About one-third of U.S. households rent rather than own. Renters are disproportionately lower income, less educated, and younger. Of course, the public policy concern is not really about a group of college students or graduates sharing rental housing, for example, but instead about a group of college students or graduates sharing rental housing, but instead about It concerns adults with incomes and parents with families. income. Lauren Bauer, Eloise Bartis, Wendy Edelberg, Sophocris Goulas, Noadia Steinmetz-Silver, and Sarah Wang of the Brookings Institution's Hamilton Project introduce some basic facts in .10 economic facts about rental housing” (March 2024).
When you think of rental housing, do you think of an apartment complex with dozens of units, or do you think of a small rental property? In the U.S. housing market, a landlord may be surprised to realize that she has a 50-plus rental building and almost as many total rental units in one building. yeah. When thinking about rental housing policy, remember that it is not just an issue for large investors with large numbers of rental properties, but also the incentives that apply to very large numbers of small units. That is important.
Although the number of vacant rental units is low by the standards of the past 20 years, new construction of rental units appears to be on a slight upward trend through 2022 and most of 2023.
New rental prices have skyrocketed during the pandemic, as shown by the three green lines representing various surveys of new rental prices. Existing rental prices have not increased during the pandemic, in part because the federal government passed rules that temporarily made it effectively illegal to evict rental apartments. However, as the figure shows, from 2022 to 2023, the rise in new rental prices began to affect existing rental prices.
For households in the middle fifth of the income distribution, rent typically amounts to about 28% of income. For those in her fifth position from the bottom of the income distribution, i.e. those with low incomes to begin with, rent in recent years has amounted to 34-36% of total income. Federal housing assistance is not particularly high. The authors of the Hamilton Project explain:
Figure 8 shows annual federal spending on housing assistance per potentially eligible household (defined as a household with income below 200 percent of the poverty threshold for a family of four) from 2005 to 2022. The annual housing assistance amount per household is very low compared to the average housing. It costs money. During this period, annual federal housing assistance doubled from $475 per eligible household per year (totaling $23 billion) to $941 per eligible household per year (totaling $49 billion). Meanwhile, the median monthly asking rent in the United States in November 2023 was $1,967 (Redfin 2023).
In many cities, the waiting list for those eligible to receive a home purchase voucher can be several years long.
Like many economists, I'm ambivalent about providing specific coupons for housing rather than providing extra cash to help low-income people make the life tradeoffs they think are best. But the U.S. political system keeps cash payments to the poor relatively low, often tied to work, while providing a variety of benefits, such as Medicaid for health care, food stamps for food, and housing vouchers for rental housing. has preferred to allocate support to specific areas.
For previous posts on rental housing in the US, see below.