In parts of California and the nation, there’s a building boom of apartments – the fastest pace of multifamily housing construction in 30 years.
But many new rentals are at the higher end, so they’re not easing the shortage of affordable housing.
A study just out from Harvard’s Joint Center for Housing Studies is the latest to highlight this trend, yet another squeeze on the middle class. The median rent for newly built apartments last year was $1,372 a month – 47 percent higher than the average for existing units.
That isn’t a big deal for empty nesters with plenty of cash or for the “creative class” – 20- and 30-somethings who get paid princely sums for being hip and imaginative. Back in the day, we called them “yuppies,” and they’re very popular among developers, planners and politicians seeking buzz for their downtowns, though there’s backlash about how much they really boost the economy.
These higher-priced apartments, however, are far out of reach for the working and middle class. Half of all renter households make $34,000 or less a year, and only 10 percent of new multifamily units are affordable for them, based on the rule of thumb that you’re not supposed to spend more than 30 percent of your paycheck on housing.
The study found that a record high 21 million renters spent more than 30 percent of their total income. The “cost-burdened” made up nearly half of all renter households, and 11 million spent more than half their income on rent – “severely cost-burdened.”
As homeownership declines, there are many more renters in general – a record 42.6 million households, up from 33 million a decade ago, with the fastest growth among high-income earners. That number is projected to rise to 47 million by 2025.
Meanwhile, the vacancy rate of 7 percent is the lowest in 30 years, while average rents increased 3.5 percent above inflation, nearly the highest in 30 years.
It’s not a big shocker, but rents in California are high. It ranks a close second behind Florida for the highest percentage of renter households who are “cost-burdened,” a total of 3.25 million households in the Golden State.
Among 381 metro areas nationally, Sacramento ranked 66th worst, with 54 percent of households paying more than 30 percent of total income in rent, including 30 percent spending more than half on rent.
At least there’s some hope in the push for 10,000 new housing units in downtown Sacramento by 2025. So far this year, there are more affordable units built or under construction – 253 toward a goal of 2,500 – than market-rate units, 224 toward a goal of 6,000.
But with recent trends, it’s going to take many, many more affordable units to make a real dent.
By the numbers
National rank and share of households paying more than 30 percent of income for rent for selected California metro areas:
- 5. Redding, 62.6 percent
- 22. Los Angeles, 58.5 percent
- 33. Fresno, 56.2 percent
- 52. Stockton, 54.9 percent
- 56. San Diego, 54.5 percent
- 63. Modesto, 54.3 percent
- 66. Sacramento, 54.1 percent
- 185. Merced, 48.5 percent
- 189. San Francisco, 48.2 percent
Source: Joint Center for Housing Studies at Harvard University