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In today's big story, we're looking at how much Americans spend on rent and why cheap properties are so hard to come by.
What's on deck:
But first, the rent is too damn high.
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The big story
High interest rates, low supply, and sky-high prices dragged the housing market to a screeching halt last year. And now a new Harvard study demonstrates how costly the rental market has become, Business Insider's Pete Syme writes.
Harvard's Joint Center for Housing Studies estimated 12.1 million American households spend more than half their income on rent and utilities. That number grows to 22.4 million households for those spending more than 30% of their income on rent and utilities.
Both figures are a record high based on data dating back to 2001.
And before you say it, this isn't a matter of people living beyond their means. Cheap rent has become extremely hard to come by, BI's Eliza Relman and Juliana Kaplan write.
Even after adjusting for inflation, the number of rentals for less than $1,000 plummeted from 2012 to 2022, according to Harvard's research. Meanwhile, rentals priced over $2,000 have more than doubled during the same timeframe.
There's still some room for optimism regarding housing affordability.
The rental market is starting to cool off after a post-pandemic surge, as outlined in the Harvard study and previously reported by BI. Meanwhile, experts predict the housing market will reverse course this year as housing inventory increases and mortgage rates fall.
That'll provide some much-needed relief. But I wonder if other trends could throw a wrench in those plans.
For one, companies continue to push workers back into the office. As a result, people will have less flexibility with where they settle down, forcing an increased focus back on properties within a commutable distance of major cities.
(To be sure, so-called Zoomtowns that exploded in popularity during the pandemic also have problems.)
But even more broadly, no one really knows where the real-estate market will ultimately end up.
For as many good signs as there are, concerns remain. The most obvious is the mountain of debt in the battered commercial real-estate market, with some $2.2 trillion in debt expected to mature by 2027.
And while trouble with office buildings and malls doesn't necessarily correlate to homes and apartment buildings, it adds to the uncertainty and fear that's persisted in the broader market for a while.
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Quiet luxury may be in, but loud luxury still sells. Brands like Hermès sell $125 envelopes if you're looking to spice up your snail-mail habits, and Dolce & Gabbana offers a $700 toaster for some ultra-luxe avocado toast.
Editor's note: Thursday's edition included an incorrect subhead in the Big Story section. The subhead should have read "Microsoft's milestone."
The Insider Today team: Dan DeFrancesco, deputy editor and anchor, in New York. Hallam Bullock, editor, in London. Jordan Parker Erb, editor, in New York.
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