Tuesday, Apr 24, 2018
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Real Estate

Study finds scarcity of affordable rental housing

The percentage of renters who spend more than half their income on housing is at its highest in half a century, and it's no longer just low-income tenants feeling the pain, according to a new Harvard University study.

About 26 percent of renters -- 10.1 million people -- spent more than half their pre-tax household income on rent and utilities in 2009. That's because incomes slipped dramatically from their peak at the start of the decade even as rents kept rising.

Developers reduced the number of apartment projects when the economy deteriorated in 2009, which drove down vacancies and boosted rents.

In many areas, the demand is driven by families who lost their homes to foreclosure during the housing bust.

Meanwhile, as the job market recovers, more newly employed young adults appear to be seeking their own apartments instead of living with their parents, according to one of the study's researchers.

Ideally, renters should not spend more than 30 percent of their income on housing, the study said. By 2009, 7.5 percent of moderate-income renters -- defined as making between two and three times the minimum wage -- spent more than half their income on rent, twice as many as in 2001.

In a report to Congress, the Obama Administration acknowledged in February that financing to build high-end rental properties is more readily available.

That helps explain why for every 100 extremely low-income American families, only 32 adequate rental homes are available, the report said.

The scarcity of affordable rental units was most pronounced in the West, where 53 units were available for every 100 very-low-income households looking to rent, according to the study, which analyzed federal survey data from 2009. That compared with 65 in the South, 66 in the Northeast, and 87 in the Midwest.

The study analyzed 6 million units that private landlords were renting in 1999 for less than $400 a month and found that by 2009, nearly 12 percent of them had been demolished.

An even larger number were no longer available because of other factors, such as disrepair or conversion to nonresidential use.

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