A 2024 report from the Joint Center for Housing Studies (JCHS) of Harvard University reveals that although the rental market is cooling, evictions and homelessness are rising. The rental housing affordability crisis has deepened across all income groups and now affects half of all U.S. renters.
It was found that:
(1) Rental costs have stabilized following historic increases in 2021 and 2022. As of 2023's third quarter, rental growth slowed to rates of less than 1%, down from 15% in early 2022. Although these reduced growth rates have offered relief for some households, asking rents still exceed pre-pandemic levels. The report finds that 50% of all renters are now cost burdened, paying more than 30% of their income on rent and utilities.
(2) The supply of lower-cost units has diminished; over 2.1 million units renting for less than $600 per month have been lost since 2012. From 2012-2022, higher construction costs and increased demand from high-income renters resulted in an increase of 8.4 million units renting for more than $1,400, which is unaffordable for most renters.
(3) As of January 2023, more than 653,000 people were experiencing homelessness, which was the highest number on record.
(4) Although multifamily housing construction increased during the pandemic, it began to slow in late 2023. In October 2023, new multifamily housing starts were down by 30% from 2022, and the reduced starts could have lasting effects on the current shortage of multifamily housing.
(5) Property insurance premiums have skyrocketed by 30 or 40% in some areas, which can limit the number of affordable units a property owner can provide. In some cases, borrowers opt for reduced coverage to bring down their insurance costs, but this strategy can place properties in an insecure position if a natural disaster occurs. In addition, these increased insurance costs also can lead property owners to compensate by cutting back on maintenance and necessary upgrades.
(6) The report indicates that the country's rental housing stock is aging, with a median age of 44 years in 2021 compared to 34 years in 2001. This aging housing stock requires substantial upgrades in habitability, energy efficiency, and accessibility standards, and it also faces a heightened risk of damage from climate change and extreme weather events.
