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Rents Rising, and Way Too Fast
Where will it end?
A team at the Washington Post has created a data-driven article about the insane increase in rents in the U.S., and the pressures on affordable housing as a result.
Rents continue to rise at the fastest pace in decades, making housing costlier than ever for many Americans.
Nationally, rents rose a record 11.3 percent last year, according to real estate research firm CoStar Group. That fast pace of growth remained elevated in the first months of 2022, as many parts of the country continued to notch double-digit jumps in rent prices.
“A supply-demand mismatch is making rents unaffordable,” said Dennis Shea, executive director of the J. Ronald Terwilliger Center for Housing Policy at the Bipartisan Policy Center. “The lowest-income families are being hardest hit by rising rents and a lack of supply.”
Here’s the map from the article where I selected Dutchess County, where rents are up 11.6% since 2019, back in the pandemic beforetimes.
Here’s Ulster and Orange counties NY:
Early in the pandemic, many cities, states and management companies placed limits on rent increases and in some cases, froze prices altogether, most of those measures have expired. In some cases, renters say landlords are factoring in two years’ worth of increases when leases renew.
Overall, [real estate research group] CoStar is forecasting another 6 percent rise in U.S. rents this year, about double pre-pandemic norms.
What are the impacts on our region? The pain of these rent increases is disproportionately falling on the young, people paid low wages, and Black and Hispanic families.
Nationwide, about two-thirds of American families owned their homes as of the end of 2021, according to the Census Bureau, but the same release shows a majority of Black and Hispanic families rent their homes or apartments, while just over a quarter of their White peers do the same.
Separately, 62 percent of families with heads of household under age 35 rent, compared with 30 percent of households with a head between ages 45 and 54.
Dutchess County’s recent Housing Needs Assessment report quantifies how short on affordable housing we are: we’d need 2,155 ‘interventions’ — creating new or converting old housing — for families making less than $50,000 per year.
This report and others, as I reported on in Yes In My Backyard at Chronogram’s The River, point out the exploding housing crisis in our region:
What About New York?
The median home value in New York State in June 2021 was $385,000, up 28.3 percent year over year. In the Hudson Valley, home sales grew as homeowners cashed in on the spike in prices, rising the most in Westchester (+60.2 percent), Rockland (+71.6), Orange (+53.5), Dutchess (+56.5), and Greene (+42.9) counties.
In many areas, low- and moderate-income housing is almost impossible to find. The two arms of the housing crisis—exploding prices for single-family homes and the cumulative shortfall of affordable rental units—pinch those most in need.
The Hudson Valley shares this problem, especially parts of Dutchess, Ulster, and Rockland counties, according to Moody’s. Pattern for Progress publishes an annual Out of Reach report that plots the fair market rent (FMR) in the region. In 2021, FMR increased in all nine counties tracked except Westchester, and rents grew faster than wages in six of the nine counties.
The average monthly gap in the Hudson Valley is $826 per month, a $38 increase over 2020. A household in Rockland or Putnam counties essentially requires three full-time jobs at the renter wage rate to afford a two-bedroom apartment at the FMR.
In Dutchess County, for example, affording a two-bedroom FMR apartment would cost $1,467 per month, while someone making the average $13.79 per hour can only afford $717 per month. This forces workers to spend too much of their income on housing—if they can even find something available, since the rental vacancy rate in a vast majority of the region’s communities is well under 5 percent, and affordable housing complexes have waiting lists ranging from two to five years.
What we are hearing from municipal, county, and New York governments is inadequate to meet the rent gap in the region. Drastic action will have to be taken, and our elected leaders are acting as if this is 1990.
The largest barrier to building affordable housing is local zoning laws, as I reported in Yes In My Backyard:
The Root Cause of the Crisis? Exclusionary Zoning
Moody’s sums this situation up in one line: “Much of the housing shortage that has developed since the financial crisis is due to land constraints.”
Those hit hardest by the rising cost of housing are low- and moderate-income renters priced out of attractive locales. Those who benefit? Homeowners who sell property in high-priced neighborhoods, and landlords who are able to charge higher rents.
These market forces lead to the concentration of affluent people in the most attractive neighborhoods, and segregation of low- and moderate-income citizens—who are often people of color—in less desirable settings. As two of the leading US housing economists, Edward Glaeser and Joseph Gyourko, put it, “the great challenge facing attempts to loosen local housing restrictions is that existing homeowners do not want more affordable homes: they want the value of their asset to cost more, not less.”