For the many Americans who feel like they pay too much in rent their may not be any relief in sight. According to a recent study, the number of United States households spending more than 50% of their total income on their rent could possibly increase by 25% over the next decade, as nearly 15 million American households would fall into this dubious category in a worst case scenario.
As a general rule of thumb, households should not spend more than 30% on rent or mortgage.
A nonprofit group called Enterprise Community Partners, along with Harvard’s Joint Center on Housing Studies, conducted the report. The researchers examined several scenarios for wage and rent growth that is expected to occur during the upcoming decade.
The best case scenario shows wages increasing 1% per year faster than rent expenses. Even then, the number of households spending over 50% of their income on their rent would only fall from 11.8 million to 11.6 million from 2015 to 2025.
The baseline study, in which rent and wages both increase by 2% annually, shows that more than 13 million households would fall into this category.
The worst possible outcome predicted 14.8 million “severely cost-burdened” American households.
In 2013, there were 11.2 million severely-burdened renter households, while there were only 7.3 million units affordable to them. If rent-costs keep increasing quicker than incomes, the number of households that spend more than 50% of their income on rent will continue to increase.
In the second quarter of this year, wages only grew by 0.2%. This is the slowest pace since 1982.
Senior director of research at Enterprise Community Partners Andrew Jakabovics said, “The economy alone is not going to solve this problem. It brings us back to the need to expand affordable housing.”
The report did not show the proportion of severely rent-burdened households in regards to income level. A report from the Furman Center states that the poorest Americans are the most likely to spend more than half of their income on rent.
However, a surprisingly large number of rent-burdened households come from the middle class. Studies have shown that in large cities, such as New York and Los Angeles, more than one-third of middle class renters are severely burdened by their rent expenses.
Meanwhile, data released by the United States Census Bureau last week indicated that the percentage of United States households that spent at least 30% of their income on housing in 2014 was the lowest since 2005. A likely cause of this decrease is the result of home buyers taking out new mortgages and homeowners refinancing their loans.
However, renters do not have such options, and they face a potentially dangerous future.Stay Connected