Dive Brief:
- A quarter of all renters in the U.S. spend at least half of their income on rent, according to Harvard’s Joint Center on Housing Studies and affordable housing advocacy group Enterprise Community Partners.
- The number of renters paying more than half of their income on housing could rise from 11.8 million to 14.8 million over the next 10 years, with the elderly and Hispanic populations at the highest risk, according to the report.
- In contrast, according to the latest Census Bureau data, U.S. households that spent 30% of their income on housing in 2014 dropped to the lowest level since 2005 — most likely due to the ability of home buyers to take out new mortgages and for homeowners to refinance at lower rates, according to economist Jed Kolko.
Dive Insight:
The latest Census Bureau data on U.S. housing costs, when compared to renter figures, highlights the limited options available for renters, particularly those with lower incomes, according to a May 2015 Furman Center report. In addition, according to the ECP/Harvard report, in 2013, 11.2 million "severely burdened" renters burdened with high rents were vying for only 7.3 million affordable units.
Builders are sure to see the financial opportunity in encouraging these renters to become homeowners, but the question still remains if builders could even meet that demand with the current lack of inventory.
The ECP/Harvard report's release resulted in renewed calls for more affordable housing options. But builders and developers often oppose government mandates for setting aside a certain percentage of new housing as affordable housing because they claim it will result in the transfer of the added cost to buyers of new homes — causing home prices to spiral even further out of control.
In California, for example, builders are asking the U.S. Supreme Court to review San Jose's affordable housing law, which they say represents an unconstitutional "taking" of property.