Rent for $800 or Less? Share of Cheap Units Available Shrinking in Most Metros, According to Latest State of the Nation’s Housing Report

Austin skyline. Photo by Flickr user Norm Lanier

Austin’s share of housing units that rented for $800 or less shrunk 20 percent between 2005 and 2015, more than any other metropolitan area, according to the latest State of the Nation’s Housing report from Harvard University’s Joint Center for Housing Studies. New Orleans fell just behind Austin, with its portion of rental units at the $800 or below rate shrinking by 19.5 percent. Houston’s supply of some of its cheapest rental units, meanwhile, shrunk by 13.1 percent in the same time frame.

The report highlights the mixed state of housing for the country’s homeowners and renters. Nationally, the housing market may have officially rebounded following the 2008 collapse. Rising housing prices finally surpassed the high point just before the collapse, a good thing for homeowners who had watched their home values plummet. But the recovery has been hugely uneven, according to the report. Values have not rebounded nearly as much in low-income areas, meaning many homeowners there still owe more than their homes are worth.

The recovery also looks different from city to city. Between 2000 and 2016, home prices in many Sun Belt cities, including Los Angeles, Houston, Miami and others have risen substantially while values in many Midwestern metropolitan areas have fallen. The Houston metropolitan area is also notable for its new building permits in 2016 with 44,700, falling just behind Dallas at 55,800. New York, Atlanta, Los Angeles and Austin also posted big numbers when it came to new permitting.

A few charts highlighting data from the Harvard report show how Houston compares and how the recovery has taken shape in some of the largest Sun Belt cities. All of the metropolitan areas included lost some of the cheapest units while adding units with monthly rents above $2,000.

Meanwhile, only a fraction of households, and even fewer renter households, could even afford the monthly payment for a median priced single family home in their metropolitan area — not to mention the down payment.

 

What does this mean for affordability here? Houston is still just slightly below the average share of income required for home payments in the 50 largest metropolitan areas, coming in at 25.6 percent compared to the overall rate of 26.8 percent. Tracking an oil slump, rents in the Houston area have slowed in 2016, according to the report, one of the few metropolitan markets where this is the case. But there is still a large unmet demand for affordable, available and adequate housing.

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Leah Binkovitz

Leah Binkovitz is Senior Editor with the Kinder Institute for Urban Research.

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