Why rents have gone through the roof in New Orleans and across the nation
Times Picayune ran commentary by Professors Raphael Bostic, the Bedrosian Chair in Governance, and Richard Green, Director of the USC Lusk Center for Real Estate, and colleagues on the continued nationwide increase in rental rates. Pointing to a slowdown in construction, smaller households, declining renter incomes, as well as the increase in the renter population following large scale foreclosures, the opinion piece has garnered national-wide attention. Here is an excerpt:
Between 2000 and 2014, our analysis — which we performed for the John D. and Catherine T. MacArthur Foundation when evaluating their 20-year affordable rental housing preservation initiative — shows that rental affordability has gotten substantially worse in virtually every major metro area. That is not just the case for the lowest-income households. It’s no longer a New York City and San Francisco problem; rents are unaffordable in Cleveland, Miami and Portland, too.
Take a family who lives in the New Orleans metro area that earned $10,672 as of 2011. Such a family had earnings in the bottom fifth of the renter income distribution in that region. This hypothetical family would have to spend 67 percent of its income to rent a home that is itself in the bottom fifth of New Orleans’s rent distribution. In fact, families like this in the bottom fifth of the income distribution would have to spend more than 30 percent of their income to rent a perfectly matched home that has rent at the bottom fifth of the rent distribution in 280 out of 283 metro areas. The only metro areas where such a family would find affordable rental housing are Decatur, Ala.; Houma, La.; and Johnstown, Pa., which are all small metros.
Read the full article here.