New Rental Units Too Pricey for Most Renters
Much of the recent multifamily construction has focused on the luxury segment, which is pricing renters out of the market, according to Harvard University Joint Center’s 2015 State of the Nation’s Housing Report.
The rising costs in multifamily development pushed the median asking rent for newly constructed rental units up to about $1,290 per month as of 2013. That marks an increase of $180 compared to 2012, according to U.S. Census Bureau data.
Meanwhile, the typical renters’ incomes rose by just $60 a month, going from $32,000 in 2012 to $32,700 in 2013, according to the American Community Survey.
In order to afford a standard new multifamily unit, a household would need to earn at least $51,440, according to JCHS. Less than a third of renters, however, earn this much.
In some areas, rental costs are even higher. JCHS’ report notes that 84 percent of new multifamily units in the Northeast and 67 percent of those in the West went for a monthly rate of $1,350 or higher in 2013. In fact, many units built in 2012 to 2013 rented for at least $2,000 per month – which would require an annual salary of at least $80,000.
In the South and Midwest, new units rented in the $1,350 range were only about a third of growth, which indicates a more even regional supply of new units by price.
“While new multifamily construction is easing some of the demand for new units, it is currently not sufficient to ease the broader affordability problems facing renters,” notes Elizabeth La Jeunesse, a research analyst, at the JCHS’ Housing Perspectives blog. “Closing the gap between what it costs to produce this housing, and what economically disadvantaged households can afford to pay, requires the persistent efforts of both the public and private sectors.”
Source: “New Multifamily Construction Is Out of Reach for Most Renters,” Harvard University Joint Center for Housing Studies’ Housing Perspectives Blog (July 30, 2015) DAILY REAL ESTATE NEWS
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