The housing crisis is being alleviated by the construction of more apartment buildings, even if half of American tenants struggle with excessive rent. December saw a small decline in rent from November, marking the eighth consecutive month of declines in rental prices nationwide. The median rent was $1,713. But even with this 22% increase, rents are still $309 more than in 2019.
As Rent Prices Show Mixed Trends, California Offers Hope Despite Housing Records
Despite the overall cooling, rent prices aren’t falling everywhere, but they are rising at a slower rate. For example, things are not as bad in California, where 22.4 million households often have to pay more than one-third of their income on rent. Unbelievably, 12 million renters are forced to use more than half of their salaries to cover housing costs because of financial difficulties.
Unsettling statistics are highlighted by Harvard’s Joint Center for Housing Studies: an increase in homelessness and a record number of tenants in overpriced housing. As pandemic protections end, eviction rates are rising, and many renters who qualify for help based on their income find it difficult to receive it.
While conditions for renting are improving, affordability is still a major problem. Rising rents in 2021 and 2022 were a result of changes in housing needs brought on by the pandemic as well as an already-existing scarcity of multifamily housing. Thankfully, a slowdown has occurred in 2023 as a result of more housing being available; by the end of 2023, yearly rent price growth had decreased from a record-breaking 15% in early 2022 to just 0.4%.
Manhattan Rentals Cool as New Buildings Rise: Multifamily construction boom faces 20% affordability drop
Manhattan and other rent-heavy cities are experiencing a cooling trend. This shift is explained by a real-time reversal of supply and demand dynamics, where migrations caused by pandemics are slowing down and new multifamily buildings are coming online.
Multifamily construction has been booming, with 436,000 units finished in Q3 2023 and over a million units under construction as of July. However, increased building costs could cause a 20% decline in construction the following year. The National Association of Home Builders issues a warning, stating that renters will continue to have serious concerns about affordability in the absence of a consistent new supply and improved rental assistance.