Media Coverage | Cost of rent is hitting record levels, including in Pittsburgh, but not enough low-cost units are available

Mar 5, 2024

By: Jordan Anderson | Pittsburgh Post Gazette | February 10, 2024 | Read the full story

Keeping up with the cost of housing has never been more unaffordable. For half of renters nationwide, it’s outright unobtainable, says one new report from Harvard University. 

Over the past three years, rent surges have pushed a record number of tenants to the brink, a report released by the Harvard Joint Center for Housing Studies has found. The number of renters spending between 30% to 50% of their income on rent and utilities rose by 2 million over the course of the pandemic, the report found. That’s a record high of 22.4 million. In 2022, half of all U.S. renters were cost burdened. 

Experts generally advise against spending more than 25% to 30% of their income on housing.

While faring better than the national average, the crisis has hit the Pittsburgh area, too. About 41% of renter households are cost-burdened, meaning they pay more than 30% of their income on housing, according to data from the report. Just under a quarter, 23%, are severely cost burdened, meaning they spend more than half their income on rent and utilities. Sally Ellwein, director of meeting basic needs for the United Way of Southwestern Pennsylvania, says her organization confronts the fallout daily. 

“Housing continues to be top need,” Ms. Ellwein said. “Our 24/7 human services contact center has seen a 47% increase in housing calls. These are people who are working, sometimes multiple jobs, and so it’s not that they aren’t bringing in wages. It really is the cost of housing and all of the other things that go into running a household – transportation, childcare, utilities.”

Both Ms. Ellwein and the report point to the continued and profound impact of expired pandemic benefits, from emergency rental assistance to the federal, state and local eviction moratoriums, which Pittsburgh and Allegheny County temporarily implemented in 2021. But it wasn’t just low-income households that lost out. 

Both nationally and across Pennsylvania, the report shows that cost burdens have increased the highest for middle-income households, or those earning between $45,000 and $74,999 a year. In 2001, just about 13% of Pennsylvania middle-income households were moderately cost burdened. By 2022, that number surged to nearly 25%. 

“That kind of middle-income group, we know that this population is really struggling and continues to struggle,” Ms. Ellwein said. “They benefited quite a bit from some of the protections that were put in place during the pandemic, and so when those things went away, it almost was like a gut punch.”

Renters are also stuck in an ever-expanding gap between income and cost of living. In 2022, U.S. median rents were 21% higher than they were in 2001, while renters’ incomes have risen just 2%. 

On the local level, the Harvard study estimated that the average income in Pittsburgh is $39,940, and the average monthly housing cost is $953, meaning renters are generally spending almost 30% of what they make on rent per year. Gov. Josh Shapiro renewed the longtime push to raise the state’s minimum wage to $15 an hour during his Tuesday budget address.

The insights into rental unaffordability, while dismal, are not all that surprising to Matt Madia, vice president of real estate services for Pittsburgh’s Neighborhood Allies. There was another glaring problem described in the report that caught his attention.

“What jumped out at me was that lower-income apartment rentals are declining as a share of the overall apartment market,” Mr. Madia said.

While rental markets are finally cooling after overheating during the pandemic and the rental supply has overall increased, Harvard researchers found that millions of low-rent units disappeared nationwide. In 2022, just 7.2 million units had contract rents under $600, a loss of 2.1 million units since 2012. The last decade saw the share of low-rent units drop from 22% of the stock to only 16%. 

In Pennsylvania, the supply of apartments below $999 shrunk by more than 191,000 units between 2012 and 2022, while apartments with rents above $1,000 multiplied by over 276,000 units. 

Apartment operators’ cash flows siphoned as interest, insurance premiums and operating costs shot up during the pandemic. To keep pace with the market, property owners are pricing out vulnerable, low-income tenants. 

“From the real estate side of things, we see a lot of these kinds of small apartment buildings go up for sale, and they are often marketed as an opportunity for a new owner to raise rents on existing tenants,” Mr. Madia said. “We’re actually losing apartments that would be considered naturally affordable apartments and could be a good option for somebody that has a Section Eight voucher, things like that. That creates just a ton of pressure for the folks who are really living paycheck to paycheck and need this housing the most.”

Though programs like the Housing Choice Voucher, also known as Section 8 housing, are meant to make affordable, privately-owned rentals more accessible to low-income families, not enough landlords are buying in. Last year, the Housing Authority of Pittsburgh created a slate of financial incentives to boost landlord participation, such as $1,000 bonuses for new landlords entering the program and enhanced payments for properties with recent renovations or properties with certain accessibility features.

Still, Richard Morris, director of the Urban League of Greater Pittsburgh’s housing department, says 11,000 vouchers across the city and county are sitting unused. It’s a nationwide problem, with the report finding that about 40% of those with vouchers are unable to use them in the short amount of time allotted to sign a lease.

“Private market landlords are not willing to convert more units to subsidize and, instead, are making them available at market rates,” Mr. Morris said. “Generally those market rates are ones that low and moderate income people cannot afford over time. It’s just a matter of when they will potentially default.”

Pittsburgh has initiated some reforms through inclusionary zoning, starting with Lawrenceville in 2019. At least 10% of the housing in new developments or substantial improvements involving 20 units or more must be designated for low-income residents for at least 35 years.

But those efforts come with pushback. One property owner filed a federal lawsuit challenging the ordinance in Oakland last year, arguing it essentially created a tax on developers. 

Local regulations and zoning laws also tend to constrain multifamily construction. Nationwide, an estimated 75% of land in major cities is zoned exclusively for single-family homes, Harvard’s report found. 

Last year did show some promise, as construction of multifamily units was at its highest since 1988, up about a third from pre-pandemic levels.

And a growing number of states targeted local zoning laws to create more flexible housing options in their neighborhoods. In 2023, Montana, Vermont and Washington joined California, Maine and Oregon in passing legislation that permits modest-sized, multifamily buildings on lots zoned only for single-family homes. Mr. Morris wants to see the same efforts locally.

“We will always be faced with, ‘not in my neighborhood,’” Mr. Morris said. “The reality is that everyone should have it. Every community should have affordable family units, single units for single folks and also units for seniors. Instead of trying to solve one problem, you’re looking at a healthy community because all three sectors are serviced.”

As Pittsburgh makes moves in the affordable housing sector, recently borrowing $30 million to bulk up its available pot of money, Mr. Morris doesn’t think the solution can be piecemeal. To tackle the shortage, he believes it will take the city and county to pinpoint the number of units needed and set a tangible goal to meet annually. 

“A program here, a program there won’t do it,” Mr. Morris said. “You have to look out at the landscape and say, how many houses do we need to build? Do we need to do 5,000 every year? How do we get there? When you’ve got a deficit of 26,000 low-income affordable units, everybody recognizes the problem. Stopping the market from doing what the market’s going to do is really challenging. The best thing we can do is invest to try to keep up.”

Top Header Image Photo Credit: Prototyping Larimer Stories by artist John Peña, photo by OPA