Renting has traditionally been thought of as an intermediate stage to homeowning, where a renter saves up before they’re ready to commit to buying a permanent (and more expensive) house. However, the Joint Center for Housing Studies (JCHS) at Harvard University’s latest findings dive into how more renters of all incomes are facing the greatest cost burdens in recent history.
A research brief titled, “Deteriorating Rental Affordability: An Update on America’s Rental Housing 2024,” co-authored by three JCHS researchers and published December 16, updates the center’s previously published “America’s Rental Housing 2024” report.
In 2022 (per the previous report), 22.4 million renter households were cost-burdened (defined as spending more than 30% of income on rent or utilities). In 2023, the number grew to 22.6 million cost-burdened households—meaning about half of all renter households. Of those 22.6 million households, 12.1 million are severely cost-burdened (spending more than 50% of income on rent or utilities).
The report draws primarily on data in the U.S. Census Bureau’s 2023 American Community Survey, comparing it to reported rental costs from 2001 onward. From 2001 to 2023, the number of cost-burdened renters increased by 7.8 million, and by 2.2 million from 2019 to 2022.
As previously reported by the JCHS, rent costs experienced a temporary dip (0.2%) early in the pandemic before climbing noticeably in mid-2021, peaking around +16% in 2022. Indeed, this latest JCHS report notes a 3.2% increase in cost-burdened renter households from 2019 to 2023, with the largest increases coming from middle-income households (those making $45,000 to just under $75,000).
While renter burdens have risen for all renter households, the number of cost-burdened households increases further down the income ladder. In fact, the report finds that in 2023, 83% of renter households making under $30,000 annually were cost-burdened. Close to three-quarters (70%) of those making $30,000 – $44,999, 45% of those making between $45,000 – $74,999 and 13% of renter households making above $75,000 were cost-burdened.
The ratio of moderately burdened to severely burdened also increases in the lower income brackets; about 60% of renter households making less than $30,000 are considered severely cost-burdened out of the 83% that are cost-burdened overall. The report adds that, in 2023, 36% of cost-burdened renters were fully-employed, compared to the less than 25% in 2001. This is cited by the JCHS researchers as an example of how “full-time work no longer guarantees that a household can afford housing.”
The increase in cost burdens was a “universal trend,” the JCHS wrote, noting that historical disparities in housing affordability remained intact.
“Renter households headed by a Black or Hispanic person face discrimination in education, employment and housing, contributing to high cost burden rates for these groups,” wrote the JCHS team, citing data that Black and Hispanic renters face higher cost burdens (57% and 53%, respectively) than white and Asian renters (45% and 46%, respectively).
Another cited effect of renter cost burdens is renter households having less residual income. In 2019, households making under $30,000 reported having 20% less income left over after paying rent than they did in 2001. By 2023, those residual incomes had fallen much further, 55% lower than 2001.
While the report is mostly relying on data from 2024, the researchers point to a more recent Census Bureau “Household Pulse” survey conducted this year that found that 41% of renters had experienced a $100 or more monthly increase in their rent between January and September.
Other affordability reports have also been tracking more recent affordability rates. A September 2024 report from Realtor.com® found that rental affordability improved in 2024 across major metro areas, but rents still did not fall below pre-pandemic levels. The latest JCHS report attributes previous slower rent growth in 2023 to a pick-up in multifamily construction. This pick-up leveled off by early 2024 and remained stalled as late as September. The JCHS wrote that this “slowdown will likely contribute to tightening markets that could push rents back up at a faster pace.”
The report concludes that increasing supply and subsidies for low-income renters will determine “the future of rent affordability,” citing a decrease in lower-cost rental units that has only been filled by higher cost ones:
“Since 2013, the number of units with contract rents under $1,000 in inflation-adjusted terms has fallen by 7.5 million, including the loss of 2.5 million units renting for less than $600 and 2.5 million units renting for $600 to $799. Meanwhile, net additions have entirely been among units renting for more than $1,400.”
The JCHS’ prescriptions are aligned with ones made by National Low Income Housing Coalition CEO Diane Yentel. Speaking to PBS in June 2024, Yentel said: “We are still well behind where we need to be in terms of building enough apartments to meet the demand in communities across the country. And that’s why rents overall are stubbornly high.”
Read the full research brief here.
