The COVID-19 pandemic’s effect on the multifamily market, including an extended period of rising housing costs, has made rents unaffordable for half of U.S. renters, according to a new study from the Harvard Joint Center for Housing Studies.

The number of renters who were cost-burdened, defined as a household that spends more than 30% of its income on rent and utilities, rose by 2 million between 2019 and 2022. The total number of cost-burdened renter households reached 22.4 million over that time, a record high that accounts for 50% of all renter households in the United States, according to the study from the Cambridge, Massachusetts, institution. Among those, severely cost-burdened households, defined as those spending more than half of their income on housing, rose 1.5 million since the pandemic, bringing the total number to 12.1 million.

Rising proportions of cost-burdened households were spread across all income groups and employment statuses as rent gains outpaced income growth, the study found. Median asking rents grew 21% from 2001 to 2022 compared to just 2% growth in renters’ incomes over the same period. That gap created roughly 8 million new cost-burdened households in 2022 that were headed by a full-time, year-round worker — more than a third of all the households in that group.

“Though the affordability challenge is not new, it has noticeably worsened in recent years,” the study said. “Before the pandemic, housing cost burdens swiftly climbed the income scale, especially in high-cost markets, while households with lower incomes grappled with persistently high burdens. The pandemic significantly exacerbated these problems as rents surged at unprecedented rates, leaving record numbers of renters struggling to afford housing and other basic needs.”

Across income groups, middle-earners making between $45,000 and $75,000 a year saw the fastest increases with shares of cost-burden households growing by 5.4% since 2019 to 41% of all renters in the category. Higher earners, those making over $75,000 a year, saw the proportion of cost-burdened households grow 2.2%, while low-income earners making less than $30,000 annually experienced a 1.5% increase in cost-burdened households, bringing the total proportion in the category to 83%.

Geographically, increases in cost-burdened households were widespread, although the share is higher in the largest markets where rents tend to be higher. Among renter households living in the 56 areas with populations over 1 million people, 51% were cost-burdened in 2022.

Addressing the affordability issue is a matter of generating enough supply to match demand, according to apartment industry trade groups. A study commissioned in 2022 by the National Apartment Association and the National Multifamily Housing Council found that keeping up with rental demand over the following 12 years would require 4.3 million new units, particularly in popular Sun Belt markets such as California, Florida, and Texas.

“While there are certainly headlines about record construction levels and falling rents, they risk masking a true housing affordability crisis that won’t be solved unless we continue to build,” Caitlin Sugrue Walter, vice president of research at NMHC, told CoStar News on Thursday.

And if there was some optimism for American renters, that’s exactly what has happened at the tail end of the pandemic as the rapid growth in rent prices enticed a similarly rapid expansion of new units that has stalled price increases at least temporarily.

From 2010 to 2022, total rental supply grew almost 10%, adding 4.3 million units, to reach a count of 48.1 million. This has been one factor leading to a decline in yearly growth rates in asking rents for professionally managed apartments from 15.3% in early 2022 to 0.4% in the third quarter of 2023, according to the report. Vacancy rates have also increased, from a pandemic low of 5.6% to 6.6% in the third quarter of 2023. 

“This abrupt deceleration was geographically widespread, with rents even falling in some markets,” Whitney Airgood-Obrycki, senior research associate at the Harvard Joint Center for Housing Studies and lead author of the report, said in a statement. “While the slowdown is a welcome change for renters, asking rents still remain well above pre-pandemic levels.”

Even with the new supply, counts of low-rent units — those with contract rents below $600 — declined more than 22% between 2012 and 2022 to 7.2 million. More than half of the 2.1 million low-rent units lost over that time happened between 2019 and 2022, including 230,000 units from 2021 to 2022, according to the report. Nationwide, low-rent units accounted for 16% of all units in 2022 while 16 states lost all units below $1,400 per month.

Additionally, softening rent prices, increasing vacancy rates and higher interest rates have caused a pullback in new construction, the study said. Multifamily starts declined 30% on a yearly basis in October to a seasonally adjusted annual rate of 402,000 units. An exception has been the single-family built-to-rent market, which hit record highs in the third quarter of 2023, reaching an annual rate of 70,000 houses. From 2010 to 2022, the supply of single-family rentals increased by 4.5% to 14.9 million nationwide.

Rapid rent increases along with the expiration of eviction moratoriums and pandemic-era income supports such as Emergency Rental Assistance also have a human cost as these political and economic dynamics have increased overall homelessness, according to the study. On a given night in January 2023, 653,100 people were without a home, a 12.2% increase from a year earlier, according to the point-in-time estimate that is used by agencies such as the Department of Housing and Urban Development to measure the homeless population.

“As these resources have expired, however, the housing safety net is once again overwhelmed and underfunded,” Chris Herbert, managing director of the Harvard Center, said in a statement. “And while states and localities have acted to fill some of the gaps, a larger commitment from the federal government is required to expand housing supports and preserve and improve the existing affordable stock. Only then will the nation finally make a meaningful dent in the housing affordability crisis making life so difficult for millions of people.”