Thursday, May 9, 2013 11:05 PM
Janet Ford
Housing-Cost Burdens Rise for Renters
Housing-Cost Burdens Rise for Renters
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.
The Housing Landscape 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,” says 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.”
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 explains. “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,” says 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.
Key national findings from the Housing Landscape 2013
report include:
• 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 10 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 include:
•
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
34%
- Florida 32%
- New Jersey 32%
- Hawaii 30%
- New York
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
41%
- Los Angeles-Long Beach-Santa Ana, CA 39%
- New York-Northern New
Jersey-Long Island, NY-NJ-PA 35%
- Orlando-Kissimmee-Sanford, FL 35%
- San
Diego-Carlsbad-San Marcos, CA 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.
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.
To view the full
Housing Landscape 2013 report, please click here www.nhc.org/media/files/Landscape2013.pdf.
Reprinted with
permission from RISMedia. ©2013. All rights reserved.
Janet & Graham Ford
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