The letter “A” symbolizes a badge of shame in the famous novel, The Scarlet Letter. Known to stand for the act of adultery, the “A” could easily represent that of “affordable” or “affordability,” which some will argue, evoke equally negative sentiments.
A recent study making the rounds reveals that in the wake of the recession, millions of Americans are facing an uphill battle when it comes to paying their rent. Vacancies are down, supply is dwindling, and the cost of renting, along with utility expenditures, continues to rise. The report, America’s Rental Housing: Meeting Challenges, Building on Opportunities, identifies an affordability crisis at hand. Those who rent are applying a greater share of income towards rent, leaving less money for other necessities – at times forcing them to make a decision between shelter or food.
A common standard of affordability is that rent and utility costs together require less than 30 percent of household income. Above that limit, renter cost burdens are defined as moderate (between 30 and 50 percent of income) or severe (more than 50 percent of income). In 1960, 24 percent of renters were at least moderately burdened, including 12 percent that were severely burdened. By 2000, these shares had reached 38 percent and 20 percent. And by 2009, the share of at least moderately cost-burdened renters soared to 49 percent while the share of severely burdened renters jumped to 26 percent.
The report cites weak gains in income and rising housing costs as contributing factors to the statistics. Additionally, the report highlights the fact that housing affordability pressures have begun to creep up into higher earning brackets. The findings consider this a long-term issue that will continue to grow,
What does seem certain is that—absent a dramatic expansion of federal assistance to help defray the costs of renting, or a shift in state and local land use and building regulations to allow expansion of modest, high-density rental developments— affordability problems will remain at staggeringly high levels, if not worsen.
Housing and Urban Development (HUD) Secretary Shaun Donovan responded to the findings in an interview with CNBC.
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How has your rent been affected? Your lifestyle and spending habits?