More bad news for Washington’s renters: Nowhere have rents risen faster in the past several decades than the D.C. region.
For anyone who leases in this area, that’s hardly surprising news. Rents have been steadily marching upward for a while.
Now a study by Apartment List shows how much rents have been outpacing incomes. The San Francisco-based company, which runs an apartment listings search engine, analyzed Census Bureau data and compared rents to incomes not just in the D.C. region but across the country. It found that D.C. area rents have grown by 86 percent (adjusted for inflation) since 1980 while real incomes of renters have risen by only 33 percent.
“It’s a city where incomes have actually gone up quite a bit more so than the national average, but because it’s such a popular housing market and housing supply is so limited, rents have skyrocketed,” said Andrew Woo, an economist with Apartment List.
The study used data through 2014, the most recent data available by the Census Bureau. Since then, several new apartment buildings have come online and rents have moderated a bit.
Washington isn’t the only city where rents are increasing faster than incomes. As would be expected, rents in high-income-earning cities like San Francisco, New York, Boston and Los Angeles have also soared.
In other areas of the country, such as Chicago, Dallas, Houston and Detroit, rents moved higher even as wages stagnated or fell. Renters in cities such as Seattle, Denver, Atlanta and Miami had some wage increases but not enough to keep pace with rent increases.
Renters in the two cities that were hardest hit by the foreclosure crisis – Las Vegas and Phoenix – are faring better than expected. Because those cities added substantially to their housing stock over the years, the lack of demand has put a damper on rent increases.
The one place in the country where rents have kept pace with incomes is Austin.
Apartment List found that if rents had been pegged to the rate of inflation, the average renter would be paying $366 less in rent each month. The reasons why rents have been rising faster than inflation primarily come down to two factors — increase in demand and scarcity of units.
Ever since the housing crisis, homeownership waned and the rental market exploded. The rental population is now greater than it’s ever been. The number of rental units hasn’t kept pace with the demand.
“You have this limited supply of rental housing that’s being chased by an increasingly large renter population,” Woo said.
What these findings show is that more and more people are struggling to pay rent each month. The combination of rising rents and stagnant incomes is forcing people to put a greater portion of their wages into housing. According to the study, nearly half of renters across the country are cost burdened or pay more than 30 percent of their income on rent.
“Overall in the U.S., renters are struggling much more today than they were in 1960,” Woo said. “The percent of cost-burdened renters has more than doubled during that time period.”