Affordable Rental Homes Now Hard to Find

April 27, 2011 / Russell Legato, Residential Property Analyst

Affordable houses for rent are now hard to find according to a Harvard University study.

Affordable Rental Homes Now Hard to Find

The study found out that rental houses with reasonable prices are scarce today, especially for the working poor.

The scarcity is said to be caused by a supply that was not able keep up with demand due to a shortage of apartments, which are supposedly a key source of new rentals.

The decrease in supply is because of house developers who cut back projects when the economy went downhill in 2009.

On the other hand, the boost in demand is a result of families who ended up searching for rentals after losing their homes to foreclosures during the housing bust and of newly employed young professionals who sought for their own apartments to shun from living with their parents during work.

The price increase caused the rents to eat a significantly bigger portion of tenants’ income.  The ideal limit for tenants to spend their income on house payments is thirty percent but statistics say that in 2009, about 26 percent of renters, or 10.1 million people, spent more than half of their pre-tax household income on rent and utilities.

More specific data show that 7.5 percent of moderate-income tenants in the same year spent more than fifty percent of their income on rent and low-income earners only keep up within the limit.

The figures represent the highest number of renters that spend more than half of their income on home expenses after half a century.

The rents are expected by analysts to continue climbing.

The Harvard study concluded that given the current situation of rental homes today, finding a cheap place to live can be daunting.



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