Millions Of Cost-Burdened Tenants Spending Half Of Their Incomes On Rents, Harvard Report Finds

A record number of tenants in the US spent about 50% or more of their income on housing in 2023, according to a new analysis from the Harvard Joint Center for Housing Studies. The report highlighted that 22.4 million renters were “cost-burdened” and out of those over 12 million pay half or more of their income toward rent. Rents are becoming unaffordable for the middle class and there is a huge gap between different racial groups when it comes to affordable housing.

Rise in rent cost

According to the report, rents rose by 2.6% for tenants in the $30,000-to-$44,000 income range, and for those in the income range of $45,000-to-$74,999, the rents shot by 5.4%. The report mentioned that while the increase is astounding, it varies from market to market depending on the demand. 

For instance, the median rent cost in Hawaii was the highest with renters spending $1,868 per month. On the other hand, it was the least in West Virginia with renters paying median rent prices of $831 per month.

As per the data from the US Census Bureau’s community survey, Hawaii has the highest median rent of $1,868 per month while West Virginia, with a median rent of $831 per month, has the lowest.

Cost of housing in the US: Current scenario

As per a report from The Grio, inflation has finally cooled down but the gap between Black and white homeowners has reached a record high in over a decade. The report highlighted that based on the income requirements alone, the number of Black renter households able to afford the median-priced home in the U.S. dropped by 39% between March 2022 and March 2023.

Also, the number of Hispanic renter households who were able to afford the median rent dropped by 37% during the same time frame. However, for white renter households, the drop stood at 30% according to the report.

“While each of these decreases represents a significant decline in access to homeownership, the outsized decrease for Black and Hispanic households works against efforts to reduce racial homeownership rate gaps,” Whitney Airgood-Obrycki, the report’s lead author, said in a Washington Post report.

Outlook for 2024

In 2023, the country’s 44 million renter households saw a slightly positive shift with rent growth for professionally managed apartments dropping by 0.4 percent, according to RealPage. However, this shift is yet to show up in the inflation statistics.

Even though there may be a positive shift, the rent prices are certainly not expected to go back to pre-pandemic levels considering the short supply. It is yet to clear what 2024’s economy will bring for the people, but Airgood-Obrycki didn’t have an optimistic outlook. She told the Washington Post the country, by and large, is still in “pretty bad shape.” However, the report added that there is hope and little expectation that rents will drop or at least the overall housing market will see a shift towards becoming a level playing field.