The Price Of Rent Is Soaring

Dated: 01/18/2016

Views: 230

Nearly half of renters in the U.S. are struggling to afford their monthly payments.

Experts generally recommend keeping your housing costs around 30% of your monthly income. But the number of "cost-burdened" tenants -- those who spend more than 30% of their income on rent -- rose to 21.3 million people last year, according to Harvard's Joint Center for Housing Studies.

Of those, more than 26% are "severely cost burdened" and spend more than half of their income to cover rent.

Related: Cities with the largest rent increases

Here's the problem: rents are increasing much faster than wages.Inflation-adjusted rents increased 7% from 2001-2014 while household incomes dropped 9%, the report showed. At the same time, rising demand for rental units has pushed the national vacancy rate to a 30-year low, driving prices even higher.

"These trends have led to record numbers of renters paying excessive amounts of income for housing, with little prospect for meaningful improvement," the report said. The median rent for a new apartment climbed to $1,372 last year, a 26% increase from 2012.

While low-income households are the most likely to have a hard time making ends meet, middle-income households are increasingly struggling to make rent. The number of burdened households with an income of $45,000-$74,999 jumped to 21% in 2014 from 12% in 2001.

Related: Here's how to set up a budget

Builders have ramped up construction recently, but supply hasn't kept up with demand and new units tend to focus on the higher end of the market. Land costs and regulations make building expensive, and developers need to make a return on their investment.

Higher rents put a strain on household budgets. Families that paid more than half of their income on rent spent 38% less on food last year and 55% less on health care, according to the report.

The 2008 housing crash has led to record rental demand with 37% of households renting in 2014 -- the highest level in more than 45 years.

Find homes for sale

CNNMoney (New York)First published December 9, 2015: 3:11 PM ET

Blog author image

Michelle Cantrell

Michelle is a native of Southwest Missouri and has twenty-five years of experience in selling real estate in the greater Springfield area! Michelle specializes in all price points, including new const....

Want to Advertise on this Site?

Latest Blog Posts

Americas Best Press Release

For Immediate ReleaseContact: Steve MurrayJuly 10, 2018PH: 303-741-1000 [email protected] Michelle Cantrell Group was Named to the 2018 REAL Trends America’s Best Real Estate Professionals

Read More

2018 The Thousand

The Michelle Cantrell Group made the list of '2018 The Thousand' top real estate teams! The Thousand, which is advertised in The Wall Street Journal, is a REAL Trends exclusive ranking of the top

Read More

Sunflower Festival Begins To Bloom

Golden Grove Farms’ Sunflower Festival kicks off July 17. Family-friendly atmosphere meets beautiful venue as attendees cut their own flowers, participate in games and crafts and listen to live

Read More

1645 North Eagle Valley Nixa

 For more information on this property, click .

Read More