ditadinho: Why People Struggle To Pay Rent In America

All across the nation, rent is increasing to the point of being unaffordable. This problem is particularly acute in cities, where more and more people are being burdened by their rent. This is widespread, despite the rapid economic growth after the recession. Worst of all, there’s no easy solution.

How is it that all salaries and employment levels can improve so much yet more people are struggling to pay their rent than ever before? Although incomes have increased about 4.5 percent since 2011, rent is up a massive 18.5 percent thanks to a perfect storm of factors, according to this report.

Rising Prices

Prices have been rising since the lows of the recession. These high property prices mean that property owners will charge more for rent and that people will be more inclined to rent instead of paying for a home of their own.

Another contributing factor is the sheer growth in the popularity of renting. The Nation’s Housing 2015 report from The Joint Center for Housing Studies of Harvard University’s State found that this decade is shaping up to be the biggest decade for renter growth ever. Younger people have always been more likely to rent than own, and now older households are renting more than ever with a drop in home ownership levels.

There’s more construction of new apartments and multi-family housing than in recent years, but that’s not really addressing the problem. Demand is far outpacing the supply and most of these new units are for people earning more than the national average. The general rule of thumb is that renters should only spend 30 percent of their income on housing, but the State of the Nation’s Housing Report shows that two-thirds of households couldn’t afford the median rent of this newly-constructed housing.

Just Move?

With no real solution in sight, it’s easy for someone to just tell renters to move somewhere that’s cheaper. At best, this is bad advice. At worst, it’s insensitive to the real problems faced by renters without thinking of other factors.

I witnessed the effects of high rent during my first job, where I worked in an extremely wealthy suburb outside of New York City. I had no chance of affording an apartment within five miles of the town, but that’s to be expected because it was an entry-level job. However, veteran police officers, firefighters and other important government employees were also unable to afford living in town. Some of them would come in from almost an hour away just because raising a family anywhere near that town would have been impossible on a modest salary. Having emergency responders so far away was a detriment to the town, especially when they were needed. Local politicians would pay lip service to this problem, but little was done to address it.

The “just move” argument also means less diversity. The U.S. has always been a melting pot of different ethnicities and backgrounds, and letting people get priced out affects that blend. An extreme case of this is San Francisco, where a lack of construction and sky-high prices has made it the only country in the region that’s becoming less diverse over time. Susan Fainstein, an expert on city planning who’s penned several books on the subject, writes that, “Diversity underlies the appeal of the urban, it fosters creativity, it can encourage tolerance, and it leads city officials to see the value in previously underappreciated lifestyles.”

Telling people to simply move from an unaffordable place is easy, but moving is difficult. Although an apartment might be expensive, in a way, it might be more expensive for someone to move to a cheaper apartment. A fair amount of cash is required to take on a new apartment thanks to deposits, so people living paycheck to paycheck are unable to come up with enough money to move. Alternatively, their high rents are eating away at any potential savings. Moving outside the city also means fewer opportunities, as the busier urban centers are where most of the jobs are.

No Easy Solution

It’s unknown if the apartment supply will rise to meet the levels of demand, but it could happen since renting out housing has become an increasingly steady form of income to landlords. As current trends show, most new housing ignores the needs of median wage earners.

What could really make a difference would be people’s attitudes changing. Instead of forcing people to be move, the root issues of a lack of diversity in housing options and insufficient salaries should be looked at.

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