American renters feel the squeeze
Affordability problems for renters have skyrocketed over the past decade both in number and the share of renters facing them, according to a new report on rental housing from the Harvard Joint Center for Housing Studies. The inability of so many to find housing they can afford dramatically impacts the health and well-being of U.S. renters, as lower-income households cut back on food, healthcare and savings, just to keep up.
Released today at an event held at the Newseum in Washington, D.C., the report, "America’s Rental Housing: Evolving Markets and Needs," finds that half of U.S. renters pay more than 30% or more of their income on rent, up an astonishing 12 percentage points from a decade earlier. Much of the increase was among renters facing severe burdens (paying more than half their income on rent), boosting their share to 27%. These levels were unimaginable just a decade ago, when the share of Americans renters paying half their income on housing, at 19%, was already a cause for serious concern.
Escalating rental affordability problems come at a time when the share of Americans that rent has increased from 31% in 2004 to 35% in 2012. In fact, the 2000s marked the strongest numerical growth in renter households in the last 50 years. As ownership rates fell, housing markets have adjusted dynamically to the increased demand for single-family rentals, with about 3 million existing homes switching from owner to rental occupancy from 2007-2011 alone.
On the strength of the surge in rental demand, rental vacancies have fallen, rents have climbed, and construction of new rental housing has picked up sharply, giving an important spur to the struggling residential construction market. Rising rents combined with softness in wages has put the squeeze on affordability. The report points out that between 2000 and 2012, real median rents (adjusted for inflation) nationally increased by 6%, while over the same period the real median income of renters dropped by 13%. More than ever before, the private market struggles to provide decent housing that is affordable for people of even modest means.
“For many low-income families, the rental housing affordability crisis is like a game of musical chairs in which there is never a chair left for them,” said Chris Herbert, research director at the Harvard Joint Center for Housing Studies. “The shortfall in the number of units affordable to extremely low-income renters in the U.S. (those earning no more than 30% of the area median) more than doubled from 1.9 million in 2001 to 4.9 million in 2011. The situation just keeps getting worse. Assistance efforts have failed to keep pace with escalating need, undermining the nation’s longstanding goal of ensuring decent and affordable housing for all.”
Market Recap: RISI Crow’s Construction Materials Cost Index
A price index of lumber and panels used in actual construction for Dec. 6, 2013
*Western – regional species perimeter foundation; Southern – regional species slab construction.
Crow’s Market Recap — A condensed recap of the market conditions for the major North American softwood lumber and panel products as reported in Crow’s Weekly Market Report.
Lumber: Greater urgency to sell production forced SPF lumber mills to lower prices more aggressively to locate trading levels. Some success was achieved at $20 below the prior week’s levels. Buyers needing to purchase did so sparingly, while others saw the weakness as a reason to remain on the sidelines. Sales activity in the Southern Pine lumber market was quiet and described by a few producers as “extremely slow.” Two major contributors to the pause in demand are the whittling down of yard inventories prior to year-end and a major cold front covering much of the U.S. Buyers shied away from the Coastal species market, making it difficult for producers to sell much without lowering prices $15 to $20 — and sometimes more. Lower prices added more fluidity to trading, but producers still struggled to sell production. Inventories of Inland species lumber were light throughout the system. Producers had little in the way of offerings, yards reported limited supplies of straight lengths and wholesalers were out of stock at many of their reloads. Radiata Pine sellers reported steady sales for loads that will deliver in January. Demand for Ponderosa Pine Shop continued to outpace availability, and prices remained strong. Buyers called in any favors they may have with producers in order to garner coverage. Although some producers reported a quieter tone to the market, Ponderosa Pine boards continued to move easily. Any offering of #2&Btr that shipped quickly was sold with little effort. Eastern White Pine producers reported market activity was “still strong,” with order files out several weeks. ESLP sales remained steady, with demand focused on #2&Btr. Western Red Cedar demand was typical for the season. Producers carried little inventory and prodded customers for 2014 projections to make sure enough inventory was available in the spring.
Panels: OSB sales volumes were light in both eastern and western markets. Producers continued to offer shipments for next week, but many were unwilling to offer much in the way of price concessions. Sales activity in Southern Pine plywood was lackluster. Negotiated pricing for some items added to the feel of a moderately weaker market, keeping buyers from purchasing whenever they could wait. A “slow week” was how most Western Fir plywood traders described sales activity. Thin order files forced mills to lower prices wherever necessary, but they did so grudgingly, citing high log and veneer costs. Participation out of the East was minimal. Market activity for Canadian plywood remained light, but producers reported selling a few loads. Mill order files into the first week of January kept many buyers on the sidelines. Those who went looking for quicker shipments were mostly unsuccessful in their attempts. Demand for both particleboard and MDF remained pedestrian, with a seasonal lack of energy in markets. Market participants continued their optimistic outlook for the first quarter of 2014.
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