NASHVILLE, Tenn. (WKRN) – A decade of unprecedented growth in the rental housing market may be coming to an end, according to the 2017 America’s Rental Housing report released by the Joint Center for Housing Studies of Harvard University.
The greatest rent increases have been in formerly low-cost neighborhoods, particularly in fast-growing metros, like Nashville.
Forty three point two percent of Nashville renters overall are cost-burdened, meaning they spend more than 30 percent of their income on housing.
Twenty point nine percent are severely burdened, meaning they spend more than 50 percent of their income on housing. That breaks down to 51,883 severely burdened renter households in Nashville.
After rising for more than a decade, the number of renter households across the United States declined slightly in 2017. There are now more than 43 million rental households, a 25 percent increase from 2006.
“In the areas that areas experiencing the fastest population growth, you can see a consistent trend across neighborhoods. The neighborhoods that started with the lowest rent levels, experienced the fastest rates of rent growth,” said Jonathan Spader, Harvard Joint Center for Housing Studies.
This speaks to the challenges facing some of the fastest growing cities across the country.
Spader said, “At the household level, one of the clearest results of it is the presence of cost burdens, so in 2016, 47.5 percent of all renter households were cost burdened. Twenty five percent were severely burdened and that includes 11 million households.”
Numbers have declined slightly since 2014.
“It’s at a speed where if you project that out, it’s not fast enough that it will recover with the economic cycle. Instead, at the speed over the past two years, it would take 24 years for the number of cost burdened renters to return to its 2001 level,” said Spader.
Research shows that across the U.S., more than 8.9 million renter households make less than $15,000 a year. The fastest growth in cost-burdens has been among households making between $30,000 and $75,000 a year.
Cost burdens are common among households with people over age 65, as well as among those under age 25 because they tend to be out of the workforce, or are bringing in low wages because of retirement and/or disability, or because they’re students. Households with children are fall into this category more frequently.
Miami has the highest cost burden rate in the country at 61.2 percent, with 34.1 percent severely cost burdened.
Since 2000, home prices in the Nashville, Murfreesboro and Franklin areas have gone up an average of 27.5 percent.
The current media value of a home in Middle Tennessee is $206,800, and according to the Harvard University study, the peak month for home prices was in September 2006 right before the housing market crash.