Harvard just released its annual rental housing report, and it's not good news for renters. While we saw the market simmer down early during the pandemic, these days, it's red hot. Translation: There is currently very high demand for rentals, but not much inventory, leading to skyrocketing prices.
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"With this resurgence in demand, the overall rental vacancy rate dropped to just 5.8%, its lowest reading since the mid-1980s," says the report.
The report also notes that rent is way up. In the third quarter of 2021, "148 of the 150 markets tracked by RealPage," with "more than half of these metros (77) posting double-digit increases." Eight markets — including Boise, Naples, and Phoenix — saw rent rise 20% or more.
Unfortunately, these housing trends disproportionately affect lower-income renters — oftentimes households made up of people of color, per the report — many of whom are still feeling the effects of reduced income due to the pandemic.
While 5% of households with incomes of $75,000 or more are behind on rent payments, a significantly higher percentage (23%) of households making less than $25,000 are in the same group. 15% of households with income between $25,000 to $50,000 are also in the same situation.
And it's not getting better in the sales market, either. "According to Zillow data, typical rents were rising at an 11% annual rate in September 2021, up from 1.2% a year earlier. At the same time, typical home values escalated from a relatively strong 5.7% annual rate to an astounding 18.9%," says the report.
The data points to an increasing need for large-scale solutions for these challenges, according to the report.
"The pandemic has brought the long-simmering rental affordability crisis to the fore, and the current administration supports large-scale investments in both new and existing rental housing, as well as in subsidy programs" Chris Herbert, Managing Director of the Harvard Joint Center for Housing Studies, said in a statement. "By creating a comprehensive, well-funded housing safety net, the nation has the opportunity to pull millions of households out of poverty, address longstanding inequities in housing delivery, and ensure that every household has access to a decent and affordable home."
You can see the full Harvard report here.