Paying more than 30 percent of your income on rent is what experts call unaffordable. Yet the number of people who fall into that group has reached record numbers, according to a new report from the Joint Center for Housing Studies of Harvard University.
The share of renters who pay more than 30 percent of what they make on housing, or what the study labels “cost-burdened,” rose 12 percentage points last decade, reaching 50 percent in 2010. That includes 27 percent who face a “severe burden,” or in other words, pay more than half of their income on rent, a figure that rose 8 percentage points. Initial estimates show that there were a record 21.1 million renters who were cost-burdened in 2012.
The most recent data is for 2011, however, when 20.6 million people were cost-burdened and 11.3 million paid more than half what they made for housing. This problem falls heavily on low-income renters. More than 80 percent of those who made less than $15,000 in 2011 paid 30 percent of their income or more on housing, with 71 percent paying at least half. Given their tight budgets, these renters spend about $130 less on food, “a reduction of nearly 40 percent relative to those without [housing] burdens,” the authors write. “Housing affordability is thus clearly linked to the problem of hunger in America.” They also spend significantly less on health care and retirement savings.
It’s not too hard to figure out why so many struggle to afford rent. There is very little affordable housing available. These low-income renters who make $15,000 or less would have to find housing that costs less than $375 a month, yet the median monthly cost for housing that was built in the last four years is more than $1,000. Less than a third of those units rents for under $800, and a mere 5 percent go for less than $400. There were just 6.9 million housing units that these renters could afford in 2011, but there are 11.8 of these renters, and to top it off, 2.6 million of the affordable units are occupied by higher-income people. The availability of low-cost housing has been declining for decades — in 1970, there was an actual surplus of 300,000 low-cost rental units, but by 2011, there was a shortfall of 5.3 million units.
Unemployment also exacerbated the situation, although the report notes that “high unemployment rates are not the main culprit because the spread of burdens has been even greater among households with full-time workers.” Three-quarters of renters whose household heads couldn’t find a job in the previous year had a housing cost burden. But the share of those who were burdened while also working throughout the year before rose nearly 10 percentage points from 2001 to 2011, reaching more than 2.5 million people.
Meanwhile, federal subsidies to help low-income people afford housing have been hammered by budget cuts and are far from reaching everyone who needs help. One quarter of the households who are eligible for rental assistance actually gets it given the high demand that puts many on lengthy waiting lists. That problem got even worse this year thanks to sequestration, as some people who had finally moved off the waiting lists got their vouchers snatched back because of the automatic budget cuts. Between 40,000 and 65,000 fewer people will have gotten assistance this year compared to last, and if the cuts remain in place next year somewhere between 125,000 and 185,000 additional people will lose the support. Yet housing subsidies kept 2.8 million people out of poverty last year.
The inability of so many to afford rent has pushed many into homelessness. Almost half of the country’s homeless population works but doesn’t make enough to pay for housing. While there has been a decline in the numbers nationally, on any given night there are more than 600,000 homeless people, according to government data, and some of the most populous states actually saw big increases. The number of homeless students reached a record last year at 1.1 million.
Yet sequestration is also hurting the services that help the homeless. The Department of Housing and Urban Development estimated that more than 100,000 homeless and formerly homeless people would be removed from programs thanks to the cuts. Instead of pulling back on all of this investment, a way to fight homelessness would be for Congress to support the creation of more affordable housing by providing financing through the Federal Housing Administration, Fannie Mae, and Freddie Mac.