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Pay the Rent: Cooling Rents Provide Some Relief Amidst Housing Affordability Crisis

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Amidst the soaring costs of housing, half of US renters find themselves grappling with rents beyond their means. A recent report by Realtor.com reveals a gradual cooling in the national rental market, marking an eighth consecutive month of annual rent declines. However, the median rent though down from its peak remains $309 higher than pre-pandemic levels in 2019. Affordability concerns persist with 22.4 million households pay the rent over a third of their income. A deeper analysis by Harvard University’s Joint Center for Housing Studies underscores the record-high number of renters facing affordability challenges.

Half of US tenants can’t afford to pay their rent - photo from Curbed NY
Half of US tenants can’t afford to pay their rent – photo from Curbed NY

Rental Market Dynamics

Despite the decline in annual rents the median asking rent nationally is $1,713, showcasing a 22% increase since 2019. Pay the rent growth peaked at 15% annually in early 2022 but slowed to a modest 0.4% by the end of 2023.

Even cities with historically high rents like Manhattan witness a cooling trend with November marking the first rent drop in 27 months. Multifamily construction has surged reaching levels not seen since 1988, with 436,000 units completed in Q3 2023.

However, challenges such as higher building costs and material shortages could impact the future pace of new constructions. The National Association of Home Builders anticipates a 20% decrease in multifamily construction next year.

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Affordability Challenges

The affordability dilemma is highlighted by the Harvard research which lists 12 million renters as substantially cost-burdened meaning they must spend more than half of their income on housing. Following the expiration of epidemic protections, evictions have increased and rental aid is insufficient leaving a record number of income-eligible renters without help.

Rental conditions are softening but affordability remains a critical concern emphasizing the need to pay the rent for continued new supply and enhanced rental support to address the pressing challenges faced by renters.

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