U.S. RENTERS WITH STAGNANT INCOMES FACE SKYROCKETING PROPERTY PRICESAccording to an analysis of Census data by Enterprise Community Partners, more than one in four U.S. renters use at least half of their family income to pay for housing and utilities. The number of these households has increased 26-percent since 2007, and now totals 11.25 million,1 a lingering effect of the Great Recession that pushed homeowners who faced foreclosure into rental housing.

Data from real estate firm Zillow and the U.S. Labor Department indicates that rental price increases across the nation have jumped to almost twice the pace of average hourly wages.2

INCOMES FLATTEN WHILE RENT SKYROCKETS Income has failed to match rent increases. While rents are rising, income levels have remained flat, close to prerecession levels.

Since incomes have remained stagnant, an increasing number of renters are feeling the squeeze. The Harvard Joint Center for Housing Studies notes in its latest report on the state of U.S. housing that almost 50-percent of all renters faced housing cost burdens – and these cost burdens are increasing rapidly among moderate-income households. Nearly 20-percent of renters earning $45,000 to $75,000 per year are among those spending 30-percent or more of their monthly income on rent.3

These high rents leave many tenants unable to save money, which means they cannot afford the down payments required to purchase a home. This has led many potential first-time homebuyers to delay their plans to purchase property.4

RENTAL VERSUS OWNERSHIP TRENDSThe State of U.S. Housing report also touches on the home ownership rate, which has decreased to 64.5-percent – a 20-year low – and has significantly impacted rent prices. The share of renters ages 25-34 who pay more than 30-percent of their incomes for housing increased 5-percent to 45-percent in 2014.5

Generation X consumers are among the most distressed, affecting their prime homebuying years. As a result, home ownership rates among Gen Xers, now mostly between the ages of 35–44, have fallen further than those of any other age group.6

Despite the economic and financial challenges young adults have encountered since the recession, the millennial generation represented the largest share of recent first-time homebuyers, according to the 2015 National Association of Realtors Home Buyer and Seller Generational Trends study.7 However, there is still a significant amount of this generation competing for increasingly expensive rental property, which has allowed landlords to consistently raise rent.

1 Josh Boak. “1-in-4 US renters spend half their pay on rent and utilities.” Associated Press, May 1, 2015.

2 Ibid.3 “State of U.S. Housing.” Joint Center for Housing Studies at

Harvard University, 2015.4 Sharon O’Malley. “Rental demand continues to outpace supply.”

Construction Dive, May 3, 2015.

5 Mark Huffman. “As rents rise Millennials’ more willing to consider buying.” Consumer Affairs, June 25, 2015.

6 Ibid.7 National Association of Realtors. “NAR Generational Survey:

Millennials Lead All Buyers, Most Likely to Use Real Estate Agent.” March 11, 2015.

RENTAL CONSTRUCTION CAN’T KEEP PACESince more renters are staying put and are reluctant to accept job transfers, the need for new builds is increasing by the day. However, construction has failed to meet demand from renters.

Although construction firms plan to build more than 320,000 apartment buildings in 2015, the supply of for-rent housing is not keeping pace with demand, according to an analysis of Census data by affordable housing advocate Enterprise Community Partners.8

The most affordable rentals can be found in cities with slower population growth, such as Pittsburgh and St. Louis, and areas that have introduced a steady supply of new housing to meet growth. For example, Chicago permitted 906 new units for every 1,000 new residents between 2012 and 2013 – and as a result, renters spend an average of 31.1-percent of their income on rent.9

TAKE PROACTIVE MEASURES WITH GRAEBEL RELOCATIONGraebel’s comprehensive menu of services includes home sale and purchase, temporary living arrangement services, and rental property assistance on six continents. When relocated employees are ready to make a move – from their homes whether they owned or rented – Graebel client-dedicated teams stand ready to provide highly personalized service.

In addition, the Graebel Worldwide Consulting Services team is prepared to review corporate relocation programs for efficient and effective policy solutions to help manage changing economic environments like the rental situation in the U.S. or other countries. In return, corporations are able to stay competitive in talent acquisitions, as well as in retaining and motivating high-performance employees to accept relocations.

Contact your Graebel representative for more information.

STAY INFORMED ON HOUSING AND RENTAL TRENDSOther recent Graebel reports that cover important housing market topics and information that can affect travel and relocation include:

• Millennial influx in the housing market: Will it last?

• Rental prices or home purchases: Which do millennials prefer?

• Closing costs hit homebuyers hard

• What U.S. cities are hot today?

For more resources including our Global Mobility Studies, visit Graebel Marketing Intelligence Reports.

8 Sharon O’Malley. “Rental demand continues to outpace supply.” Construction Dive, May 3, 2015.

9 Builder Online. “In least affordable rental markets, construction lags demand.” March 31, 2015.

U.S. renters with stagnant incomes face skyrocketing property prices

The information contained in this document represents the current research of Graebel Companies, Inc. on the issues discussed as of the date of publication. This document is for informational purposes only and does not serve as an endorsement of products nor providers. Graebel cannot guarantee the accuracy of any information presented after the date of publication.

© 2015 Graebel Companies, Inc. All rights reserved. All trademarks are property of their respective owners.

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