The rental market may finally be slowing down as the new year approaches. Factors like fewer new rental households, rising rental vacancies and slowing rent growth could bring the United States’ decade-long rental boom to an end, according to Harvard’s 2017 America’s Rental Housing report.
While Harvard’s report points to a number of reasons why the rental boom is coming to an end, the larger conclusion may be more complicated, notes Christopher Herbert, managing director of the Joint Center for Housing Studies of Harvard.
“This year’s report paints a complicated picture of the rental market,” he said. “We’re finally seeing the record growth in renters slow down, but while the market has responded to rental housing needs for higher-income households, there are alarming trends that suggest a growing inability to supply housing that is affordable for middle- and working-class renters, let alone those with very low incomes. Addressing these challenges will require bold leadership and hard choices from both the public and private sector.”
In addition, a growing share of renters is older and more financially stable. “Renters are now much older on average than a decade ago, reflecting both an increase in middle-aged households that rent and the overall aging of the population,” the report states. “The median age of renters thus increased from 38 in 2006 to 40 in 2016. Although roughly a third of renters are under age 35, nearly as many are now age 50 and over.”
Affordability also remains a huge problem in the rental market. While the share of renters who are cost-burdened (paying more than 30% of income for housing) and severely cost-burdened (50% income) has slightly fallen over the past few years, it is still nowhere near the low levels of cost-burdened renters at the turn of the millennium. “It would take another 24 years for the number of cost-burdened renters to return to the 2001 level,” the report says.