Most of these apartments will remain vacant if their owners will choose to keep the current rent rates. The housing market will have to make the difficult choice of lowering prices in order for this current crisis to be solved.
With the current state of the average income which a middle-class family has, it’s not surprising that rent problems are not only affecting the low-income population. This phenomenon is partially created by the effects of the housing crash which came after the house bubble peak of 2005.
Almost 49% of families currently residing in a rented establishment are paying over 30% of their monthly income only on rent. This reaches an aggravated state in low-income families, who because of the constantly growing rents are forced to pay over half of their income towards rent.
By paying 50% of their salary in order to keep residing in their current household, families are compelled to pay less for their retirement savings, food and especially healthcare. The numbers are staggering, with healthcare payments dropping over 55% in 2014 due to the stagnation of wages when compared with the rise in rent payments.
The current grapple with rent payments that Americans are currently enforced to face on a monthly basis is also partially caused by the low levels of vacancy rates. These rates have reached a point of 7.1% in the past three-quarters of 2015.
Even if it is commonly considered that this rise in rents is associated directly to the inflow of 20-year-old former college students opting to pay for their own housing, this is not entirely true. Taking into accord the numbers released by the Joint Center for Housing Studies from the Harvard University, this boom is also attributed to the high prices of newly built apartments, usually reaching a six-figure price.
The number of families which are presently struggling with rents is around 21 million across the US, mainly due to the fact that incomes have dropped about 9% last year and are not really showing a substantial increase in the near future.
Even if new apartments and houses are being built around the nation each month, their high price makes only 10% of them actually affordable. The different housing assistance programs are struggling to help low and middle-class families, but the gap is proving too big to fill in a usual manner.
One of the things which can help people overcome this problem is the Low-Income Housing Tax Credit, but even this cannot solely defeat this challenge. Even though it can sustain affordable rents as well as continue the production of low-priced housing, the current rent rates are still higher than expected.
It is unfortunate that rent problems are not only affecting the low-income population, targeting both middle-class families as well as people between 55 and 69 years old. The demand bumped by the number of millennials with a college education who opt for a rental apartment is currently on the rise, overthrowing the current supply. Rent is not spared from the phenomenon which affects every side of the market: if the demand is higher than the supply, the prices go up.
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