Amidst Record High Rent, Apartment Construction Spurs a Slowdown

Find out how a surge in apartment construction is reshaping rental affordability and mitigating amidst Record High Rent in the U.S.

Apartment construction is slowing amidst Record High Rent in the U.S. (Photo: Wall Street Journal)

Amidst Record High Rents, How Apartments Are Impacting Affordability in 2024

A minimum of 30% of income is being spent on rent, which represents an unaffordable proportion of the rental market in the United States. This represents a substantial shift in the rental landscape amidst record high rent. An area of optimism does exist, however, in the form of an increase in apartment supply due to the construction of multi-unit structures, which has gradually slowed the rate of rent increases. Nationally, rents have decreased for the past eight months, according to the monthly report by Realtor.com. This may indicate the beginning of an effort to reign in escalating price levels.

In 2019, the median rent remains substantially elevated in comparison to pre-pandemic levels, with a 22% increase, notwithstanding the favorable trend of declining rents. A considerable proportion of households are now severely burdened by rental expenses, with millions of households expending over one-third of their income on rent. Illuminating the gravity of the affordability crisis, the Harvard Joint Center for Housing Studies has exposed an all-time high in the number of tenants residing in unaffordable housing and an upsurge in homelessness.

READ ALSO: 2024 Child Tax Credit: How Delays Affect Refund & When To Expect It

While rental conditions are softening due to increased apartment supply, affordability conditions continue to pose challenges. Rent growth, which peaked in 2022, has slowed down significantly by the end of 2023 according to the reports published by CNN, with even cities with high rents experiencing a cooling-off period. The increased supply of multifamily housing has shifted the dynamics of supply and demand, giving renters more leverage than ever before but also calling attention to the fragility of the affordability situation.

The rental market has benefited from multifamily housing construction at record levels. Due to rising construction prices and multifamily construction estimates, this trend may not last. Without additional supply and strong rental support, the affordability crisis will persist, threatening many renters worldwide.

READ ALSO: Social Security Benefits For 2024: Millions Of Americans To Receive An Increase $440 Monthly