that the trend of rising rents and diminishing housing supply has little negative impact on mid- and high-earning renters. It’s low-income households that suffer the most from the affordable housing crisis. [WSJ] — Cathaleen Chen