America's Looming Rental Crisis
Earlier this year there had been many comments from people online that the rates that Arbor Village is asking for the residential units were overpriced. I compared the Arbor Village rates to other units around town and they ended up being similar to what others apartments complexes were charging. Many of the initial comments were from homeowners saying things like the rental rates are way more than what they are paying for their mortgage. The reason for this can be contributed to the law of supply and demand, as a recent post on CityLab highlights:
Rents are going up and up as more people compete for a number of units that isn’t growing fast enough. The number of completed new housing units built for rental has grown slightly since 2011, but the numbers are still far below pre-recession levels—and even further below what we really need.
In response to this problem, former single-family, owner-occupied homes in far-flung suburbs are being transformed into rental housing as a sort of stop-gap measure in some parts of the country. In others, rents just go up and up.
Renters are then, unsurprisingly, more “cost-burdened” than homeowners, according to the same Harvard Joint Center for Housing Studies report. About half of all renters were “cost burdened,” paying more than 30 percent of their income for housing, compared to less than a third of homeowners. And a whopping 28 percent of renters paid more than half of their incomes for housing.
Part of this may be due to underlying economic realities for these two groups. Homeowners, by definition, have enough savings and income to buy their homes, while many renters tend to have far fewer such resources. The Harvard study found that nearly half of the increase in renter households came from households earning under $30,000 per year.
These are the makings of a very different kind of housing crisis, one that is making affordability the real watchword of today’s housing market.
Lack of rental supply in and of itself is not a reason why we should go about allowing increased population density just anywhere. But it is yet another reason why an increase in population density in a mixed-use Mountlake Terrace Town Center, near transit, makes sense.
Read the full story at CityLab: America's Looming Rental Crisis.