Study Shows Rising Rent Straining Family Budgets

Many Americans who live in rental properties can't keep up with the cost of higher and higher rents, according to a new study by Harvard's Joint Center for Housing Studies. The report finds that half of U.S. renters spend more than 30 percent of their income on rent. David Greene speaks with Chris Herbert, one of the report's authors, about why there isn't more affordable housing.

Copyright © 2013 NPR. For personal, noncommercial use only. See Terms of Use. For other uses, prior permission required.

STEVE INSKEEP, HOST:

You may recall the guy who ran for governor of New York as part of the Rent Is Too Damn High Party. Turns out, it is. A new study from the Harvard Joint Center for Housing Studies shows more and more families spending more and more of their monthly budgets on rising rents - leaving less money for everything else, including food.

Chris Herbert is one of the report's authors, and he spoke with our colleague David Greene.

DAVID GREENE, HOST:

So what concerns you in the numbers that you've uncovered now in terms of the rental market compared to eight years ago?

CHRIS HERBERT: Well, one of the things we've seen has really been a remarkable increase in the share of people having to spend significant amounts of their income for housing. You know, the standard measure of affordability is that you don't spend more than 30 percent of your income on housing.

GREENE: OK.

HERBERT: We've seen the share of people falling into that category, facing these cost burdens rise by 12 percentage points between 2000 and 2012, and a large share of those are actually spending more than half of their income for housing. Certainly, since the recession it's gotten worse. Over the last 10 years, we've seen real rents rise by 6 percent and real renter incomes fall by 13 percent, putting the real squeeze on renters.

GREENE: Let me just highlight one of the numbers you said there; that there are an increasing number of families who are paying more than half of their income on monthly rent. What can that do to a family?

HERBERT: Well, one of the things we looked at is we compared what the household budget looks like for people paying more than half their income for rent with those who were able to find housing affordable. That is only less than 30 percent. And you're forced to make some very difficult trade-offs. And one, the main trade-off, the biggest ticket item in that household budget, is expenditures on food, so among those households paying half their income for housing, they spend 40 percent less on food than those who are able to find affordable housing, really highlighting, I think, the connection between affordable housing and hunger in America.

GREENE: So we have a real supply-demand problem here. We have more people wanting to rent and we have less affordable units in the country?

HERBERT: We do. We have - the affordable stock of housing actually has been holding fairly steady. We really can't build units that are affordable for people at the bottom of the income distribution. So what we call the supply gap has gone from 1.9 million units - that is, there's a shortfall of 1.9 million affordable rentals - has now increased to 4.9 million.

GREENE: It sounds like you're making an important point here. You said it's difficult to build units that are affordable. Why is that?

HERBERT: Well, I think it's, you know, in part it's just the nature of the construction process. I mean the cost of materials, the cost of labor, the cost of financing and the cost of land in America is quite high. And so even on the best of circumstances, when you're talking about, you know, 22 percent of renters make under $15,000 a year. And $15,000 a year is roughly what you make working year-round, full-time at the minimum wage. Ultimately, there's going to be a group of people for whom that gap is just a bridge too far for the private sector alone to manage, and we're going to need subsidies to close the gap.

GREENE: You know, when a report like this comes out, it's always sort of tough to figure out, you know, whether it's a crisis, whether it's a, you know, just a significant problem. The headline on your press release says: Severe Affordability Problems for American Renters. I mean how big a problem is this?

HERBERT: Well, you know, we wrestled ourselves with the question of whether it's a crisis. And, you know, something that is acute, something that comes up all of a sudden, seems like it's a crisis and there is a response that you can take that will address it quickly. This isn't a crisis in the sense that it's something that's been growing for a long time. But when you have 21 million households in the country who are paying more than 30 percent of their income and struggling to make ends meet, it's something that is certainly an issue that we really need to address.

GREENE: Chris, thank you so much for taking the time to talk to us.

HERBERT: My pleasure. Thanks very much.

INSKEEP: Chris Herbert is research director at Harvard's Joint Center for Housing Studies.

Copyright © 2013 NPR. All rights reserved. No quotes from the materials contained herein may be used in any media without attribution to NPR. This transcript is provided for personal, noncommercial use only, pursuant to our Terms of Use. Any other use requires NPR's prior permission. Visit our permissions page for further information.

NPR transcripts are created on a rush deadline by a contractor for NPR, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of NPR's programming is the audio.

Comments

 

Please keep your community civil. All comments must follow the NPR.org Community rules and terms of use, and will be moderated prior to posting. NPR reserves the right to use the comments we receive, in whole or in part, and to use the commenter's name and location, in any medium. See also the Terms of Use, Privacy Policy and Community FAQ.