Housing affordability is one of the most pressing issues facing the region. With an increase in people moving to the region looking for a place to live, the supply of housing has not kept pace with the demand, leading to rising rents and ownership costs. When you add to that the allure of amenities like lively neighborhood centers, parks, bike paths, and transit access, it follows that many households are finding themselves either priced-out or heavily cost-burdened in many of the region’s neighborhoods. As the largest burden falls on lower-income residents (of which the majority are renters), effective housing affordability strategies will need to focus on addressing rising rents for this most hard-hit group of renter. The chart below compares the actual median rents between 2011 and 2016 for the Atlanta Metro region** to the rents that would be considered affordable to a household earning the median household income among renters.
Median rents in the metro region are consistently higher than what would be affordable to most renters. It is estimated that 48.4% of all renters in the Atlanta Metro region paid more than 30% of their household income toward rent (i.e.”cost-burdened”) in 2016. Of all households with incomes less than $50K per year, 55.3% were renters. Of these lower and middle income renters, an estimated 78.9% were cost-burdened in 2016. Comparatively, only 3% of high-income renter households, those earning $75K or more per year, were cost-burdened. The chart below demonstrates clearly the relationship between household income and the proportion of income going to housing costs for renters in the Atlanta Metro region.
Whereas higher income renters are significantly less cost-burdened than their lower income counterparts in the region, they are nonetheless the fastest growing portion of the rental market. The proportion of renter households earning $50K or more per year grew from 29.8% in 2007 to 42.2% in 2016. Of the 229,537 total renter households added during this period, 167,774 had incomes of $50K or more per year — representing 73% of the region’s rental market growth.
In total, the region experienced a 40% increase in the number of renter households from an estimated 568,415 in 2007 to 797,952 in 2016. However for higher income households, the increase was much more pronounced. The number of high-income renter households, those earning $75K or more per year, went from 68,667 in 2007 to 180,698 in 2016 — a 163% increase!
Looking at just the higher-income rental households, the most significant increase was among those earning between $100K and $150k per year. This income bracket alone grew by 191% between 2007 and 2016.
The increase in higher income renters, exhibited on the last two charts above, reflects a shifting preference among higher income households more broadly to forego home ownership in favor of renting. Among households earning $75K or more per year, the percent that were renting increased from 10% in 2007 to 21.1% in 2016.
Housing affordability in the region depends on a supply of housing that reflects its economic diversity. With higher income households increasingly choosing to rent in the region, more money will continue to flow into the rental market. If the supply of rental units does not keep pace with the shifting demand in the region, rents will continue to be pulled higher than is affordable for a majority of its lower income residents. Closing this “affordability gap” will be a central challenge to those working to address housing affordability in the Atlanta Metro region.
* Defined as the Atlanta-Sandy Springs-Marietta MSA for 2007 to 2012 and as the Atlanta-Sandy Springs-Roswell MSA for 2013 to 2016, the only difference being that the latter includes Morgan County while the former does not include Morgan County.
U.S. Census Bureau, American Community Survey (ACS), 1-year estimates, 2007 to 2016
Zillow, Jan. 2011 to Dec. 2016