It's Not Your Imagination, Rent Is Less Affordable Now

The rent: is it too damn high? A new economic research paper finds: it is.

A new study by three economists, published by the National Bureau of Economic Research, establishes a few facts that may be useful in helping to assure you that no, you’re not crazy—it really is getting harder to pay for a roof over your head. Try dropping these in your next argument with your landlord:

Since 1970, “the price of housing (or shelter) services has risen almost 40 percent relative to other goods.”

During the same time period, “the percentage of households facing ‘extreme’ [costing more than 50 percent of their income] housing affordability burdens rose from 16 to 28 percent, while the share facing ‘moderate’ [costing more than 30 percent of their income] burdens rose from 30 to 53 percent.”

In 1970, the median renter spent a fifth of their income on rent; now, that number has risen to nearly a third of their income.

Income and wealth inequality have risen drastically since 1970, and renters as a group have seen smaller gains than homeowners. And households today have fewer people on average than they used to (they “have shrunk in size by almost 30 percent”)—which raises housing demand and exacerbates the affordability crisis for renters even more.

So what is the extremely common-sense conclusion by the authors of this research paper? “The ‘affordability crisis’ in housing is deeply tied to the overall well-being of households, particularly at the bottom of the income distribution,” they write. “Therefore, policies and regulations that raise rents by creating artificial shortages in housing supply may have particularly concerning distributional consequences.”

BUILD MORE HOUSING.

[ The full paper]