Research: Pathways Through Which Rent Burden is Produced in U.S. Shrinking and Growing Cities

A new paper by Bloustein School Assistant Professor Eric Seymour and colleagues K. Arthur Endsely (WA Franke College of Forestry and Conservation, The University of Montana, Missoula), and Rachel Franklin (School of Geography, Politics and Sociology, Newcastle University, U.K.)  addresses the different pathways through which rent burden is produced in shrinking and growing cities in the U.S.

In “Differential drivers of rent burden in growing and shrinking cities,” (Applied Geography, In print, December 2020) the authors draw upon multiple lines of evidence to both formally and informally test their hypothesis that shrinking cities exhibit fundamentally different dynamics in income and rent than non-shrinking cities. Their conceptual framework describes how the rent burden is exacerbated in growing cities (i.e. faster increases in rent than income) as well as the less-explored relationship between income and rent in shrinking cities, where they hypothesized incomes fall faster than rent.

Few cities regulate rent levels and these controls are often limited (e.g. Gilderbloom & Ye, 2007). Thus, in growing cities, there are few mechanisms preventing rents from rising in the context of increasing demand. For renters in shrinking cities, conversely, rent likely falls only so far given fixed housing costs and the abandonment of no-longer-profitable units. Incomes, however, have declined in shrinking cities for decades due to economic contraction and selective out-migration. Under both scenarios, rent burden is likely to grow.

The study indicates shrinking and non-shrinking cities do, in fact, exhibit different trajectories of income and rent and that the joint operation of these two dynamics increases the share of rent-burdened households. Gross rents, in constant dollars, have risen steadily since 1980 in both shrinking and non-shrinking cities but the median renter household income in most cities has fallen below 1980 levels. While renter incomes fell sharply between 2000 and 2010, they have generally recovered in non-shrinking cities; no such recovery occurred in shrinking cities. They also observe a modest increase in rents over time in shrinking cities, not the steep plummet in prices one might expect from popular accounts.

Since declining incomes exacerbate rental affordability across all cities (and in shrinking cities in particular), the policy implications of this research are clear. While policies like rent control might address the problem of sky-rocketing rents in growing cities, it is not clear that laws limiting rent increases would mitigate rent-burden rates in shrinking cities, where rents rise more slowly. The central problem in shrinking cities, rather, is the alarming decline in income, which renders unaffordable what most would consider to be low-cost housing. An increase in the minimum wage would offer relief to a large number of cost-burdened households living in growing and shrinking cities alike. At present, full-time minimum-wage employment is inadequate to afford even a one-bedroom apartment in many states and nowhere can such income allow a household to afford a two-bedroom apartment (Aurand et al., 2019).

Due to their perception of greater risk involved in renting to low-income tenants, or simply because they can get away with it, landlords charge relatively high rents in low-income areas (Desmond, 2016, Desmond and Wilmers, 2019). Rents are on the rise even in shrinking cities, despite the erosion of demand through depopulation and poor property conditions.