Policy- Cheap rent has gotten much harder to find as housing costs have surged over the last decade.
- The number of homes that rent for under $1,000 has plummeted, Harvard researchers found.
If you've been struggling to find a cheap rental, you're not alone: Low-rent apartments are harder to find than ever.
The supply of homes that rent for under $1,000 a month has dried up over the last decade, while those that rent for $1,000 or more are in larger supply, according to a new report from Harvard's Joint Center for Housing Studies.
The number of homes that rent for under $600 after adjusting for inflation fell from about 9.4 million units in 2012 to 7.2 million in 2022, according to the Harvard researchers' analysis of 2022 census data. And homes with rent between $600 and $799 fell from almost 9 million to 5.8 million units. Meanwhile, the number of homes that rent for at least $2,000 per month more than doubled, climbing from about 3.2 million to 7.3 million homes.
This is just more evidence of the housing affordability crisis many cities and towns across the country are facing. Millions of Americans can't afford their rent and struggle to attain homeownership.
Even many renters and homeowners who can afford their housing costs don't feel able to move because of stubbornly high mortgage rates and market-rate rents. Fortunately, rent growth is expected to slow this year as builders race to bring a significant number of new multifamily buildings online. Still, the affordability outlook is bleak.
The fundamental reason for the sharp rise in housing costs in recent years is a severe home shortage of between 3.8 million and 6.5 million units. The rise of remote work since the pandemic has also helped boost demand for — and the cost of — homes in many parts of the country. Over the last few years, home prices have risen at a record pace.
Half of American tenants spend more than 30% of their income on rent and utilities, making their housing unaffordable under a widely used measure of affordability, the Harvard study found. Of the record 22.4 million households that are rent-burdened, 12.1 million spend more than half of their income on housing costs. Homelessness is also at a record high.
Middle-income renters — those who make between $30,000 and $74,999 annually — saw the most dramatic increase in housing costs between 2019 and 2022. In California, where younger workers have seen their homeownership rates drop precipitously over the past few decades, the number of units going for $2,000 and over has more than doubled.
Those rent hikes come as more Americans think they'll never own a home: Just 41% of renters think there's a chance that they'll own a primary residence in the future, according to the New York Federal Reserve's February 2023 Housing Survey. But the majority of renters say they'd prefer or strongly prefer to own rather than rent.