According to The State of the Nation’s Housing 2018 report by the Joint Center for Housing Studies of Harvard University, low-income renters continue to be hit hard by rising housing costs. In 2016, 47% of renter households had housing cost burden. This means they paid more than 30% of their monthly income for rent. Although this is a slight decline from the year before, it is 20% higher than in 2000.
High housing costs are a more serious problem for those with the lowest incomes. Exactly 80% percent of renters earning less than $30,000 were cost-burdened. More than half of these households had a severe cost burden, which means they paid more than half their income for rent. Paying this much for housing leaves little to cover other basics like food, medicine or childcare. There are no counties or metropolitan areas in the U.S. where a full time minimum wage worker can afford a modest two-bedroom apartment.
The influential report has been produced for 30 years by Harvard’s Joint Center on Housing Studies. Each year, it provides an analysis on all aspects of housing in the U.S. In addition to analysis of rental housing production and rental costs, it also includes information about homeownership and demographic changes that affect the housing market.
One of its key findings is the disconnect between wages and the cost of rent. Renter incomes have risen 5% since 1960, but median rents have gone up 51% in the same period. From 1989-2016, 93% of the gains in wealth went to the top 20% of households, who also captured 61% of the gains income.
For a number of years, builders have developed more high-end rentals than affordable apartments. More than 2.5 million units renting for less than $800 per month were lost between 1990 and 2016. With the loss of existing affordable units, and few new ones being built, low-income renters face tighter markets. Vacancy rates for affordable rentals are at their lowest level since 2001, and much lower now than for high-end rentals. This shows high demand for affordable rentals and shrinking demand for expensive units. According to the National Low Income Housing Coalition, there are only 35 affordable rental units available per 100 households with extremely low incomes.
In addition to a limited supply of apartments that are affordable to low-income renters, federal housing assistance has shrunk. The report notes that the number of households receiving Section 8 Housing Choice Vouchers shrunk by 86,000 from 2016 to 2017. Funding for federal housing assistance has been stagnant for many years, and rising housing costs mean that a smaller portion of low-income households are being served. While 29% of eligible households received federal housing assistance n 1995, only 25% received it in 2015. Although the total number of households receiving federal housing assistance grew by about 1 million since the late-1980s, the number of low-income households eligible for assistance grew by 6 million over that time.
The State of the Nation’s Housing also discusses how demographic changes in the U.S. population will affect housing production. Currently, immigrants account for roughly half of population growth. By 2040, immigrants will account for 63% of population growth.
Millenials were hit hard economically during the Great Recession and this will affect future housing markets. They have been less mobile than earlier generations, and those that are moving are largely seeking jobs in the booming sunbelt South and Pacific Northwest. Millenials have greater debt, with large student loans a contributing factor. They are also settling down and forming households later. These trends have contributed to a homeownership rate 6-8% lower for current young adults (25-44 years old) than earlier generations.
In addition to information about the rental market, The State of the Nation’s Housing also covers homeownership trends. While the homeownership rate increased slightly in 2017, it dropped for young adults and African-Americans. The gap between the homeownership rate for white and black households, 29%, is the largest on record. Home prices increased, especially in large metro areas, which is putting pressure on the affordability of homeownership. Low interest rates, however, have for now offset rising purchase prices.
Although the U.S. housing market has seen many improvements over the last 30 years, The State of the Nation’s Housing shows that low-income renters continue to face the same challenges. Wages are flat, rents are rising faster than inflation, there are fewer affordable apartments and federal housing support is shrinking. All of this results in low-income renters paying too much of their incomes for basic housing.
Affordable Housing Online has a page that makes it easy to search for a snapshot of affordable housing in your state, county or city. You can find data for your area of interest here.