A sharp rise in rents over the past few years has led millions of renters to spend much of their income on housing costs, pushing the share of so-called rent-burdened households to an all-time high, according to a new report.
In an annual report from the Joint Center for Housing Studies at Harvard University released Thursday, researchers found that in 2022, the number of renters in America who were spending more than 30% of their income on rent and utilities reached a record high of 22.4 million.
Housing is generally considered affordable if it does not cost more than 30% of a person's gross income. People who spend more than this are known as “rent burdeners” or “cost burdeners.” Half of U.S. renters in 2022 were spending more than 30% of their income on rent and utilities, according to the Harvard Joint Center, 3.2 percentage points higher than before the pandemic in 2019.
Of those renters, 12.1 million renters, an all-time high, were severely “cost burdened,” the group said, spending more than half their income on housing.
Even high-income families were experiencing increasing pressures: they saw their burden ratio increase by 2.2 percentage points. Households with incomes of $75,000 or more are considered higher income, according to Harvard's calculations.
To be clear, rent increases, after rising nearly 20% between 2021 and 2022, have slowed significantly since 2022 as more apartments and houses are built.
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But wages have not kept pace with rising rental costs, according to the Harvard Center. “Although average rents have risen by 21% in inflation-adjusted terms since 2001, average annual incomes have risen by only 2% over the same period,” the researchers noted.
Low-income renters making less than $30,000 annually saw their cost burden rate rise by 1.5 percentage points to 83%. About a third of renters had a household income of less than $30,000 in 2022, had an average cash savings of just $300 and an average net worth of $3,200, according to the Harvard University report.
The researchers found that after paying rent, cost-burdened low-income households had an average residual income of just $170.
“Rent is the largest expense for most households and often takes priority because the consequences of not paying rent can include eviction and homelessness,” the Harvard researchers said.
Evictions are on the rise, with homelessness at the highest level on record, the center said.
According to the report, there was an all-time high of 653,100 homeless people as of January 2023. That's up to nearly 71,000 people in one year. The report noted that in 2023, the total number of people experiencing homelessness in unsheltered sites reached an all-time high of 256,610.
Since the end of pandemic-era policies, such as eviction moratoriums and rent relief, “the housing safety net has once again become overwhelmed and underfunded,” Chris Herbert, managing director of the Joint Center for Housing Studies, said in a statement.
“While states and localities have worked to close some gaps, a greater commitment from the federal government is needed to expand housing support and maintain and improve the existing affordable stock,” Herbert said. “Only then will the nation finally make a meaningful dent in the housing affordability crisis, which is making life so difficult for millions of people.”
