As the economic recovery has rolled forward, average rents in many areas of the country have migrated north. In some instances, the increases have been rapid and noteworthy, raising the question of apartments’ affordability. Point in case is this recent NYT article, which focuses on the fact that half of all renters spend more than 30 percent of their income on rent.
The underpinnings of this trend lie in the chronic underbuilding of apartments during the downturn, which created a dearth of new units at the same time that demand for apartment living has been climbing. True to the laws of supply and demand, this shortage has resulted in temporary rent increases.
However, there are additional contributing factors rarely recognized in the media. Rising unit costs is one that Dean Baker, with the Center for Economic and Policy Research, recently highlighted in this blog post. Using Consumer Price Index data, he argued that today’s rising rents actually reflect better quality housing, as the mix of rental units has changed so that the typical unit costs more.
NMHC recognizes that the proliferation of media stories on rising rents can pose challenges for our members and continue to address the issue through our advocacy, education and communication efforts.
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