Skyrocketing rents hit 'crisis' level
The trickle-down effect of a decline in homeownership has put more rentals out of reach.
Since the housing crisis began in 2008, approximately 4.6 million homes were lost to foreclosure, according to CoreLogic. The vast majority of those homeowners became renters. Even as housing recovered, credit tightened, pushing even more potential buyers out of homeownership and into rentals, both apartments and single-family rental homes.
There are now 43 million renter households, or 35 percent of all U.S. households, the highest rate in over a decade for all age groups, according to Harvard's Joint Center for Housing Studies; 4 million more renters today than there were in 2007. For those ages 25 to 54, rental rates are the highest since the center began record keeping in the early 1970s.
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As a result, rental vacancies have fallen dramatically, and rents have skyrocketed.
"We are in the midst of the worst rental affordability crisis that this country has known," said Shaun Donovan, secretary of Housing and Urban Development.
Half of all U.S. renters today pay more than 30 percent of their incomes on rent. That's up from 18 percent a decade ago, according to the Harvard center. For those in the lowest income brackets, the jump is even worse.
"Over four years, a 43 percent increase in the number of Americans with worst-case housing needs," Donovan said. "Let's be clear what that means: They're paying more than half of every dollar they earn for housing."
The numbers are not lost on Annie Eccles, who is in her late 20s. She has been renting for more than two years, and the rent on her Bethesda, Md., apartment has increased by the maximum the county allows every year.
"It's frustrating because we pay for rent, we also pay for parking, and just knowing that every June it's going to increase significantly, it's frustrating," Eccles said.
And Eccles pays almost as much each month on student-loan debt as she does in rent. Put together, it makes it hard for her and her husband to save up enough to buy a home of their own.
"It would be hard buying in this area, just because it's so expensive," she said.
Most younger Americans, like Eccles, want to be homeowners someday. While so-called millennials favor mobility and city living, they still see homeownership as a goal.
"Nineteen out of 20 people that are surveyed say that they intend to buy a home at some point in the future, if they're under the age of 30," said Eric Belsky, director of Harvard's Joint Center for Housing Studies. "There is no question that the will toward homeownership remains there, it's the way."
Home prices are rising faster than expected, because of heavy investor demand, ironically in single-family rental housing. While more than 3 million owner-occupied homes are now investor-owned rentals, there is still a lack of supply in the market. New rental stock is coming soon, but demand is not easing. Renters may want to be buyers but many still can't, because of rising home prices and mortgage rates.
"You add in other things, like higher student debt for many people, you add in the fact that incomes for low- and moderate-income people have not been going up as fast as inflation, and you have a situation where it's going to be very difficult to buy homes," Belsky said.
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My family has owned/operated rentals for over 30 years. Rental rates are based on supply and demand. If rental prices get too high, tenants go elsewhere leaving empty units, and so, in order to fill them, rates go down. If rates are too low, you get the opposite effect. Rentals, like the price of real esate, and just about everything else, are fluid. It is a balancing act that you need to adjust according to conditions in your area.
My American Dream is alive and well. I just bought a home last year :)
My daughter is staying with me saving up to pay cash for a home of her own.
Just because some people lack the discipline to plan/save/sacrifice for homeownership, doesn't mean the American Dream is dead.
Many banks do not allow reasonably priced condos to be sold to first-time home buyers with a mortgage. They favor their rich, investor criminal friends.
That is partially why for many, home ownership is still out of reach. Everyone should have the opportunity to own a home, like back in the 1950s.
Because of the rich and greedy, the idea of the American Dream is now just that: a dream. Cause you have to be asleep to believe it.
I appreciate the people who did responds to my comments both pro and con. I guess we are all "griping" about things in general. Regarding college, it just seems to be a present day reality that everyone should not necessarily attend college. College in the guise of "education" of course is just another "industry." Whether it is profit or non-profit. There are many talented people in all endeavors will do well even without so-called "advanced" education and some who drop-out because college is just slowing them down. I call attending college basically an "attendance certificate" simply because all of my time here on earth my teachers kept pushing to attend college or we wouldn't do well in our lives. No I'm not an "ingrate,' I attended three colleges and graduated from the last school. I also got a certificate or two from advanced courses. I think the internet like with the newspapers will put brick and mortar campuses out of business.
Regarding Bush spending money unnecessarily on "wars" I still haven't heard even ONE person in 12 years or so explain what they would've done after the event of 9/11.
Safe Holidays to those who "believe."
I recall when I was flying high and living the good life buying my own home and driving a new car and it was crash and burn the manufacturing company decided to close shop and send my job to China and not even a thank you for 22 years of work. I was force to get a lower paying job--nobody hires anybody over 50-and I had to sign up on section 8 if I wanted my family to live in a nice apartment. I finally found a house trailer that I could afford to buy and buy it I did.
Lady luck can turn her back on you in a heartbeat so, watch looking down your high and mighty long noses at those less fortunate then yourself because you're always one payday away from crashing and burning and joining their ranks...
Foreclosure for Christmas. My husband is a Firefighter-EMT, he loved to take care of people. He even used to pay for other peoples groceries in the check out lane if the thought they looked down on their luck or elderly on a fixed income. He worked two jobs, at the fire dept. and the hospital. I worked at the hospital also. We had no problems, planned a trip to Ireland even. Then he got injured during a training session at the firehouse. Cervical spinal injury. Two surgeries later still in pain. Could not work at all anymore. Then I lost my job. I'm still looking for work. House is $100,000 in the red. Could not refinance. Qualify for Making Homes Affordable Act but bank refuses to work with us. Apparently they make more money in the long run by foreclosing, taking the tax write off, then selling off the property. Our neighbors are not happy that we will be leaving as we have always helped them when we could and decorate for holidays and they look forward to our halloween and Christmas decor. This will be the last Christmas in our home, but we are still going to decorate and put up all the lights. Can't disappoint all the neighbors and kids and buses of seniors for christmas.