Financial Security of Millions Threatened by High Rent
HARTFORD, Conn. – High rents are threatening families' financial security and putting home ownership out of reach for many, according to a new report.
The analysis from The Pew Charitable Trusts says since the Great Recession, the number of households paying more than 30 percent of their pre-tax income in rent has grown.
Erin Currier, director of Pew's Family Financial Security and Mobility Project, says 43 million American families now rent their homes, a number that has been growing in recent years.
"As it has grown, the proportion of renters who struggle with rent has also grown,” says Currier. “And our analysis is showing that being rent-burdened is disproportionately affecting older Americans and people of color."
She says in 2015, 38 percent of all renter households were "rent burdened," an increase of about 19 percent since 2001.
Currier notes that over that same time period, the racial gap grew wider as the severity of the rent burden increased.
"The gap between the share of white and African-American households who were spending 50 percent or more of their income on rent grew by 66 percent," she says.
The data also shows that almost half of households headed by someone age 65 or older are rent burdened, and more than 20 percent of them pay half or more of their income in rent.
Rent-burdened households often suffer other forms of financial insecurity. Currier says almost two-thirds have less then $400 cash in the bank, and half have less than $10 in savings.
"Compare that to the typical homeowner who has more than $7,000," she says. "And households that were rent-burdened for at least a year were less likely to be able to transition to home ownership than those that never experienced being rent-burdened."
The Pew report says policymakers should consider ways to make renting a home affordable for the 17 million rent-burdened American families.