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Housing Landscape 2013: More than a quarter of working renter households spend at least half of income on housing

Housing cost burdens among working renters rise for third straight year; cost burdens remain steady but challenging for working owners.

WASHINGTON—The newest edition of the Center for Housing Policy (CHP)’s annual Housing Landscape report finds that severe housing cost burdens among working renter households have risen for the third consecutive year. Housing Landscape 2013 explores the latest American Community Survey data from 2011, showing that 26.4 percent of working renters spent more than half of household income on housing costs. While severe housing cost burdens stayed relatively stable for working homeowners between 2008 and 2011, roughly one in five working homeowners experienced severe housing affordability challenges throughout this period – despite falling home prices and mortgage interest rates.

Figure 1. Percentage of working households with a severe housing cost burdenCHP, the research affiliate of the Washington-based advocacy group the National Housing Conference (NHC), charts the trends in housing cost burdens among working households from 2008 to 2011 in the latest edition of Housing Landscape. In addition to housing costs and income, the new report includes housing cost burden data from the 50 largest U.S. metropolitan areas, all 50 states and the District of Columbia. The report defines a working household as one with an income less than 120 percent of the median for its area, and with members working at least 20 hours per week on average.

The share of working renter households with a severe housing cost burden grew over the three-year period due primarily to falling incomes and rising rental housing costs. Nationally, working renters saw their housing costs rise by  6 percent from 2008 to 2011, while their household incomes fell more than 3 percent.  Lead report author Janet Viveiros says renters are stretched so thin by growing housing costs that many face impossible choices.

“The growing rate of severe housing cost burdens among renters is not a new trend, but it is clearly an unsustainable one,” said Viveiros. “While rental costs have steadily risen over the last few years, wages for these working families have not fully recovered from the hit they took between 2008 and 2009. Spending most of your paycheck on rent means cutting back on other necessities, including healthcare and even food.”

Figure 2. Changes in median housing costs and household income, 2008 to 2011

Co-author Maya Brennan noted that the causes of rising housing cost burdens among working renters include a difficult economy and an increased demand for rental housing, partly due to the crisis on the homeownership side of the market.

“While the economy pushed both owners’ and renters’ incomes down, the shift away from homeownership is pushing rents up due to increased demand. What we’re seeing with the rental market is not explainable by population trends alone—it clearly reflects the movement of former homeowners into rentals as well as delays in home purchases by current renters,” Brennan explained. “But this increase in rental demand has not been matched by an increase in supply. This imbalance leads to rising rents in markets across the country.”

Working homeowners may have dodged the upswing in housing costs that hit renters, but they have not avoided the effects of falling incomes. In fact, while housing costs among homeowners fell some 3 percent over the study period, household incomes among these homeowners fell even more than they did for renters, down more than 4 percent over the three-year span. However, NHC President and CEO Chris Estes cautioned that a high and growing proportion of all working households—renters and homeowners combined—cannot afford their housing, and that little is being done to help.

"The challenge we face is that despite the range of successful tools to help offset this crisis, we are still in a long trend of flat—and even slashed—funding for these important programs,” said Estes. 

Estes notes that a recent report from the Bipartisan Policy Center’s Housing Commission highlighted the success of federal housing programs like HOME, the housing voucher and the Low Income Housing Tax Credit and encouraged expanded funding for these programs to help respond to the housing affordability crisis.

Read the Housing Landscape 2013 report 


Key National Findings

  • Nearly one in four working households spends more than half of its income on housing. The share of working households with a severe housing cost burden increased significantly between 2008 and 2011, rising from 21.8 percent to 23.6 percent.

  • Declining incomes have exacerbated housing affordability problems for working renters. The median housing costs of working renters rose nearly six percent between 2008 and 2011 while their median incomes fell more than three percent.
  • Severe housing cost burden was most preva­lent among working households earning less than 30 percent of area median income (AMI). Eight in ten working households earning less than 30 percent of AMI (but working an average of at least 20 hours per week) were severely burdened in 2011, a much higher share than for other income groups. Increases in housing cost burdens occurred primarily among working households with incomes at or below 50 percent of AMI, but even some working households earning between 51 and 120 percent of AMI are faced with severe housing cost burdens. 

State and Local Findings

  • Between 2008 and 2011, the share of working households with a severe housing cost burden increased significantly in 24 states and decreased significantly in only one state: South Dakota.
  • Among the 50 states and the District of Columbia, the following five had the highest share of working households with a severe housing cost burden in 2011:

◦  California
◦  Florida
◦  New Jersey
◦  Hawaii
◦  New York

34%
32%
32%
30%
30% 

  • Among the 50 largest metropolitan areas, the following five metropolitan areas had the highest share of working households with a severe housing cost burden in 2011:

◦  Miami-Fort Lauderdale-Pompano Beach, FL
◦  Los Angeles-Long Beach-Santa Ana, CA
◦  New York-Northern New Jersey-Long Island, NY-NJ-PA
◦  Orlando-Kissimmee-Sanford, FL
◦  San Diego-Carlsbad-San Marcos, CA  

41%
39%
35%
35%
34% 

  • A closer look at the data reveals that the share of working households with a severe housing cost burden increased significantly over the three years studied in 18 of the 50 largest metropolitan areas, yet decreased significantly only in the Washington, D.C. and Riverside-San Bernardino-Ontario, Calif., area. Of the 18 metro areas with rising cost burdens, nine are located in the South. Overall, the level of severe housing cost burden among working households displayed a high level of variation at the metropolitan level. Levels ranged from a high of 41 percent in the Miami area to a low of 14 percent in Pittsburgh.

Methodology

This report is based on American Community Survey (ACS) data collected by the U.S. Census Bureau in 2008, 2009, 2010, and 2011. Estimates in this report were generated using Public-Use Microdata Sample (PUMS) population and housing files made publicly available by the Census Bureau. Each file includes roughly 40 percent of the full ACS sample for its respective year, resulting in over 3 million records in each population file and over 1.2 million records in each housing file. There is a unique identifier that links individuals in the population file to households in the housing file. The only geographic identifiers are the state, the census region, and the Public-Use Microdata Area (PUMA) of residence. PUMAs are locally defined geographic areas that allow researchers to produce socioeconomic and demographic estimates with ACS data for sub-state geographies. Each PUMA has a minimum population of 100,000.

For more information on how the PUMS files and constituent variables were used to develop the estimates in this report, see methodology details online at nhc.org.

Notes: For purposes of this report, “working households” are defined as those with a household income of no more than 120 percent of the area median income in which the household members worked an average of at least 20 hours per week for the preceding 12 months. “Severe housing cost burden” is defined as monthly housing costs (including utilities) exceeding 50 percent of household income.

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About the National Housing Conference

Since 1931, the National Housing Conference (NHC) and its members and partners have been dedicated to helping ensure safe, decent and affordable housing for all in America.  We also look to the future.  By combining the expertise of NHC’s members with the research and analysis of the Center for Housing Policy (CHP), we develop ideas, resources and policy solutions to shape a new and brighter housing landscape.

About the Center for Housing Policy

As the research affiliate of NHC, the Center for Housing Policy (CHP) specializes in solutions through research, working to broaden understanding of America’s affordable housing challenges and examine the impact of policies and programs developed to address these needs.