Why is rent so expensive?
by Janet Weinstein
Rent prices are at their highest levels in over a decade, according to a new study by Harvard University
Jeremiah Lowery is a young professional living and working in Washington, D.C., and he spends a lot of money on rent.
His bills for accommodation come out to nearly $1,000 a month — almost half of his monthly income.
"It's like, 'wait a second! That can't be the price!' But that's the price. And there are people who want it. And who will compete for it. And you know that finding a better place would be a lot more difficult," says Lowery.
Lowery is among a growing national demographic of people who are facing the highest rent prices in over a decade.
Jeremiah Lowery, a Washington D.C. resident, spends almost half of his monthly income on rent.
Janet Weinstein/Inside Story/Al Jazeera America
According to a recent study by Harvard University, close to half of renters in the U.S. are "cost burdened" — meaning they pay more than a third of their monthly income on accomodation.
And 27 percent of renters are "severely" cost burdened, paying more than half of their wages on a place to live.
Lowery falls just below "severe" but says it comes with a lifestyle he prefers.
"Living in D.C., you have to sacrifice a lot. But even though rent is too high, it’s off-set by access. You're able to walk to the grocery store instead of taking public transportation or driving. It’s off-set by being able to hop on the bus — one bus — instead of paying $10 to get to work every day," says Lowery.
Harvard points to a shortage in affordable housing as one key reason for the statistic spike.
Rick Gersten, CEO of rental search engine Urban Igloo, agrees.
"It's harder to get a mortgage. So people are having to rent because their desire to buy is not being fulfilled," says Gersten.
Gersten also says the market is still see-sawing after the 2008 crash.
"After the crash in 2008, the market turned in 2010 and 2011. Apartment owners and condominium owners were able to rent for outrageous numbers because of the greater demand. And then with more milennials going into urban areas, the demand for higher quality apartments has brought a higher cost of living," says Gersten.
In growing cities like Washington D.C., waves of affluent young professionals are driving up prices, too. In one decade, the capital's population grew by 23 percent and added close to thirty-thousand new apartments. Once known as the murder capital of the U.S., Washington has become the fourth most expensive city in America for renters.
On the same exact street two miles south as Lowery, rising rent is having a different effect.
Kimberly Butts is a long-term resident of what is now known as "The Heritage at Shaw."
The building used to be called "Lincoln/Westmoreland II," and was run by a company partnered with D.C.'s section-8 public housing program.
Drugs. Prostitues. Gangs. Butts remembers what the 1990s were like.
“The crime was really bad, you know. It was violent, people hung out on the sidewalk, in the hallways. There were so many shootings happening all the time. We’ve really seen the worst of it,” says Butts.
Only one mile from the White House, the area has since seen a lot of development, attracting middle class commuters and low-income long-termers alike.
Earlier this year, the private company that owned the building opted out of the city's section-8 partnership. Though it is still accepting public housing vouchers, it's renovating the units one-by-one, so it can charge newcomers high market rents.
"It’s scary to know that if at any time they stop accepting our vouchers, we will have to move. We just feel like we should be able to reap the benefits of our community changing as well. We should be able to enjoy the new building instead of being pushed out," says Butts.
Butts says she feels like it's only a matter of time until her family's public housing voucher won't be accepted by the building anymore. If that happens, they'll have to find somewhere else to live. Their voucher covers two-thirds of the rent and can fluctuate based on how much the household makes each month.
Janet Weinstein/Inside Story/Al Jazeera America
“It’s scary to know that if at any time they stop accepting our vouchers, we will have to move. We just feel like we should be able to reap the benefits of our community changing as well. We should be able to enjoy the new building instead of being pushed out.” - Kimberly Butts, long-term public housing resident
The housing market is becoming an economic squeeze play, leaving both sides of the street with hard choices. Our guest panel chewed the hard facts on our show.
It's true that more Americans are paying higher rent than before, but fewer can afford it. We asked our panel of experts: why have rent prices gotten to this level? How can prices go back down? Should local governments even get involved in something traditionally left to free market?
Via Al Jazeera America