Unaffordable rental market hits record heights

A Harvard University study shows that people across all income levels have been affected by rising rents. That means Americans are handing over a bigger portion of their paychecks to housing costs.

CAMILA DOMONOSKE, HOST:

Rent has skyrocketed in the United States. That means Americans are handing over a bigger portion of their paycheck to their housing costs, leaving less money for things like food, electricity and commuting. The pandemic and inflation have both played a role in pushing rents higher, but Whitney Airgood-Obrycki, senior research associate at Harvard’s Joint Center on Housing Studies, says it’s not all bad news.

WHITNEY AIRGOOD-OBRYCKI: In some markets, rents are actually going down now, but we’re in such a hole from those massive rent increases that it’s going to take a little while to get ourselves out of that.

DOMONOSKE’s Jennifer Ludden covers housing and joins us now to talk about how we got here and what it would take for things to change. Hi, Jennifer.

JENNIFER LUDDEN, BYLINE: Hi there.

DOMONOSKE: So as we’ve heard, a record-high share of people are facing painfully high rents. How did the U.S. housing market get to this point?

LUDDEN: So there are a lot of factors, but I would say there’s one big one that underlies them all, and that is that the U.S. has a massive housing shortage. It goes back to the 2008 housing crash. A lot of homebuilders went out of business, and really, for a decade, economists say the U.S. did not build enough. And that has led to an incredibly tight market, so that helps explain why.

And then we had the pandemic, and people started going remote, moving all over the country. And you really saw rents skyrocket – double-digit increases because there just was not a lot out there. In some places, vacancy rates hit 1- and 2%.

Then on the heels of that, there was high inflation and skyrocketing mortgage rates. So that meant a lot of people who wanted to buy a home got priced out….