During the tech boom, rents and incomes rose together. After the tech bust, they came apart, with the median cost of rent (in orange) continuing its upward trajectory, even as the incomes of renters (in purple) tumbled. As a rule, renters skew young and poor. The runaway cost of housing has made them feel poorer still, as this graph shows, from a new report by Harvard's Joint Center On Housing Studies.
The result is that according to the latest data, about half the 40.6 million American households that rent their home are what economists consider "rent burdened," meaning they spend at least 30 percent of their income on housing. More than a quarter are "severely rent burdened," meaning they spend at least 5o percent of their income on housing.
There are a whole ebooks to explain why rents have continued to rise. But here are two big ones highlighted by the Harvard study: First, vacancy rates have fallen, in part thanks to the foreclosure crisis, which dumped many families back into the rental market. With less supply comes higher prices.
Second, low-cost rental properties have been disappearing from the market—they tend to be older and on the more decrepit side, which is why they're cheap—only to be replaced by newer, more expensive units. That's good for the quality of U.S. housing, but bad for affordability.