Los Angeles residents are now spending half their income on rent
"Americans living in rentals spent almost a third of their incomes on housing in the second quarter, the highest share in recent history," reports Prashant Gopal.
"Rental affordability has steadily worsened, according to a new report from Zillow, which tracked data going back to 1979. A renter making the median income in the U.S. spent 30.2 percent of her income on a median-priced apartment in the second quarter, compared with 29.5 percent a year earlier. The long-term average, from 1985 to 1999, was 24.4 percent."
The Census Bureau's U.S. rental vacancy rate, which tracks the share of properties that are unoccupied, fell to 6.8 percent in the second quarter. That's the lowest level using comparable data since 1985.
The short supply of units means "rental inflation is not going away anytime soon," Neil Dutta, head of U.S. economics at Renaissance Macro Research LLC, wrote in a note to clients.
Already rents have climbed 3.5 percent in the 12 months through June, matching the biggest jump since 2008, Labor Department data show. That far outstrips the increase in consumer prices excluding food and fuel, which gained 1.8 percent in the same period.
While that may be good news for Federal Reserve policy makers who'd like to see inflation go higher, it may limit the amount of money consumers can spend on things besides shelter.