In 2023, the median rent-to-income ratio across all U.S. households was 31.0%. A decade earlier, in 2013, that ratio was 30.8%. In 2011, it was even higher at 31.9%. This is one of the key points often overlooked in discussions about today’s affordable housing crisis. Despite significant rent growth over the past several years, the typical household is still spending roughly the same proportion of their income on rent as they were more than 10 years ago. This isn't to downplay the real affordability challenges in today's rental market; however, the issue is more complex and bifurcated than many realize. At the upper end of the affordability spectrum are renters in professionally managed properties, who typically spend around 20% or less of their income on rent. At the other end are those facing severe affordability pressures—“renters by necessity”—whose incomes haven’t kept up with rent increases and are becoming increasingly squeezed with each rent payment. While the median rent-to-income ratio has held steady over the past decade, the affordability gap has widened. Renters at the top end are managing just fine, while those at the bottom are feeling the strain more than ever.
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Despite an uptick in new housing supply and falling rents in some markets, affordability has worsened. Analysts attribute this to the rapid rent spikes of 2021 and 2022, which outpaced wage growth and left a record 22 million renter households paying more than 30% of their income on housing. https://lnkd.in/e9n5wh8c
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Measuring Housing Affordability: Key Metrics and Their Limitations Understanding housing affordability is crucial for individuals, families, and communities. However, accurately measuring it can be complex due to the various factors influencing housing costs and people's ability to pay. Let's explore some common metrics used to assess housing affordability and their limitations: 1. Median Multiple This metric compares the median house price to the median household income. A higher median multiple suggests lower affordability. Limitations: Regional variations: Median multiples can differ significantly across regions, making comparisons challenging. Income distribution: It doesn't account for income inequality within a region. Household size: It doesn't consider the number of people in a household. 2. Housing Cost-to-Income Ratio This ratio measures the percentage of household income spent on housing costs, including rent or mortgage payments, property taxes, and utilities. Limitations: Varying costs: Housing costs can fluctuate depending on the type of housing, location, and amenities. Other expenses: It doesn't account for other essential expenses like food, transportation, and healthcare. Debt levels: It doesn't consider household debt levels, which can impact affordability. 3. Residual Income This metric calculates the income remaining after paying for housing costs and other essential expenses. Limitations: Subjectivity: Defining "essential expenses" can be subjective and vary across households. Unexpected costs: It doesn't account for unexpected expenses like medical bills or car repairs. Savings: It doesn't consider the ability to save for future goals like retirement or education. Conclusion While these metrics offer valuable insights into housing affordability, it's essential to recognize their limitations and use them in conjunction with other data and qualitative information to gain a comprehensive understanding of the issue. Remember: Housing affordability is a complex issue with no single solution. By understanding the different metrics and their limitations, we can have more informed discussions and develop effective strategies to address this challenge. #HousingAffordability #Metrics #Limitations #RealEstate #Ikonomo
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The number of US renters facing affordability issues hit 51.8% in 2023. These households are spending an unsustainable share of their income on housing, wiping out affordability gains made over the past decade. https://lnkd.in/eyzukyXe #affordablehousing #affordablehousingfinance #communityimpact
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Affordable Housing & Inclusionary Zoning Advocate. Exclusionary Zoning was the cause. Inclusionary Zoning is the cure. Zoning is the foundation of housing.
Renters are struggling more than homeowners in America’s tough housing market, report says Analysis by Bryan Mena, CNN A report from Harvard University’s Joint Center for Housing Studies released last week showed that both homeowners and renters in recent years have become increasingly burdened by climbing housing costs. The report, based on an analysis of existing data, said that nearly one in four households that own a home “are now stretched worryingly thin.” The cost burdens are even worse for renters. “For renters, the landscape is even more challenging,” the Harvard report said. “While rents have been rising faster than incomes for decades, the pandemic-era rent surge produced an unprecedented affordability crisis.” Renters who spend more than half of their household income on housing and utilities rose in 2022 to a new record high of 12.1 million, up 1.5 million from levels seen before the Covid-19 pandemic. Allocating such a high proportion of household income to rent makes them vulnerable to becoming unhoused if they face an unexpected financial issue, such as an unexpected medical bill. https://lnkd.in/gV2EvNAv
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Our 2024 State of the Nation’s Housing report pointed to significant affordability challenges for renters. Even though rent growth halted at the beginning of this year after a period of record-breaking increases, rental affordability is the worst on record. At last measure in 2022, the number of cost-burdened renter households reached a record high of 22.4 million. The cost burden rate for lower-income renters climbed to 83 percent, including 65 percent who were severely burdened. As rents outpaced incomes, lower-income renters had less left over after paying rent than ever before." Read more from Harvard Joint Center for Housing Studies https://lnkd.in/e9V_EEvd
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Measuring Housing Affordability: Different Metrics and Their Limitations Housing affordability is a critical issue that affects individuals, families, and communities. However, measuring it accurately can be challenging due to various factors influencing the cost of housing and people's ability to pay. This post will explore common metrics used to assess housing affordability and their limitations. Median Multiple This metric compares the median house price to the median household income. A higher median multiple indicates lower affordability. Limitations: Regional variations: Median multiples can vary significantly across regions, making comparisons difficult. Income distribution: It doesn't account for income inequality within a region. Household size: It doesn't consider the number of people in a household. Housing Cost-to-Income Ratio This ratio measures the percentage of household income spent on housing costs, including rent or mortgage payments, property taxes, and utilities. Limitations: Varying costs: Housing costs can vary depending on the type of housing, location, and amenities. Other expenses: It doesn't account for other essential expenses, such as food, transportation, and healthcare. Debt levels: It doesn't consider household debt levels, which can impact affordability. Residual Income This metric calculates the amount of income remaining after paying for housing costs and other essential expenses. Limitations: Subjectivity: Defining "essential expenses" can be subjective and vary across households. Unexpected costs: It doesn't account for unexpected expenses, such as medical bills or car repairs. Savings: It doesn't consider the ability to save for future goals, such as retirement or education. Conclusion While these metrics provide valuable insights into housing affordability, it's important to recognize their limitations and use them in conjunction with other data and qualitative information to gain a comprehensive understanding of the issue. Remember: Housing affordability is a complex issue with no single solution. By understanding the different metrics and their limitations, we can have more informed discussions and develop effective strategies to address this challenge. #HousingAffordability #Metrics #Limitations #RealEstate #CommunityDevelopment
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Rent vs Buy https://lnkd.in/gtXm7QJT Are you still paying your landlord Owning a home may be more realistic than you think. Use my online calculator to see if owning a home costs less than renting.
US rent prices are reaching unprecedented levels: Median asking rent in the US soared to $1,481/month in Q2 2024, marking a record high. Since 2019, these prices have surged by an astounding 56%, according to US Census Bureau data. This steep increase has led to rent now consuming about 29% of the average monthly disposable income, up significantly from 24% in 2019. Clearly, rent costs are outpacing post-tax household income growth at an alarming rate. The current trend suggests that even basic housing rentals are becoming increasingly unaffordable for many Americans. Source: https://lnkd.in/g5ZVeBb6 #RentCrisis #HousingAffordability #IncomeInequality #CostOfLiving #EconomicChallenges
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US rent prices are reaching unprecedented levels: Median asking rent in the US soared to $1,481/month in Q2 2024, marking a record high. Since 2019, these prices have surged by an astounding 56%, according to US Census Bureau data. This steep increase has led to rent now consuming about 29% of the average monthly disposable income, up significantly from 24% in 2019. Clearly, rent costs are outpacing post-tax household income growth at an alarming rate. The current trend suggests that even basic housing rentals are becoming increasingly unaffordable for many Americans. Source: https://lnkd.in/g5ZVeBb6 #RentCrisis #HousingAffordability #IncomeInequality #CostOfLiving #EconomicChallenges
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Retired - Executive Director at Redevelopment Authority of the City of Bethlehem Retired - Director of Community and Economic Development City of Bethlehem
More bad news for the affordable housing space. While the rental market remains strong, the lowest-income households are left with fewer and fewer options. Affordability is getting worse.
The number of cost-burdened renter households hit yet another record high last year. Affordability has worsened up and down the income scale, leaving the lowest-income households with less left over than ever before, write Whitney Airgood-Obrycki, Alexander Hermann, and Sophia Wedeen in a new research brief. https://lnkd.in/ea_Zaw-g
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How dramatic does it sound that Aussie families with a median income household (those that are earning $112,000 a year) can afford to purchase just 14% of homes sold across the country. That’s a sharp fall from just three years ago, when this figure was 43% of homes. Check the link in this post to read through the latest PropTrack's Housing Affordability Index Report.
