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After some cooling at the start of the COVID-19 pandemic in spring 2020, rental housing demand has surged, with the nation seeing rising rents and reduced vacancy rates. During this time, the disparities between renter incomes became more evident, according to “America’s Rental Housing 2022,” a new report from Harvard University’s Joint Center for Housing Studies (JCHS).

According to the report, some of the rebound in demand can be attributed to the lack of inventory in the for-sale market and high home prices, keeping many higher-income renters from making the move to homeownership. The overall vacancy rate has fallen to 5.8%, the lowest reading since the mid-1980s. Rents also have increased; in the third quarter of 2021, asking rents rose 13.8% for units in higher-quality buildings.

However, on the other end of the spectrum, many lower-income households, especially those of color, were hard-hit by income losses due to the pandemic and are still struggling to pay their rent. In the third quarter, nearly 25% of Black renters and 19% of Hispanic renters were behind on rent payments. The share of Asian renters behind on payments was slightly lower at 18%, and white renters at 9%.

“This disparity reflects long-term discrimination in labor markets that has consigned many households of color to low-wage jobs in the service industry,” said Chris Herbert, JCHS managing director. “And this sector suffered the most drastic employment cuts over the past two years, which has only compounded existing inequalities.”

While high-end apartments dominate the new construction field, the nation’s low-cost rental stock is shrinking. Through November, multifamily starts saw a three-decade high of 466,000 units at a seasonally adjusted annual rate, exceeding the annual pace of 350,000 units between 2014 and 2020. Nearly 650,000 are under construction, with the pipeline expected to remain robust for some time. Single-family rental share also is on the rise, up from 10% in 2014 to 13% in 2020.

However, according to the report, rental housing nationwide continues to be highly concentrated in just a few neighborhoods and largely absent in others, which limits where renters can live.

“Single-family-only zoning and other density restrictions block the development of multifamily housing in many communities, thereby excluding renters from many neighborhoods,” said Whitney Airgood-Obryki, a JCHS research associate and lead author of the report. “Give that people of color are more likely to have lower incomes and to rent rather than own their homes, the geographic concentration of rental housing helps to perpetuate patterns of racial and socioeconomic segregation.”

With developers building for the upper end of the market to make deals pencil out with rising costs, the rents at new apartments are out of reach for many moderate- to lower-income renters. In addition, the stock of low-cost rentals is disappearing during this period of rising rents, tenure conversions, and losses to disrepair. The number of units that rent for less than $600 decreased by 3.9 million between 2011 and 2019, reducing their share of the rental stock to 22%.

With this imbalance, Herbert said it’s a “pivotal moment for national housing policy.”

“The pandemic has brought the long-simmering rental affordability crisis to the fore, and the current administration supports large-scale investments in both new and existing rental housing, as well as in subsidy programs,” he said. “By creating a comprehensive, well-funded housing safety net, the nation has the opportunity to pull millions of households out of poverty, address long-standing inequities in housing delivery, and ensure that every household has access to a decent and affordable home.”