How Rising Rents Contribute to Homelessness

Friday, December 14, 2018
Gaby Del Valle

Cities where a lot of people spend more than one-third of their income on rent are more likely to experience homelessness crises, according to a new report by a team of researchers from the University of New Hampshire, Boston University, and the University of Pennsylvania.

The report, which was released on December 11 and was sponsored by the real estate website Zillow, analyzed 386 real estate markets across the country and found that increases in rent prices in less affordable areas make the homelessness rate rise faster.

Most troublingly, the report claims that the total homeless population is much greater than federal estimates suggest. According to the federal Department of Housing and Urban Development’s annual homelessness count, there were approximately 546,566 homeless Americans in 2017. The Zillow report, however, puts that figure at 660,996 — 20 percent higher than the HUD estimate.

In big cities like New York, Seattle, and Los Angeles, steadily rising rents have contributed to a “no-win situation” for renters, according to the report. Even though people who live and work in these cities tend to make more money than people in other parts of the country, rent prices in these cities have outpaced wages. The result: More people are spending a larger percentage of their income on rent, contributing to what the researchers call “an affordability crunch with cascading effects.”

The study found that rents in these cities are so high that people of all income levels, including those with higher-than-average salaries, are competing for a small number of affordable apartments. Everyone struggles when rents rise, but those at the bottom of the economic ladder struggle the most — even small increases in rents can push low-income families into homelessness, according to the report.

According to the report, people communities where the average renter spends more than 30 percent of their income on rent — meaning that they can be described as being “rent-burdened” — are particularly vulnerable to rapid increases in homelessness rates. Prior research has also shown a link between high rents and homelessness; rent-burdened households tend to be more financially precarious than those that spend a smaller percentage of their income on rent, according to an April study by the Pew Charitable Trusts. They also have higher rates of eviction, which could make them vulnerable to homelessness.

This phenomenon isn’t just limited to big coastal cities. In Monroe County, Florida, the median rent is equivalent to nearly 63 percent of the median household income, the study found. The researchers grouped the 386 markets they studied into six “clusters” based on homelessness risk.

One cluster — which is composed of 54 regions, including big coastal cities like New York and Los Angeles, as well as Las Vegas, St. Louis, Missouri, and Anchorage, Alaska — is home to 47 percent of the US’s entire homeless population, despite only housing 15 percent of all Americans. The cities in this cluster have higher rates of homelessness than other parts of the country, as well as higher average rents; nearly half of all renters in these cities are rent-burdened, based on the report’s findings.

Conversely, another cluster that includes central Minnesota, Provo, Utah, and the entire state of Rhode Island has the lowest rate of homelessness, the lowest poverty rate, and lower-than-average rents. More than one-third of all Americans live in this cluster, according to the report, but it’s home to just 14 percent of the US’s total homeless population.

The uneven spread of homelessness across the country suggests that even as a majority of states report declining homelessness rates, the percentage of unhoused people is rising steadily in certain parts of the country — and this relative increase in homelessness is likely the result of high rents and stagnating incomes. According to HUD’s 2017 homelessness estimate, 30 states and Washington, DC, saw a decrease in their homeless populations between 2016 and 2017. But other parts of the country, including Los Angeles and New York City, reported increases in local homelessness rates, often driven by the high cost of housing.

“It’s undoubtedly good news that the overall level of homelessness has fallen nationwide, even as housing costs have increased,” Skylar Olsen, Zillow’s director of economic research and outreach, said in a statement. “But that zoomed-out view obscures some very real, local tensions between housing affordability and homelessness, and ignores the reality that success in tackling homelessness in one community doesn’t necessarily have the same effect in another.”

There is no one-size-fits-all solution to reducing homelessness rates, the researchers found — but in cities where the number of affordable apartments keeps dwindling, addressing the steady increase in rents may be a good place to start.

FAIR USE NOTICE. Tenants Together is not the author of this article and the posting of this document does not imply any endorsement of the content by Tenants Together. This document may contain copyrighted material the use of which may not have been specifically authorized by the copyright owner. Tenants Together is making this article available on our website in an effort to advance the understanding of tenant rights issues in California. We believe that this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the U.S. Copyright Law. If you wish to use this copyrighted material for purposes of your own that go beyond 'fair use,' you must obtain permission from the copyright owner.

Help build power for renters' rights: