The Joint Center for Housing Studies of Harvard University recently released its 2025 State of the Nation’s Housing report. The annual report provides a comprehensive look at national housing trends. For owners and managers of affordable housing sites, the findings point to significant challenges in maintaining stable operations and meeting growing demand.

The report shows that housing costs continue to climb faster than incomes. Low-cost rental units are increasingly scarce, and the gap between what renters can afford and what the market provides has widened further. With cost burdens climbing and low-cost units disappearing, the role of federally supported housing has never been more critical.

Meanwhile, rising insurance premiums, property taxes, and construction costs are affecting both new development and long-term asset preservation. All of these pressures are compounded by slow growth in federal housing support and delays in expanding the affordable housing pipeline.

Cost Burdens for Renters Reach New Highs

One of the most striking takeaways from the report is the continuing increase in cost burdens among renters. As of 2023, more than 22.6 million renter households, or half of all renters nationwide, spend at least 30 percent of their income on housing and utilities. This includes over 12.1 million renters who are considered severely cost-burdened, paying more than half of their income on rent.

These figures represent the highest levels ever recorded. Since 2019, the number of cost-burdened renters has grown by 2.2 million households. Cost burdens have increased across all income groups, but the most severe impacts are among households earning under $30,000 per year. Eighty-three percent of these households are cost-burdened, with a majority spending more than half of their income on housing.

This level of financial strain is problematic because it leaves little room for non-housing expenses. According to the report, the median residual income for the lowest-income renter households is just $310 per month. This is money left each month for food, transportation, healthcare, and other needs after paying rent and utilities.

Demand Outpacing Supply

In 2024, developers delivered 608,000 new multifamily rental units, which represents the highest total in nearly 40 years. But renter demand continued to outpace supply, with more than 848,000 new renter households entering the market over the same period. Vacancy rates fell in four out of five metro areas, and rents increased in two-thirds of markets despite the new supply.

In addition, the pace of new construction is already slowing. Multifamily starts dropped by 25 percent last year, reflecting tighter financial conditions, higher interest rates, and increased development costs. The report warns that this slowdown could limit rental housing growth in the coming years, especially at the lower end of the market. Fewer new units combined with increasing demand will likely lead to tighter conditions for income-qualified households and longer waiting lists for HUD-assisted units.

Rental Assistance Not Keeping Up

Even as more renters qualify for assistance, federal rental programs serve only a portion of those in need. According to the report, an estimated 5.1 million very low-income renter households currently receive rental assistance, but nearly three times as many qualify. Housing Choice Vouchers remain the largest rental support program, yet about 40 percent of voucher recipients are unable to secure housing within the designated time frame.

Obstacles to lease-up include tight market conditions and the reluctance of some owners to accept vouchers. While source-of-income discrimination laws are in place in many jurisdictions, enforcement remains inconsistent. The report suggests that greater success could come from offering additional support to both owners and renters in the form of assistance with security deposits, utility deposits, and application fees, as well as mobility counseling and extended search periods.

Low-Rent Units in Decline

The report also highlights the fact that the supply of low-cost rental units continues to shrink. Between 2013 and 2023, the number of units renting for less than $1,000 per month (adjusted for inflation) dropped by more than 7.5 million. Units renting for under $600 per month saw a 30 percent decline.

In contrast, the number of units renting for $2,000 or more nearly tripled from 3.6 million to 9.1 million. This upward shift in rents, driven in part by the rising cost of new construction and land, is steadily eroding the availability of naturally affordable housing.

Operating Costs and Climate Risk

In addition to tenant-side pressures, owners are facing increased operational costs. Insurance premiums rose by 14 percent in 2024 alone, bringing the average annual policy to $1,761. Since 2019, premiums have increased 62 percent. Property tax bills rose by 12 percent between 2021 and 2023, and maintenance and capital expenditures are trending upward as well.

The financial impact is greater in areas prone to natural disasters. The report finds more than 60 million housing units are located in regions with at least moderate disaster risk. And the number of billion-dollar weather events has climbed to an average of 28 per year, up from just three per year in the 1980s.

As a result, resilience planning is becoming a necessary part of long-term operations. Insurance access and cost will increasingly depend on disaster exposure and mitigation strategies. Owners may want to explore available resources through federal resilience programs or new energy-efficiency initiatives supported by recent infrastructure legislation.