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Q: Why is rent so high? (median US renter paid 14% of income for rent in 1960, 24% by 2017.)
That’s the topic of my new paper with @evansuw alum Alanna Williams, presented this morning @nberpubs #NBERSI2020.
Want the answer (or at least a partial one)? Follow along! (1/11)
That’s the topic of my new paper with @evansuw alum Alanna Williams, presented this morning @nberpubs #NBERSI2020.
Want the answer (or at least a partial one)? Follow along! (1/11)
First some clues to the mystery: this is more a story of rents rising fast, rather than incomes falling. Renter incomes track inflation well, but sometime around 1970 rents started accelerating ahead of inflation. Had rents just tracked inflation they’d be about 50% lower today.
It’s a story of rents for older apartments rising, in particular. Long ago, affordable housing was created through depreciation, not construction. Older units rented at a significant discount – 25% off for a 10-20 year old unit. There’s still a discount, but it is smaller.
