Canada's Condominium Magazine
One consequence of the “Great Recession” and the housing market collapse in the United States has been an enormous increase in the number of renters. When millions of Americans lost their homes, or sold them to avoid foreclosure, many of those who could afford to moved into rental accommodation. Since 2006, the number of renters has swelled, says a new study from New York University’s Furman Centre. In the same period, the number of owner-occupied homes shrank in most of the cities studied. However, affordability has become a greater problem, especially for low-income renters, as rents rose more than incomes. The study examined eleven of the biggest cities in America.
With so many new renters looking for accommodation, vacancy rates fell in most cities, while rents rose. Though the amount of available rental stock also rose, it did not keep pace with the demand. In Philadelphia, for example, the population of new renters grew nearly twice as much (28 per cent) as the number of rental units available (15 per cent). Low-income renters got the worst of it, with more than 60 per cent of them now considered “severely rent burdened,” meaning that they must spend more than 50 per cent of household income on housing. In all cities studied, low-income renters were able to afford only a “tiny fraction” of the available rental units.
The increase in the numbers of renters in some cities was dramatic. As of 2013, Miami was up 25 per cent; Philadelphia up 28 per cent; Washington DC and Boston up 22 per cent. Miami had the highest percentage of renters in the US: 65 per cent, with New York City a close second at 64 per cent. Los Angeles and Boston were next with 60 per cent. (Toronto’s rental rate was 45 per cent that year, lower than any of the US cities except Philadelphia.)
In all 11 cities in this study, more and more people are renting: Between 2006 and 2013, the population living in rental units went up, ranging from a 6.5 percent increase in Atlanta to a 28.2 percent increase in Philadelphia. Additionally, in all 11 cities, the share of residents who lived in rental households increased during this period. While in 2006 renters constituted a majority of the population in only five of the cities in this study, by 2013 the number of majority-renter cities had increased to nine.
Vacancy rates in the eleven cities fell, in some cases sharply: Dallas dropped from 13 per cent in 2006 to 7.6 per cent in 2013. Not one of the cities has a vacancy rate as low as Toronto’s, however, which is 1.6 per cent. The closest US city is San Francisco, at 2.5 per cent, the tightest rental market of all US big cities.
In more than half of the cities studied, rents rose more than household incomes. Los Angeles was the hardest hit: rents there rose 11 per cent, while renter household income actually fell 4 per cent. In New York City, rents rose even higher, 12 per cent, while income did not change. Washington DC had the most startling changes: there, rents rose 21 per cent, while income rose 14 per cent in the same period.
Toronto relying on condo units to ease rental pressure
In Toronto, meanwhile, where the vacancy rate is perennially below 2 per cent, the condo sector provides a certain amount of relief for renters. In the first quarter of 2015, more than 13,000 condo units were listed for rent in Toronto, an increase of 20.2 per cent compared to a year ago, according to the Toronto Real Estate Board. Most of those were one-bedroom units with an average rent of $1,585.
Families living in older rental buildings in Toronto face rather bleaker conditions. University of Toronto researchers studied more than 1,500 families living in a random sampling of apartment buildings built between 1950 and 1979 and found that the housing was inadequate for nine out of ten families. “Inadequate” housing is indicated by such factors as unaffordability, overcrowding, lack of safety, bad unit and building conditions, and risk of eviction due to non-payment of rent (insecure housing).