The gap between household income and rental costs is increasing to unsustainable levels in many parts of America, according to the National Association of Realtors (NAR) which indicates that the situation will continue to decline “unless new home construction meaningfully rises.”<\/p>\n
NAR’s Chief Economist, Dr. Lawrence Yun notes that when this gap widens to “unhealthy levels,” it makes it more and more difficult for renters to become homeowners. Equally challenging is the rise in the share of renter household as homeownership levels fall.<\/p>\n
“In the past five years, a typical rent rose 15 percent while the income of renters grew by only 11 percent,\u201d Yun observed. \u201cThe gap has worsened in many areas as rents continue to climb2 and the accelerated pace of hiring has yet to give workers a meaningful bump in pay.\u201d<\/p>\n
The NAR is observing an unequal distribution of wealth, and it has nothing to do with politics. The study points out that home values have risen and mortgage balances have declined, putting homeowners net worth on an upward trajectory as renters “feel the pinch of increasing housing costs every year.”<\/p>\n
Dr. Yun adds that renters hoping to become homeowners are daunted by home prices rising faster than their incomes. “With rents taking up a larger chunk of household incomes, it\u2019s difficult for first-time buyers \u2013 especially in high-cost areas \u2013 to save for an adequate downpayment.\u201d<\/p>\n
The markets where renters have seen the highest rent increases since 2009 are:<\/p>\n
NAR\u2019s research analyzed changes in the share of renters and homeowners, mortgage payments, median home prices, median household income for renters and the rental costs in 70 metro areas.<\/p>\n
NAR is looking for home builders to increase their supply (reasonably, of course), which would relieve housing costs and allow more entry-level buyers (renters) into the market.<\/p>\n
So why haven’t builders just magically towed the line? Dr. Yun recognizes that they have been hesitant since the recession because of “rising construction costs, limited access to credit from local lenders and concerns about the re-emergence of younger buyers.”<\/p>\n
He asserts that housing starts need to rise to 1.5 million to the historical average. To put that in perspective, starts have averaged at 766,000 per year for the last seven years<\/em>.<\/p>\n \u201cMany of the metro areas that have experienced the highest rent increases are popular to millennials because of their employment opportunities,\u201d notes Yun. \u201cWith a stronger economy and labor market, it\u2019s critical to increase housing starts for entry-level buyers or else many will face affordability issues if their incomes aren\u2019t compensating for the gains in home prices.\u201d<\/p>\n As the gap between housing costs and income levels widens, renters are being pushed out of the homeownership game. How can this change? NAR has the answer.<\/p>\n","protected":false},"author":335938,"featured_media":2514,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"wds_primary_category":0,"footnotes":"","jetpack_post_was_ever_published":false,"_links_to":"","_links_to_target":""},"categories":[365],"tags":[99,323,100],"class_list":["post-3725","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-politics","tag-breaking-news","tag-homeownership","tag-hot-stories"],"jetpack_featured_media_url":"https:\/\/theamericangenius.com\/housing\/wp-content\/uploads\/sites\/2\/2014\/07\/broker-agent.png","jetpack_sharing_enabled":true,"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/theamericangenius.com\/housing\/wp-json\/wp\/v2\/posts\/3725","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/theamericangenius.com\/housing\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/theamericangenius.com\/housing\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/theamericangenius.com\/housing\/wp-json\/wp\/v2\/users\/335938"}],"replies":[{"embeddable":true,"href":"https:\/\/theamericangenius.com\/housing\/wp-json\/wp\/v2\/comments?post=3725"}],"version-history":[{"count":3,"href":"https:\/\/theamericangenius.com\/housing\/wp-json\/wp\/v2\/posts\/3725\/revisions"}],"predecessor-version":[{"id":4526,"href":"https:\/\/theamericangenius.com\/housing\/wp-json\/wp\/v2\/posts\/3725\/revisions\/4526"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/theamericangenius.com\/housing\/wp-json\/wp\/v2\/media\/2514"}],"wp:attachment":[{"href":"https:\/\/theamericangenius.com\/housing\/wp-json\/wp\/v2\/media?parent=3725"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/theamericangenius.com\/housing\/wp-json\/wp\/v2\/categories?post=3725"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/theamericangenius.com\/housing\/wp-json\/wp\/v2\/tags?post=3725"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}#Homeownership<\/span><\/h3>\n","protected":false},"excerpt":{"rendered":"