Housing Complex

Rental Housing Is Getting Unaffordable. What’s to Be Done?


Yesterday, Harvard's Joint Center for Housing Studies released a report on the rise of renting in America—and the parallel rise in the housing-cost burden for renters. The long trend toward homeownership, the study finds, has reversed, with the rental share of households climbing from 31 percent in 2004 to 35 percent in 2012. Meanwhile, the percentage of renters paying more than 30 percent of their income for housing—considered the threshold of affordability—rose from 38 percent to 50 percent between 2000 and 2010, and the share of "severely burdened" renters, paying more than half their income toward rent, increased from 19 percent to 27 percent.

Compare that to a story today from Annie Lowrey in the New York Times Magazine on how Americans are increasingly staying put in their cities. The percentage of people moving across state lines is now half what it was in the 1990s. You'd think that geographic mobility, considered a key ingredient in America's economic success, would logically be tied to renting, while homeowners would have more trouble picking up and moving. So what gives?

Part of the answer lies in where people are moving to: cities. Central cities are home to 43 percent of renters, the Harvard study finds, while suburbs—containing 49 percent of the population—have only 40 percent of renters. This shouldn't come as any surprise to residents of the District, which has been gaining around 1,000 residents a month. Reversing the flight to the suburbs of much of the second half of the 20th century, people want to live in cities now. Not only are they moving there as college graduates; they're increasingly staying there as they start families. And in cities, many or most people rent. (Here in D.C., as of 2011, the figure was 55 percent.)

This is a great thing for cities, particularly D.C., which needs population growth to make up for the fact that most people who work here don't live here and don't pay taxes here. (Not to mention all those federal facilities that aren't contributing property taxes.) But it also causes problems. Particularly when it comes to housing.

What conclusions can we draw from the Harvard study? The study itself posits two: "Part of the solution is to persist in efforts to reduce regulatory barriers to construction of rental housing in general, because expanding the supply helps to reduce rent inflation for all households. But efforts to develop low-cost rentals deserve particular attention."

The first element is the Matt Yglesias theory: The rent is too damn high because we're artificially keeping it that way with restrictions on new supply. Just today, in fact, he reiterated that argument, blaming zoning for both limiting supply and keeping that supply out of historically desirable neighborhoods like those west of Rock Creek Park. When wealthy people have nowhere to move in these neighborhoods, they'll opt for places that are getting new supply, like Logan Circle and Columbia Heights. Rents there will then increase, and lower-income residents will be forced out.

This, of course, is also an argument for changing the Height Act to allow taller buildings, particularly in areas where the demand already exists. (Relatedly, see this Washington Post story today on just how much value people place on location when it comes to office rents.) Sure, building luxury high-rises downtown won't directly make housing more affordable for anyone. But it will give those wealthy folks a place to move that's not, say, Columbia Heights, so that when new units come to Columbia Heights, there won't be the same upward rent pressure from those well-heeled would-be residents. This will only become more important as the District's population continues to climb.

Still, while loosening regulatory constraints is helpful in the long run, the second element is needed for short-term (and long-term) relief: building and preserving more affordable housing. Mayor Vince Gray has committed $187 million to affordable housing. Ward 5 Councilmember Kenyan McDuffie has introduced a bill that would require a portion of each housing development on public land to be affordable. These measures are a good start, but won't bring D.C.'s housing burden from high to zero.

Which raises the question: Is the 30 percent affordability threshold no longer realistic? Half of all renters now pay at least 30 percent of their income toward housing. That number may only increase as more people move to cities and rental housing gets more expensive. While the price of a Mac laptop has declined over the past decade and a half and the price of milk has increased slightly, any longtime D.C. resident will tell you that rents have tripled or quadrupled in many neighborhoods in that time period. Most moderate-income people I know pay at least a third of their after-tax income toward rent. (For low-income people, it's overwhelming: According to the study, a full 71 percent of renters making under $15,000 spend more than half their income on rent.) As much as we need to fix the affordability issue, we may need to fix the formula as well.

Graph from the Harvard study

  • John


    Do you seriously think people will pay market to live in a building with more than 30% subsidized? Maybe workforce subsidized, but not something even more so. More than workforce would be pressing it at 30%.

  • billy

    Interesting piece, but I'm a little baffled by the proposal in the concluding paragraph. If rent is increasing at a far faster rate than income or other goods/services, I'm not sure how that points to a problem with the affordability formula. More likely, it underlines the notion that the rental market is massively distorted and needs to be fixed.

    Changing the formula suggests that perhaps people should be spending more on housing than they ever have before, which I doubt excites many city residents (outside of prospective landlords).

  • John

    Oops, you meant the 30% of income stat. I thought you were talking 30% of units from Kenyan's proposal.

  • h st ll

    no discussion of how one doesn't need a car to live in a city, rendering the 30% benchmark obsolete?

  • Pingback: Rental Housing Is Getting Unaffordable. What’s to Be Done? | MemePosts

  • Really?

    "no discussion oh how one doesn't need a car to live in the city"

    Really? I'm going to take a wild guess you don't have kids. Try grabbing a bike with a sick kid. I could go on but this was a silly comment.

  • Mrs. D

    Why grab a bike? If I was paying 30% of my income in rent, I would be living in a place that was on top of the Metro and probably had Zipcar right downstairs. Since my doc's office is a combined total of 6 blocks and 1 Metro stop away from my MUCH CHEAPER (owned) home, NBD. Driving there is, in fact, more of a hassle (parking there is pretty tight). I'm taking my dog to the vet on the bus this weekend. Then I'm not on the clock of a meter OR Zipcar, should something come up and the appointment runs long.

  • Pingback: Morning Links - Loose Lips

  • h st ll

    Really? - try again, lame. Father of a toddler. We take the bus to the Doctor. And have a very high quality of life. Stop riding your kids around in them death machines (you do know car crashes are the number one cause of death for kids, right?)

    Oh, and I bet my pockets are way fatter than yours. Lol!

  • Pingback: District Line Daily: What a Zoo - City Desk

  • Pingback: Will D.C. keep its ‘Promise’?

  • jorge

    The last paragraph doesn't quite make sense. you state the problem is with the affordability criterion, but your evidence suggests that the problem is with affordability itself. You cite no evidence to suggest that the formula is actually flawed.

  • noodlez




  • Todd

    One thing that I think contributes to the problem in DC is that it seems all new construction and renovations are "luxury" apartments. I think we may reach a point where the only people who can live in DC will be the wealthy and those who qualify for subsidized housing, cutting out everyone in between.

  • Ryan

    The real measure of affordable living should be the cost of housing + transportation. It is much cheaper for me to live in Columbia Heights and walk to most places I need to go, or use a $75 bikeshare membership all year, than it would be to live out in the suburbs and own a car. So much cheaper that I can afford to do things like hail a cab if the need for motorized transport arises. If that were a frequent occurrence I could easily add a zipcar or car2go to my transportation options.