California ranks third worst for renters – Orange County Register
“Survey Says” looks at various rankings and scorecards that assess geographic locations and finds that these grades are best viewed as a mix of artistic interpretation and data.
To hum: Only two states are worse deals for renters than California.
Source: My trusty spreadsheet compared Census Bureau housing data, comparing 2021 to 2016 for 50 states plus the District of Columbia. To create a value metric for renting, states were ranked using five-year change in cost of rent, proportion of financially burdened tenants in 2021, change in burden 2016–21, change in rental households 2016–21, and residents per rental unit 2021 rated. Rankings were derived from a state’s average grade.
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My scorecard ranked California as the third worst for renters, ahead of only Nevada and Arizona. After California came Georgia and Florida.
The best states were North Dakota, Wisconsin, Iowa, Montana and Ohio.
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Those five years of housing history included a pandemic urge to find larger homes and mortgage rates at historic lows, boosting home ownership nationwide by 11% versus a 1% growth in rental households.
Unfortunately, homeless people have been hit with rising rental costs and significant strains on family finances.
But let’s start with the basics. California had the most rental households at 5.73 million, or 13.6% of the country’s 42 million. These renters represent 44% of households in the state, the third largest share of renters behind. DC at 58% and New York at 45%. California was followed by Nevada with 41% and Hawaii and Texas with 37%.
But consider a measure of popularity (or not), the five-year change in the number of tenants.
In California, renter households shrank by 1.5% between 2016 and 2021. That still put it in 34th place.
The biggest declines were in West Virginia down 9.9%, then Hawaii down 6.2%, Michigan down 6.1%, Rhode Island down 6% and Louisiana down 6% of 4.8%. Overall, 24 states had fewer tenants.
Utah had the #1 increase with 18% more tenants, then DC with 10%. Texas was up 9%, New Jersey was up 6% and Washington State was up 5%.
So why the decline in California? Pay attention to the price tag.
Renting in California had an average cost of $1,750 per month in 2021 with only Hawaii being higher at $1,774. After California came DC with $1,668, Colorado with $1,491 and Massachusetts with $1,487.
But it’s really about how much rent has moved up.
California renters suffered the sixth-largest rental cost inflation in 2016-21 – up 27%. The largest increases were seen in Idaho, Washington State and Nevada at 31%, Arizona at 28% and Colorado at 27%.
These rising rents made it difficult to balance a household budget.
High rental spending has resulted in 3.2 million California renter households being financially “burdened,” defined as 30% or more of income for housing costs.
No state had more. No. 2 was Texas with 2 million, New York with 1.8 million, Florida with 1.6 million and Illinois with 745,000.
This financially strapped herd means 56% of California renters were defined as “burdened” by rents, versus 51% nationally and the third-highest US level of “unaffordability.”
Florida had the largest proportion of burdened tenants at 59%, followed by Hawaii at 58%. Louisiana and Nevada followed California with 56%.
Perhaps the best news in the Census rent report for California renters was that the number of taxed renters fell — by 1% — in 2016-21. But that decline is more related to the decline in renters across the state than to financial advances.
Statewide, financially distressed renters rose 4% statewide with gains in 34 states. The biggest jump was in Utah at 26%, then Alaska at 21%, Wyoming at 18%, Texas at 17% and Nevada at 14%.
And renters are crowding into California’s expensive rentals.
In 2021, the typical California rental unit had 2.73 people — the highest in the country. No. 2 was Hawaii at 2.67, then Utah at 2.51, Nevada at 2.49 and Mississippi at 2.45. Florida was No. 7 at 2:43.
Note that “crowded” housing isn’t just about sharing costs. Population densities are often high in states like California and Utah, which have relatively young populations with many families with children.
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To explain poor rankings like California’s, I’ve divided the states into thirds, from lowest to highest grades. What did it tell me about the 17 states with the lowest rental values?
They are expensive: Rental spending in 2021 was $1,382 per month in the lowest-ranked states versus $957 in the highest-ranked states. That’s a gap of 44%.
They become more expensive: These costs increased by 24% in the bottom 17 between 2016 and 2021, compared to a 16% increase in the states with the best value for money.
They are a bigger burden: 37% of renters in low-ranked states were financially stressed by housing costs in 2021, versus 31% in top-ranked states.
They are crowded: 2.44 people per rental unit in low-rank states vs. 2.13 in high-rank states.
But renters seem to be flocking to places that could roughly be described as bum shops.
Low-ranked states had 24.3 million renter households in 2021 versus 8.4 million in high-ranked states. And over five years, the tenant group grew 1.7% in low-tier states while it shrank 1.3% in high-value states.
Why the popularity of seemingly low-ranked states? The three most important words in the real estate industry: jobs. jobs. jobs.
The lowest-ranked states added 3 million jobs between 2016 and 2021, versus a loss of 460,000 jobs in the highest-ranked states.
Renters are looking for opportunities, even if it’s a more expensive trip.
Jonathan Lansner is a business columnist for the Southern California News Group. He can be reached at jlansner@scng.com
https://www.ocregister.com/2023/01/04/california-ranks-3rd-worst-value-for-renters/ California ranks third worst for renters – Orange County Register
