Detroit area rents squeeze record number of residents
In Metro Detroit, household rent is growing faster than incomes and new housing is often targeted for the affluent.
That’s the result of a Harvard University study that highlights growing affordability problems in rental housing nationwide, including Metro Detroit.
“With renter incomes stagnant, last year was another record-setting year in the number of renters paying more than 30 percent of their income on housing costs,” according to the 2105 Harvard Joint Center for Housing Studies. The report will be formally released Wednesday.
Nationally, nearly 26 percent of renters pay more than half of their incomes in housing costs. While the burden of rent cost is being felt most strongly by low-income families, even moderate-income renters who earn as much as $45,000 per year are feeling the pinch, particularly in urban markets.
Metro Detroit follows that national trend, the study finds. Last year, 40 percent of local renters with incomes between $30,000 to $44,999 a year spent up to one-third of their income on rent. The median rent paid in 2014 for those in that income group was $930 a month, which was higher than the $910 a month median rent in 2013.
Those with lower incomes in the area have a tougher time paying the rent, the study found. Slightly more than one-third of those with annual incomes between $15,000 and $29,999 spend up to half of their earnings on rent. The median local rent paid by this income group was $740 a month last year, up from $710 in 2013. About 45 percent spent up to one-third of their income on rent, the study found.
Nationally, the decade-long surge in rental demand is unprecedented.
In mid-2015, 43 million families and individuals lived in rental housing, up nearly 9 million from 2005—the largest gain in any 10-year period on record, the study found. In addition, the share of all U.S. households that rent rose from 31 percent to 37 percent, its highest level since the mid-1960s.
The soaring demand is due to bursting of the housing bubble. Also, household incomes have also fallen back to 1995 levels and access to mortgage credit has tightened, all of which makes the path to home ownership more difficult.
Another factor is the aging of the millennial generation, born 1985–2004, which has increased the population of adults in their 20s.
But the soaring demand is not translating into more construction. Metro Detroit follows the national trend: while there is a steady new supply of structures aimed at middle-class residents and above, the new housing supply for renters with lower incomes, including those who rent single-family homes, remains low.