The Blubber

Housing is unaffordable for a record half of all U.S. renters, per Harvard Researchers.

The State of the Nation's Housing 2023, a report published by Harvard's Joint Center for Housing Studies, reveals that a record number of American renters are facing significant financial burdens due to rising rents. A staggering 21.6 million households, equivalent to a substantial portion of the population, now spend more than 30% of their pre-tax income on rent. Furthermore, some households are even allocating up to 50% of their earnings towards rent, far exceeding the recommended threshold of spending less than 30% of income on housing costs, as suggested by housing experts.

The surge in housing costs can be attributed, in part, to the proliferation of what are known as "luxury" buildings, which have gradually replaced more affordable housing options. Over the last two decades, the construction of high-priced apartments, commonly referred to as Class A apartments, has outpaced the development of affordable ones. Startlingly, data from Moody's Analytics reveals that 51% of the rental construction projects in 2022 were luxury apartments. In contrast, back in 2000, high-cost rental units constituted only 34% of the market. By Q1 of 2023, this number surged to 51%, indicating a significant shift in the rental housing landscape.

The issue lies in the fact that the new housing supply mainly caters to the top end of the price spectrum, as explained by Carl Whitaker, the director of research and analysis at RealPage. Consequently, this trend has contributed to the inflation of housing costs, causing financial strain on a growing number of renters across the country.