Rising Rental Costs Strike More Households
Rental expenses are climbing faster than wages across many parts of the country – an issue that has just intensified in the previous year, as indicated by a developing number of housing studies.
"Rents have soar so much and wages haven't kept pace, so we have an affordability crisis in some of our major metropolitan areas for the middle housing market," Kenneth Rosen, director of the Fisher Center for Real Estate and Urban Economics at the University of California, Berkeley, told The Wall Street Journal.
Financial analysts are blaming the crisis on supply and demand issues , with a limited supply of rentals with more renters that has prompted prices to rise across the country.
From 2003 to 2013, the share of renters aged 25 to 34 who are considered cost-burdened rose from 40 percent to 46 percent, as per a report by Harvard University's Joint Center for Housing Studies. Market analysts normally consider a family unit "cost-burdened" if they're paying at least 30 percent of income on rent.
Rental rates increased 5.2 percent from a year prior, coming to a 15-year high, as per MPF Research. The West saw the highest increases in rental expenses, with Oakland, Calif., posting the biggest increase at 11.8 percent in the previous year.
Mid-tier cities are also seeing prices climb. For instance, Greg Willett, VP for examination and investigation at MPF, singles out Nashville as one city "getting meaningfully more expensive." Rents there rose 5.1 percent in the second quarter conpared with a year before and are outpacing wages, which was at a 2.4 percent growth between 2013 and 2014.
"We have an issue," says Fabian Bedne, a Nashville district council member and a sponsor of a city bill that proposes a new zoning plan to increase the supply of affordable housing "There is insufficient pool of housing available, the rents are going up, and it's making it harder for individuals."
Builders are ramping up production of apartment units across the country. However, housing analysts say that many of the new units are luxury apartments and low-income Americans are finding a limited supply.