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Rent Prices Are Easing, But Renters Are Still Stretched, Study Shows
January 31, 2024
Rent prices are starting to come down after a period of record-high increases, but renters are still spending more than they can afford, according to a recent study from Harvard.
Prices have been falling in recent months as increased supply boosts vacancy rates and demand slows from the record highs set in 2022. In December, the median asking rent price in the U.S. was $1,964, down 0.8% from a year prior, according to the real estate site Redfin. That marks the third consecutive month that has seen an annual decline, following a drop of 2.1% in November and 0.3% in October.
Prices are expected to continue moderating as supply is boosted by new construction. Redfin’s data shows that the number of newly constructed apartment buildings is near the highest level in more than 30 years, and the number of those under construction is also close to a record.
Moderating rent increases will be welcome news to renters, an increasing share of whom are “rent burdened,” according to a study from the Joint Center for Housing Studies of Harvard University.
Researchers found that 50% of American renters spend more than 30% of their income on rent and utilities, a level that makes it difficult for households to meet their other essential expenses. The share of “rent burdened” renters jumped 3.2 percentage points between 2019 and 2022.
As a result of higher rents, the average residual income, or the amount of money available after paying for rent and utilities, has dropped significantly, particularly for lower earners, the study found. The study found that households with annual incomes below $30,000 had a record-low median residual income of $310 a month in 2022.
