Study: Affordable Rentals Scarce in U.S.

• April 26th 2011

by Mark Wellborn

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It appears that this contest couldn’t have come along at a better time.

A study from Harvard University released today reveals that the number of “renters who spend more than half their income on housing is at its highest level in half a century,” The Washington Post reports. Specifically, 26 percent of renters nationwide spent over half their pre-tax household income on rent and utilities in 2009.

Most personal finance experts say you should spend no more than 35 percent of your gross income on rent whether you live in a high- or low-cost area. In October of last year, Delta Associates released a report in which it noted that rents in the DC area had increased by 7.3 percent for Class A and B apartments, year-over-year. Specifically, the average rent in the DC area was $1,643 a month, up from $1,507 a month in September 2009. By the 35 percent gross income rule, DC area residents would have to make at least $56,300 a year to comfortably pay the current monthly rent.

The Post writes that the scarcity of rental housing is due to a variety of reasons, including supply not keeping up with a demand:

In many areas, the demand is driven by families who lost their homes to foreclosure during the housing bust and ended up searching for rentals. Meanwhile, as the job market recovers, more newly employed young adults appear to be seeking their own apartments instead of living with their parents, putting even more upward pressure on rental rates.

Earlier this month, an analysis released by Reis Inc. reported that rental vacancies across the country fell to the lowest level in more than two years, dropping from 6.6 percent in the fourth quarter of 2010 to 6.2 percent in the first quarter of this year.

This article originally published at http://dc.urbanturf.production.logicbrush.com/articles/blog/study_affordable_rentals_scarce_in_u.s/3386.