NEWS ANALYSIS: Tenants Across the Nation Face Major Rental Increases

NEWS ANALYSIS: Tenants Across the Nation Face Major Rental Increases

A New York Times story on Monday, April 14, 2014 highlights a dilemma facing people who are priced out of for-sale housing -- or who prefer to rent. The story is headlined:

 

In Many Cities, Rent Is Rising Out of Reach of Middle Class

By SHAILA DEWAN  

Here's the link:

http://www.nytimes.com/2014/04/15/business/more-renters-find-30-affordab...

And here are the first five paragraphs from the story:

MIAMI — For rent and utilities to be considered affordable, they are supposed to take up no more than 30 percent of a household’s income. But that goal is increasingly unattainable for middle-income families as a tightening market pushes up rents ever faster, outrunning modest rises in pay.

The strain is not limited to the usual high-cost cities like New York and San Francisco. An analysis for The New York Times by Zillow, the real estate website, found 90 cities where the median rent — not including utilities — was more than 30 percent of the median gross income.

 In Chicago, rent as a percentage of income has risen to 31 percent, from a historical average of 21 percent. In New Orleans, it has more than doubled, to 35 percent from 14 percent. Zillow calculated the historical average using data from 1985 to 2000.

 Nationally, half of all renters are now spending more than 30 percent of their income on housing, according to a comprehensive Harvard study, up from 38 percent of renters in 2000. In December, Housing Secretary Shaun Donovan declared “the worst rental affordability crisis that this country has ever known.”

Apartment vacancy rates have dropped so low that forecasters at Capital Economics, a research firm, said rents could rise, on average, as much as 4 percent this year, compared with 2.8 percent last year. But rents are rising faster than that in many cities even as overall inflation is running at little more than 1 percent annually.

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 Obviously, I can't afford to have Zillow -- or anyone else -- provide a tailor-made study for me, but Andrea Hurst of Irvine, CA-based CoreLogic graciously provided data from the second quarter of 2013 that confirms the facts in the Times' story.

For Class A apartments -- more expensive units -- rents in Portland, OR rose 22.3% from the second quarter of 2012 to the second quarter of 2013 -- from $1,056 to $1,291 a month. 

Phoenix recorded a 7.3% increase for the same period, from $960 to $1,030 a month for Class A rentals.

In Chicago, rents rose 4% in the same period, from $1,443 to $1,501 a month.

San Francisco -- one of the costliest housing areas in the nation -- showed a modest 0.80% increase for luxury apartments, from $2,389 to $2,408 a month. Obviously, many renters are paying more than 30% of their income in the greater San Francisco area.

Luxury apartments in the Los Angeles-Long Beach metro area actually registered a decrease of 6%  -- from $2,331 in 2012 to $2,191 a month.

You'd expect the greater New York City area to have high rental prices, but they actually decreased 4.8%, from $2,749 to $2,618 a month. That's still very expensive, as one would expect from the area, which includes New York City, Long Island and northern New Jersey.

In more modest Class B rentals, relatively affordable Austin, TX showed a 2.4% increase, from $721 to $729.

Class B rentals in the Miami-Ft. Lauderdale area were flat at $902 a month.

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Many housing experts say the answer is more construction, but many areas are already at their limits, and affordable land is hard to find when rental projects compete with for-sale developments. It's a major problem when many renters are burdened with student loans that are at the levels of apartment rents. The answer for many: Living in their old room at the house they grew up in.

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