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Nevada Renters Pay More For Housing Than Homeowners

Shannon Wright for NPR

Researchers from Harvard University’s Joint Center for Housing Studies say renters spend more of their income on housing than homeowners do.

Expensive coastal cities have a reputation for sky-high rents, but according to the center’s annual housing report, people in lower-cost communities are also paying a large part of their income for rent because their wages are often much lower than the national average.

Nearly half of renter households in both Las Vegas and Reno are considered cost-burdened – meaning they pay more than 30 percent of their annual income for housing.

Chris Herbert, Managing Director of the Harvard Joint Center for Housing Studies, said the study has actually some good news and some bad news.

“The good news is that when it comes to homeowners the share that is cost-burdened have been coming down steadily over time and as fallen nationally from about 23 million to about 17 million households," he said,  "Among the renters the situation became much worse, in the years after the recession, as many people struggled to get into home-owning and remain renters for a longer period of time and rents are escalating rapidly."

Herbert said during the housing boom many people were cost-burdened because they were stretching to get into homes that were costing more and more.

And when the recession hit, those people lost their homes to foreclosure. 

In addition, more and more people are struggling to get into homeownership because of the lack of entry-level homes and tighter lending practices.

Those two factors along with a cautious homebuilding industry and investors buying up homes to rent out have led to more people renting.

Herbert said the price of rent has long been a problem for people in the bottom rung of the economic ladder but now it is becoming a larger issue.

“What is increasingly the case now is that people working at decent jobs are having a hard time finding housing that fits within their budget,” he said.

He said that in some places people making $30,000 to $40,000 a year are struggling to afford housing and in cities like Los Angeles and San Francisco the same is true for people making even more money.

When housing is no longer affordable, it can have a big impact on other parts of the economy, Herbert said. He said people start cutting back on food, transportation and healthcare.

It also impacts the community because with fewer affordable houses fewer people will want to move to that community. 

He said local governments can use zoning laws, building codes and the building approval process to improve the situation. 

“I think what local governments can certainly do is look and check their own processes to approving development to make sure that they’re allowing sufficient places for developers to come in and put up smaller buildings that can be more cost-effective,” he said.

He said the federal government can improve its subsidizing efforts and change the tax code to improve profit margins for building affordable housing.

However, Herbert said it is not exactly an affordability issue but a wage issue. 

“The growing affordable housing problem really in a basic way comes down to the fact that housing costs over some number of years now have increased faster over time than incomes have.”

Chris Herbert, Managing Director, Harvard Joint Center for Housing Studies, 

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Bert is a reporter and producer based in Reno, where he covers the state legislature and stories that resonate across Nevada. He began his career in journalism after studying abroad during the summer of 2011 in Egypt, during the Arab Spring. Before he joined Nevada Public Radio and Capital Public Radio, Bert was a contributor at KQED and the Sacramento News & Review. He was also a photographer, video editor and digital producer at the East Bay Express.