According to a recent Harvard study, an estimated 11 percent more households will pay more than half of their incomes in rent. Renters who pay more than 50 percent of their incomes on rent, require federal subsides to find affordable living. This is leading to the private sector struggling to produce profitable housing that is affordable to lower income families.
In 2014 about 11.2 million households paid more that half of their income in rent. This is almost 3 million more households than in 2000.
A large part of that rise was due to matters that were considered to be temporary such home foreclosures and a decrease in income due to the economic recovery after the recession. However, the report finds that these problems are likely to persist and will contribute to longer-term challenges.
One factor contributing to the rise in households who pay more than half their income on rent, is the rapid growth of the Hispanic population, who tend to be mostly renters. In turn, putting more pressure on the existing supply of affordable rental housing.
Millennials are also predicted to grow and continue to rent in larger numbers. Because of the recession, many millennials were either unemployed or underemployed for the early years of their careers, and are more likely to struggle to afford housing.
If renters continue to grow faster than incomes, the number of severely burdened households could rise by as much as 25%.