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A recent study focused on America’s 11 most crowded cities shows that while rental housing possibilities are growing, more and more tenants pay unaffordable rents.
The study, which was conducted by Capital One and New York University’s Furman Center, analyzed the rental housing market in 11 cities including New York City, Washington, Philadelphia, Los Angeles and Miami.
Experts noticed that in all those cities housing affordability sunk in the past nine years, but each city had its particularities. Laura Bailey, a Capital One financial expert, said that U.S. renters’ options are quite “limited” at the moment.
For their study, investigators analyzed the data gathered by the Census Bureau between 2006 and 2013. The data revealed that two years ago at least 60 percent of U.S. residents living in metropolitan areas were tenants. According to the study, the number of renters rose from 31 percent in 2006 to 35 percent a couple of years ago.
Analysts believe that the hike in renting is caused by the 2008 financial crisis, home-downsizing of an aging population and student loans. The financial crisis pushed many people out of their homes, so many of them became loan adverse, researchers explained.
On the other hand, experts caution that a rent that leaves no room for savings toward a home ownership becomes a “reinforcing cycle.” Furman researchers also found that many students choose to rent a home rather than buy one because of their college debt.
The new findings also show that there are more houses to rent than at the beginning of the decade since many people turned their homes into rentals. Moreover, people are more likely to rent a home than own one.
Vacancy rates have also declined except for Atlanta which has a 10 percent vacancy rate. In 2006, the city with the lowest vacancy rate was NYC at 3.8 percent. But seven years later, NYC was surpassed by San Francisco with 2.5 percent. Los Angeles and Boston also fared well with 3.5 percent.
Additionally, the new study revealed that rent payments surpassed inflation due to increased demand and short supply. In Washington, rents jumped 21 percent since 2006 to more than $1,300 per month. In the Big Apple rents rose by 12 percent to around $1,230 per month. The figures include utilities.
According to experts, housing costs that exceed 29 percent of a family’s income are “burdening” for that family, while what goes beyond 49 percent is considered “severely burdening.”
According to this scale, San Francisco had 45 percent of tenants that were burdened by their rent payments, while in Miami nearly 70 percent of tenants qualified as burdened.
Image Source: CNN Money
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