The Joint Center for Housing Studies (JCHS) of Harvard University published its annual report, America’s Rental Housing 2022, describing a “surging rental market, starkly divided by race and renter income.”
Key Findings
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Rental markets rebounded rapidly – Marked by low vacancy rates and a surge in rents, researchers have observed that rental markets have rebounded rapidly since 2019. Rents dropped modestly in 2020 but rebounded quickly and rose the fastest in 20 years by 10.9% in the third quarter of 2021. Vacancy rates have also dropped to 5.8 percent – its lowest level since the mid-1980s.
Note: Apartment quality is based on the CoStar Building Rating System for professionally managed market-rate apartments in buildings with five or more units (Source: JCHS tabulations of CoStar data).
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Construction is strong but demand is surging – Multifamily and rental construction has been very strong in recent years. Through November 2021, multifamily housing construction has grown to a three-decade high of 466,000 units, far exceeding the 350,000-unit annual average. In 2020, 375,000 multifamily units were completed, the highest number since the 1980s. However, new rental housing construction has been highly constrained to a few neighborhoods, limiting the supply of newly built units for many moderate- and lower-income households. The median asking rent for newly completed apartments jumped from $1,606 in the first quarter of 2020 to $1,715 the next year. The number of units renting for less than $600 fell by 3.9 million between 2011 and 2019, reducing their share of the rental stock from 32 percent to just 22 percent.
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Higher-income households account for most growth in renters – Nearly 70 percent of total renter household growth between 2009 and 2019 was driven by higher-income households. The number of renters making at least $75,000 jumped by 48 percent over the decade, to 11.3 million.
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The pandemic exacerbated existing affordability challenges - In 2019, 83 percent of households making less than $15,000 paid a disproportionate share of income for housing. Of these households, 72 percent faced severe burdens. The cost-burdened share of renter households making less than $30,000 also topped 80 percent, where it has held for 10 years.
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Unprecedented resources stabilized renters, but the need for a housing safety net continues – The pandemic brought about unprecedented efforts to stabilize renter households, including eviction moratoriums, more than $46 billion in emergency rental assistance, and various income supports. These efforts, in addition to landlord flexibility and court closures, helped keep eviction filings about 40 percent below historical averages in November 2021. However, federal subsidies fall well short of need. In 2019, about 13.3 million households with incomes below 50 percent of area median were eligible for rent subsidies but unable to secure that support because housing assistance is not an entitlement. As a result, some 7.8 million of these households lived in severely inadequate housing, spent more than half of their incomes on housing costs, or both.
The study concludes that continued policy needs should reinforce the housing safety net, reduce barriers to multifamily construction, increase accessibility, make housing units more energy efficient and fortified against growing threat of climate change.