Rents are becoming unaffordable for many Americans, even those in the middle class. Because the cost of buying property, maintaining it, and covering property taxes has jumped, so have the costs of renting.
A new report from the Joint Center for Housing Studies of Harvard University calculates that 10.9 million renters spent more than 50% of their income on housing in 2018. That equates to one in four renters. Moreover, there were 6 million more cost-burdened renters in 2018 than in 2001. Households with incomes of at least $75,000 accounted for more than three-quarters of the growth in renters from 2010 to 2018.
Affordable housing will continue to be more and more out of reach as long the government keeps getting in the way. Regulations and property taxes are a huge burden when it comes to affordable housing.
According to Market Watch, a renter is cost-burdened when she or he must spend more than 30% of her income on housing costs and severely burdened when they spend more than half of their income on those expenses. The problem is much more predominant among lower-income Americans — 72% of renters earning less than $15,000 a year were severely burdened as of 2018, as were 43% of renters earning between $15,000 and $30,000.
“Even as the overall share of cost-burdened renters has receded somewhat, the share of middle-income renters paying more than 30 percent of income for housing has steadily risen,” researchers wrote.
Nearly 56% of renters earning between $30,000 and $45,000 a year were cost-burdened as of 2018, up 5.4 percentage points from 2011. That was the largest increase in the share of cost-burdened renters across any income band in the country.
Among those who earn between $45,000 and $75,000 annually, this share increased 4.3 percentage points to 27%. The Pew Research Center defines the middle-income American household as a three-person family that earns between $45,200 and $135,600 annually. –Market Watch
“The spread of cost burdens up the income scale coincides with the ongoing decline in lower-cost rentals,” researchers wrote. “While the improving economy has increased the share of middle-income renters, earnings growth has not caught up with the rise in rents.”
Completely eliminating the unconstitutional property tax is only one step in making renting and housing, in general, more affordable. California could benefit from an elimination of burdensome regulations that have made building more apartments or houses impossible. When supply is low, as housing is in California, demand is high increasing the price. The simple and finite rule of supply and demand can be applied here, and when politicians start legislating, it will always prevent prosperity.