Industry NewsRentals

Harvard Joint Center for Housing Studies unravels rise of rental prices

Most new rental construction is intended for upper-income renters, leaving low- and middle-income renters out in the cold
  • A report by the the Harvard Joint Center for Housing Studies found that more than a third of Americans live in rentals with many spending more than a third of their income on housing.
  • Over the last decade, the cost of new unit construction has been on the rise, the price of which gets passed on in the form of rent.
  • To allay the problem, experts suggest that local governments offer publicly owned land at reduced or no cost to developers, particularly in high-cost metro areas.

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The gap between current rental housing construction and the needs of lower-wage renters is widening, and it’s because new units cater to the upper end of the income spectrum, according to Harvard University’s Joint Center for Housing Studies (JCHS). In a Jan. 12 post on JCHS’s Housing Perspectives blog exploring the rise in rental prices, Research Assistant Irene Lew noted that in 2013, about 40 percent of new units charged at least $1,000 per month. By comparison, in the 1960s and 1970s, when multifamily construction hit a peak thanks to federal subsidies, only about a quarter of rental units charged that much. In 2014, the median asking rent for new market-rate apartments was about $1,400 per month, an increase of 25 percent since 2012. Lew’s post comes on the heels of a report that the JCHS issued last month, America's Rental Housing, which concluded that about 37 percent of all U.S. households live in rentals with a large portion paying more than 30 p...