A recent study by Harvard University shows that the housing market crash of 2008, foreclosures on bad mortgages and sustained unemployment are sending record numbers of homeowners and would-be buyers straight into the rental market.
Who’s now renting?
The study, entitled, “America’s Rental Housing: Evolving Markets and Needs,” found that, apart from the oldest age group of renters, households of every other age group increasingly are choosing to rent. The largest increase can be seen among households in their 30s, up by at least 9 percentage points over an eight-year span.
Singles traditionally have been and still are the most common type of renter. However, the study shows that families with children now are nearly as likely to rent their homes as single persons.
But is the rent too d**n high?
Economists are now saying that 30 percent of a person’s household income toward rent is no longer a realistic measure. That means, if more people now are flooding the rental market, more and more people can no longer afford their housing costs.
Even further, the study found that close to 60 percent of all black and Latino renters pay more than 30 percent of their income to rent, compared to 47 percent of whites. And close to 30 percent of all renters spent more than half of their incomes on covering their housing costs, leaving significantly less for health care spending and retirement savings.
The study’s authors also found that as a result of this crunch, these renters are spending about $130 less on food, “a reduction of nearly 40 percent, relative to those without [housing] burdens,” the authors write. “Housing affordability is thus clearly linked to the problem of hunger in America.”
Other Results of the Rental Trend
Gentrification is one of the clearest and most obvious results of the rental trend, as affordable spaces normally occupied by those in the lower-income brackets are attracting former and would-be homeowners.
“Significant shares of these renter households will be married couples with children and single-parent families, which together will account for 30 percent of new renters,” the authors write. “This group of households will seek more spacious homes to accommodate their larger families and in locations with access to good schools and employment opportunities.”