Open Access Journal Article

Post-Pandemic Rental Housing Affordability Economics in the U.S., U.K., & Canada

by Grant Alexander Wilson a,* orcid ,  Jason Jogia b  and  Tyler Case c
a
Hill & Levene Schools of Business, University of Regina, Regina, Saskatchewan, Canada
b
Chief Investment Officer, Avenue Living, Calgary, Alberta, Canada
c
Edwards School of Business, University of Saskatchewan, Saskatoon, Saskatchewan, Canada
*
Author to whom correspondence should be addressed.
EAL  2024, 58; 3(2), 58; https://doi.org/10.58567/eal03020007
Received: 13 January 2024 / Accepted: 9 March 2024 / Published Online: 12 March 2024
View Full-Text
Download PDF

Abstract

Rental unaffordability is defined as spending more than 30% of a household’s gross income on rent. Post-pandemic inflation and interest rate increases have intensified rental unaffordability. This research examines rental affordability in the U.S., the U.K., and Canada. It also explores the effect of renters’ “affordability knowledge” – defined as the expertise tenants have and use to make economical rental housing choices – on rent expenditure and affordability positioning and compares personal finances, economic perspectives, and demographics based on renters in affordable and unaffordable situations. The results show that nearly two-thirds of the renters studied are in unaffordable rental situations. Interestingly, affordability knowledge was found to reduce rent spent and increase affordability situations. Significant demographic differences were found between those in affordable and unaffordable rental situations, including rent spending, food spending, transportation spending, savings, perceived homeownership likelihood, and age. The research offers important insight into current rental affordability economics, recommendations for policymakers, and opportunities for real estate organizations.

Keywords: Affordability; Rental housing; Rental economics;
Copyright: © 2024 by Wilson, Jogia and Case. This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY) (Creative Commons Attribution 4.0 International License). The use, distribution or reproduction in other forums is permitted, provided the original author(s) or licensor are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms.

Share and Cite

ACS Style
Wilson, G. A.; Jogia, J.; Case, T. Post-Pandemic Rental Housing Affordability Economics in the U.S., U.K., & Canada. Economic Analysis Letters, 2024, 3, 58. https://doi.org/10.58567/eal03020007
AMA Style
Wilson G A, Jogia J, Case T. Post-Pandemic Rental Housing Affordability Economics in the U.S., U.K., & Canada. Economic Analysis Letters; 2024, 3(2):58. https://doi.org/10.58567/eal03020007
Chicago/Turabian Style
Wilson, Grant A.; Jogia, Jason; Case, Tyler 2024. "Post-Pandemic Rental Housing Affordability Economics in the U.S., U.K., & Canada" Economic Analysis Letters 3, no.2:58. https://doi.org/10.58567/eal03020007
APA style
Wilson, G. A., Jogia, J., & Case, T. (2024). Post-Pandemic Rental Housing Affordability Economics in the U.S., U.K., & Canada. Economic Analysis Letters, 3(2), 58. https://doi.org/10.58567/eal03020007

Article Metrics

Article Access Statistics

References

  1. Andersen, A. L., Hansen, E. T., Johannesen, N., & Sheridan, A. (2022). Consumer responses to the COVID‐19 crisis: Evidence from bank account transaction data. The Scandinavian Journal of Economics, 124(4), 905-929. https://doi.org/10.1111/sjoe.12512
  2. Andres Fernandez, M., & Martin, S. L. (2022). Affordable housing policies in a post-COVID aftermath. International Journal of Housing Markets and Analysis, 15(1), 126-144. https://doi.org/10.1108/IJHMA-11-2020-0137
  3. Baker, S., Farrokhnia, R. A., Meyer, S., Pagel, M., & Yannelis, C. (2020). Income, liquidity, and the consumption response to the 2020 economic stimulus payments. National Bureau of Economic Research (NBER), Working Paper 27097. https://doi.org/10.3386/w27097
  4. Bank of Canada. (2023). Financial System Review—2023. https://www.bankofcanada.ca/2023/05/financial-system-review-2023/
  5. Bolter, K. & Robey, J. (2020). Agglomeration Economies: A Literature Review. The Fund for our Economic Future (FFEF). https://research.upjohn.org/reports/252
  6. Brennan M., Reed P., Sturtevant L. (2014). The impacts of affordable housing on education: A research summary. Insights from Housing Policy Research. Center for Housing Policy. https://nhc.org/wp-content/uploads/2017/03/The-Impacts-of-Affordable-Housing-on-Education-1.pdf
  7. Callan, M. J., Kim, H., Gheorghiu, A. I., & Matthews, W. J. (2017). The interrelations between social class, personal relative deprivation, and prosociality. Social Psychological and Personality Science, 8(6), 660-669. https://doi.org/10.1177/1948550616673877
  8. Canadian Mortgage & Housing Corporation. (2018). About affordable housing in Canada. https://www.cmhc-schl.gc.ca/en/developing-and-renovating/develop-new-affordable-housing/programs-and-information/about-affordable-housing-in-canada
  9. Chronopoulos, D., Lukas, M., & Wilson, J. (2020). Consumer spending responses to COVID-19 pandemic: An assessment of Great Britain. COVID Economics, 34, 145-186. http://dx.doi.org/10.2139/ssrn.3586723
  10. Cox, N., Ganong, P., Noel, P., Vavra, J., Wong, A., Farrell, D., & Greig, F. (2020). Initial impacts of the pandemic on consumer behavior: Evidence from linked income, spending, and savings data. Brookings Papers on Economic Activity 2020 (2), 35–82. https://doi.org/10.3386/w27617
  11. Du, R., & Zheng, S. (2020). Agglomeration, housing affordability, and new firm formation: The role of subway network. Journal of Housing Economics, 48. https://doi.org/10.1016/j.jhe.2020.101668
  12. Eichholtz, P., & Lindenthal, T. (2014). Demographics, human capital, and the demand for housing. Journal of Housing Economics, 26, 19-32. https://doi.org/10.1016/j.jhe.2014.06.002
  13. Federal Reserve Bank of New York. (2020). Household debt tops $14 trillion as mortgage originations reach highest volume since 2005. https://www.newyorkfed.org/newsevents/news/research/2020/20200211
  14. Fernald, M. (2015). The State of the Nation's Housing 2015. Joint Center for Housing Policy of Harvard University, Cambridge, MA.
  15. Fernald, M. (2016). The State of the Nation's Housing 2016. Joint Center for Housing Policy of Harvard University, Cambridge, MA.
  16. Gabriel, S., & Painter, G. (2020). Why affordability matters. Regional Science and Urban Economics, 80, 103378. https://doi.org/10.1016/j.regsciurbeco.2018.07.001
  17. Ganong, P., & Noel, P. (2019). Consumer spending during unemployment: Positive and normative implications. American Economic Review, 109(7), 2383-2424. https://doi.org/10.1257/aer.20170537
  18. Goodman L. & Mayer C. (2018). Homeownership and the American Dream. The Journal of Economic Perspectives; Nashville, 32(1), 31-58. https://doi.org/10.1257/jep.32.1.31
  19. Goyal, K., & Kumar, S. (2021). Financial literacy: A systematic review and bibliometric analysis. International Journal of Consumer Studies, 45(1), 80-105. https://doi.org/10.1111/ijcs.12605
  20. Hacıoğlu-Hoke, S., Känzig, D. R., & Surico, P. (2021). The distributional impact of the pandemic. European Economic Review, 134. https://doi.org/10.1016/j.euroecorev.2021.103680
  21. Hanna, S. (1984). The impact of high rent expenditures on other consumer expenditures. Housing and Society, 11(3), 136-148. http://dx.doi.org/10.1080/08882746.1984.11429952
  22. Hoolachan, J., McKee, K., Moore, & T., Soaita, A.M. (2017). 'Generation rent' and the ability to 'settle down': Economic and geographical variation in young people's housing transitions. Journal of Youth Studies, 20(1), 63-78. http://dx.doi.org/10.1080/13676261.2016.1184241
  23. Kabundu, E., Mbanga, S., Botha, B., & Crafford, G. (2022). Housing quantum and innovative building systems in South Africa – The affordability perspective for 2020. Critical Housing Analysis, 9(2), 18-29. http://dx.doi.org/10.13060/23362839.2022.9.2.546
  24. Kacher, N., & Petach, L. (2021). Boon or Burden? Evaluating the Competing Effects of House-Price Shocks on Regional Entrepreneurship. Economic Development Quarterly, 35(4), 287-304. https://doi.org/10.1177/08912424211041084
  25. Kirkpatrick, S. I., & Tarasuk, V. (2007). Adequacy of food spending is related to housing expenditures among lower-income Canadian households. Public Health Nutrition, 10(12), 1464-1473. https://doi.org/10.1017/s136898000700081x
  26. Kirkpatrick, S. I., & Tarasuk, V. (2011). Housing circumstances are associated with household food access among low-income urban families. Journal of Urban Health, 88, 284-296. https://doi.org/10.1007/s11524-010-9535-4
  27. Malpezzi, S. (2023). Housing affordability and responses during times of stress: A preliminary look during the COVID‐19 pandemic. Contemporary Economic Policy, 41(1), 9-40. https://doi.org/10.1111/coep.12563
  28. Markov, Č, & Min, Y. (2022). Understanding the public’s animosity toward news media: Cynicism and distrust as related but distinct negative media perceptions. Journalism & Mass Communication Quarterly, 99(4), 1099-1125. https://doi.org/10.1177/10776990211061764
  29. Marreiros, H., Tonin, M., Vlassopoulos, M., & Schraefel, M. C. (2017). “Now that you mention it”: A survey experiment on information, inattention and online privacy. Journal of Economic Behavior & Organization, 140, 1-17. https://doi.org/10.1016/j.jebo.2017.03.024
  30. Mason, K. E., Baker, E., Blakely, T., & Bentley, R. J. (2013). Housing affordability and mental health: Does the relationship differ for renters and home purchasers? Social Science & Medicine, 94, 91-97. https://doi.org/10.1016/j.socscimed.2013.06.023
  31. McKee, K. (2019). Generation rent is a myth – housing prospects for millennials are determined by class. https://theconversation.com/generation-rent-is-a-myth-housing-prospects-for-millennials-are-determined-by-class-108996.
  32. McKee, K., Soaita, A. M., and Hoolachan, J. (2020). ‘Generation rent’ and the emotions of private renting: Self-worth, status and insecurity amongst low-income renters. Housing Studies, 35(8), 1468-1487. https://doi.org/10.1080/02673037.2019.1676400
  33. Meltzer, R., & Schwartz, A. (2016). Housing affordability and health: evidence from New York City. Housing Policy Debate, 26(1), 80-104. https://doi.org/10.1080/10511482.2015.1020321
  34. Miller, S., & Kiernan, K.T. (2021). Proceedings from the Conference on the Impact of Housing Affordability on Economic Development and Regional Labor Markets. Economic Development Quarterly, 35(4). 262-268. https://doi.org/10.1177/08912424211044404
  35. Moore, E., & Skaburskis, A. (2004). Canada's increasing housing affordability burdens. Housing Studies, 19(3), 395-413. https://doi.org/10.1080/0267303042000204296
  36. Morris, A. (2013). The trajectory towards marginality: How do older Australians find themselves dependent on the private rental market? Social Policy and Society, 12(1), 47-59. http://dx.doi.org/10.1017/S1474746412000383
  37. Mosleh, M., Pennycook, G., Arechar, A. A., & Rand, D. G. (2021). Cognitive reflection correlates with behavior on Twitter. Nature Communications, 12(1), 921. https://doi.org/10.1038/s41467-020-20043-0
  38. Nagarjun, K. B., & Sridhar, K. S. (2023). COVID‐19 and the urban housing affordability–evidence from select Indian cities. Regional Science Policy & Practice, 15(8), 1864-1882. https://doi.org/10.1111/rsp3.12695
  39. Newman, S. J., & Holupka, C. S. (2015). Housing affordability and child well-being. Housing Policy Debate, 25(1), 116-151. https://doi.org/10.1080/10511482.2014.899261
  40. Newman, S., & Holupka, C. S. (2016). Housing affordability and children’s cognitive achievement. Health Affairs, 35(11), 2092-2099. https://doi.org/10.1377/hlthaff.2016.0718
  41. Palan, S., & Schitter, C. (2018). Prolific. ac—A subject pool for online experiments. Journal of Behavioral and Experimental Finance, 17, 22-27. https://doi.org/10.1016/j.jbef.2017.12.004
  42. Pollack, C. E., Griffin, B. A., & Lynch, J. (2010). Housing affordability and health among homeowners and renters. American Journal of Preventive Medicine, 39(6), 515-521. https://doi.org/10.1016/j.amepre.2010.08.002
  43. Reed., S., & Crawford, M. (2014). How does consumer spending change during boom, recession, and recovery? U.S. Bureau of Labor Statistics, 3(15), 1-6.
  44. Szumilo, N., & Vanino, E. (2021). Mortgage affordability and entrepreneurship: Evidence from spatial discontinuity in Help-to-Buy equity loans. Journal of Business Venturing, 36(4), 106105. https://doi.org/10.1016/j.jbusvent.2021.106105
  45. Ternullo, S. (2022). “I’m not sure what to believe”: Media distrust and opinion formation during the COVID-19 pandemic. The American Political Science Review, 116(3), 1096-1109. https://doi.org/10.1017/S000305542200003X
  46. Wilson, G. A., & Giuffre, A. (2022). Private rental target markets: A comprehensive spectrum. International Real Estate Review, 25(1), 137-159.
  47. Wilson, G. A., Jogia, J., & Millard, G. (2023b). Vertical integration & performance in residential real estate. Critical Housing Analysis, 10(1), 1-13. http://dx.doi.org/10.13060/23362839.2023.10.1.549
  48. Wilson, G. A., Millard, G., & Hills, C. (2023a). An international examination of market orientation and performance in residential property management. Property Management, 41(5), 618-628. http://dx.doi.org/10.1108/PM-10-2022-0082
  49. Woessner P. (2020). Introducing what works in housing affordability. Federal Reserve Bank of Minneapolis. https://www.minneapolisfed.org/article/2020/introducing-what-works-in-housing-affordability.
  50. Xu, Y., Johnson, C., Bartholomae, S., O'Neill, B., & Gutter, M. S. (2015). Homeownership among millennials: The deferred American dream? Family and Consumer Sciences Research Journal, 44(2), 201-212. https://doi.org/10.1111/fcsr.12136