Local Rents Continue to Rise
Annual survey illustrates need for low-cost rental housing
CBRE Hubbell’s 2014 installment of the annual Apartment Survey, released last month, shows that rent in the Des Moines market continues to rise. Rent for the average 2-bedroom apartment in our region has risen to $781 per month, a 3% increase from $758 last year. Rents have risen more steeply for the smallest and largest units available: rent for efficiencies rose 5% and rent for 3-bedroom units rose 6%. While these increases are modest compared to skyrocketing rent in larger cities, rising housing cost remains a major problem for low- to moderate-income households in Central Iowa.
For these households, incomes have not risen as quickly as the cost of rent. Between 2010 and 2012 (the most recent Census data available), median renter household income rose nearly 2%. At the same time, rent for a 2-bedroom apartment rose by 7%. This means that housing is becoming an increasingly large portion of renter households’ monthly expenditures, making it more difficult to pay for other essentials like food, health care, and transportation. For those renters making less than median income, these challenges are even more acute.
PCHTF research suggests that the lowest-income households face the greatest challenge in finding affordable housing. Three out of four extremely low income households pay over half of their income in rent each month. Rising rents for efficiency units will disproportionately impact this group, for whom efficiency apartments may be the only affordable option. Because 60% of these households are single people, these small units are a natural choice. To ease their housing cost burden, more efficiency units must be built. Raising supply will lower rents and provide the poorest households with housing that suits their needs.
One encouraging sign is a substantial increase in planned rental unit development, with 2,575 market-rate units and 368 affordable tax credit units in the works. This marks a staggering 44% increase over last year’s report. Though many of these units will be market rate, providing new options for renters may free up older existing units, creating new options for lower-income households. In addition, meeting our region’s growing demand for rental housing will hopefully keep rents from rising as quickly next year.
The PCHTF thanks CBRE Hubbell for its commitment to providing the latest housing data to the community. Their annual reports help us understand the dynamics of the changing housing market so that we can make informed decisions about affordable housing policy. To read the complete survey, click the link below.