Harvard study: More middle-income households getting priced out of rentals

More middle-class Americans are getting priced out of their rentals. That's according to a new housing study released by Harvard University.

Harvard researchers said the results are eye-opening, revealing the increase in cost-burdened households for middle-income renters is larger than the increase seen in low-income households.

The new Harvard Housing report revealed it's getting harder for middle-income households to afford renting. And, high-income households have become a much larger segment of the rental market.

President and CEO of the Federal Reserve Bank of Minneapolis, Neel Kashkari, said, "It's widespread, it's all across our country, it's all across our region, and it's all across Minnesota."

The newly released study showed vacancy rates are at decades-long lows, which means rent prices are being pushed up faster than incomes.

"This is an economic competitiveness issue," Kashkari said.

The new report indicated, from 2010-2018, households with incomes of $75,000 and above accounted for more than three-quarters of the growth in renters. It's a significant shift in the typical renter household profile. And, they're paying more than 30% of their income for housing.

Lt. Gov. Peggy Flanagan said her office plans to address the issue soon.

"One of the things that we've proposed for the upcoming Legislative Session is an increase in $276 million in bonding for affordable housing, we know that this is a need all across the state, which is why our proposal is 2.5 times higher than any previous administration," Flanagan said.

Harvard researchers said new high-end rental construction remains near the highest levels in three decades.

"We have to have an all hands on deck approach, from the federal government to the state government," said Flanagan.

"You can't tax the middle-class to subsidize the middle-class," Kashkari added.

Instead, he said another entity needs to step up: the private sector.

"We need a lot more private sector development to come in, build many, many more units across the spectrum, create more supply, that'll make things more affordable for everyone … Unless we unlock the private sector, we're never going to help the vast majority of people who are struggling with affordability today," Kashkari said.