A Look at the Harvard Joint Center for Housing Studies’ America’s Rental Housing 2022 Report

Shifting Trends

Demand

A large share of the growth in America’s rental market has catered to higher-income households. With the number of older, high-income renter households at a record high, investors have seen lucrative returns on large, high-quality buildings with little incentive to build for lower-income households. Between 2009-2019, the number of renter households with an income of $75,000 and above rose by 48.4% as the number of renter households earning $15,000 – $29,999 (an income level that dominated the rental market share in 2009) fell by 4.6%. Where high-income renters represented a minority of renters in 2009, they represented the majority of all renters in 2019.

Supply

To satiate the demand for high-quality rental housing, there has been a boom in new construction of single-family and large, multifamily apartment buildings with 20 or more units. Since 2010, 1.8 million of the 3 million newly constructed rental housing structures have been large, 20+ unit buildings. Smaller apartments (2-4- or 5-19-unit buildings) that have historically catered to lower-income families added just 350,000 and 829,000 buildings, respectively, between 2009-2019.

As new rental construction has shifted to higher end, amenity-rich structures, there has been a relative loss in the number of low-cost units. As the median asking rent for new apartments rose more than $100 between 2019-2020 (from $1,604 to $1,715), the nation’s supply of low-cost rentals continued to dwindle, losing an estimated 3.9 million units charging $600/month or less between 2011-2019. Where low-cost rental units represented 32% of the entire rental market in 2011, they represented just 22% in 2019. “Robust new construction of larger properties” dominated new development, accounting for 89% of all completions between 2014-2019. With higher monthly costs, these new, professionally managed apartment buildings are out of reach for most low-income families.

In the fourth quarter of 2021, the rental vacancy rate dropped to 5.6%, its lowest level since the mid-1980s, emblematic of the severe shortage of affordable supply of homes for both rent and for sale. Renters seeking to purchase a home for the first time are increasingly outcompeted for the limited supply of entry-level homes on the market and are forced to turn to “rental housing temporarily or remain in rentals longer than planned.” As Harvard’s JCHS explains, “While the growing presence of higher-income households in the rental market has propped up demand in recent years, it has also fueled competition with moderate- and lower-income households for housing, especially in supply-constrained areas.”

Federal Government Assistance Does Not Match Need

The current federal response leaves 13.3 million of the 17.9 million households eligible for the Housing Choice Voucher program without government housing assistance. As Harvard’s JCHS argues, the federal government “must now take bold, far-reaching measures to shore up the housing safety net and expand the affordable rental housing supply.”

Conclusion

Any meaningful remedy to the current state of rental instability must ensure an adequate supply of affordable and available homes exists for Americans at every income level. BPC has previously identified several bipartisan policies that would shore up the supply of affordable homes for those who need them the most. These proposals include addressing restrictive zoning and land use policies; expanding the Low Income Housing Tax Credit; and preserving public housing.

For more information on the housing supply challenge and potential solutions, check out these resources from BPC’s J. Ronald Terwilliger Center for Housing Policy.