Report: Housing failing to meet demand; rents pricing lower-income families out of market

Dive Brief:

With new home construction still not keeping pace with demand and rents continuing to rise, a Harvard University Joint Center for Housing Studies report found that the number of families paying more than one-third of their income on rent increased to 40 million in 2014, The Wall Street Journal reported.
Low and middle-income families are being priced out of the rental market as the median rent for new units reached $1,381 in 2015, 70% more than overall median rent. In addition,11.4 million households paid more than 50% of their income in rent in 2014.
Over the last 10 years, the number of renters increased by a record 9 million, resulting in 36% of all U.S. households choosing to rent — the largest percentage since the late 1960s, according to Building Design + Construction.

Dive Insight:

Multifamily starts grew by more than 10% for the last five years, totaling an near-30-year high of 397,300 units, and permits for multifamily projects rose 18.2%. However, developers are increasingly building luxury-type units, so although there is new rental stock, the price points prevent many households from taking advantage of it.

Other takeaways from the report:

Household formation is back to its pre-recession rate, meaning millennials may soon be entering the housing market in greater numbers.
The median house size has risen to 2,467 square feet, but the median apartment size has shrunk to 1,074 square feet.
Homebuilder starts were slightly more than 1 million in 2015, a 10.8% increase from recession-level activity but still not enough to meet demand.
Only 25% of those who are eligible for public housing assistance receive it.
The percentage of construction workers over the age of 55 increased 6% from 2007, and an older, retiring workforce increases the chance of future construction labor shortages.
Countering conventional wisdom, middle-aged households, not millennials, are driving demand for rentals.
The rise in median income could help first-time buyers enter the housing market, with the exception of the most expensive cities where young adults continue to live with their parents.