Renters Will Become Increasingly Cost-Burdened Over the Next Decade
In a new publication, Projecting Trends in Severely Cost-Burdened Renters: 2015-2025, the Joint Center for Housing Studies at Harvard University and Enterprise Community Partners projects that the share of renters spending more than 50 percent of their income on housing will rise by at least 11 percent in the coming decade. The research team posed three different scenarios: a baseline scenario in which there is no real growth in income or rent over the next decade, a scenario in which rent growth outpaces income, and a scenario in which income outpaces rent growth. In all cases except for one in which income outpaces rent by at least 1 percent, the number of extremely cost burdened households would increase. In particular, older Americans, Hispanics, and single-person households are expected to be impacted the most.
Major findings from the baseline scenario:
- The only factor driving changes in the number of renters who are cost-burdened are demographics. Severely cost-burdened households would increase by 11 percent, from 11.8 million in 2015 to 13.1 million in 2025.
- Most burdened would be older adults and millennials; that is, all else being equal, an increase in younger and older households over the next decade will increase the number of severely cost-burdened renters. Households of people ages 65-74 and 75+ are projected to increase by 42 and 39 percent; young adults ages 25-34 and 35-44 would increase by 12 percent.
- The largest percent growth in severely cost-burdened households would be married couples without children who are mostly baby boomers, at 17.6 percent.
- The growth of millennials will drive up the number of married couples with children who are severely cost-burdened by 12.6 percent.
- Even two-income households will contribute to the increases in severely cost-burdened renters over the next decade.
- Hispanic households will have the largest increases in severe renter cost burdens, increasing by 27 percent, with Asians and non-black minority households increasing by 23 percent, and black households increasing by 11 percent.
Major findings from other scenarios:
- In scenario 2, where rent outpaces incomes, every .25 percentage point increase in rent over income makes approximately 400 thousand more renters severely cost-burdened. Because more white families become burdened in this scenario, demographic disparities would be leveled out. This scenario is considered likely, and would probably increase severely burdened households by 1.7-3 million.
- In scenario 3, if income outpaces rent growth by .25 percentage points, in most possible cases, the cost-burdened would increase until income is 1 percent higher than rent. If income rises to 1 percent above rent, the severely rent burdened would drop by 1.4 percent, or by fewer than 200 thousand households, over the next decade.