Report Shows Challenging Housing Market for Low- and Moderate-Income Residents
Harvard’s Joint Center for Housing Studies recently released its State of the Nation’s Housing Report. The report paints a grim picture centered around high rents, low wages, and booming wealth inequality. While the U.S. housing market has shown some improvements, such as the national homeownership rate increasing for the first time in 13 years, the report shows that many challenges still persist, especially for lower-income Americans.
According to the report, almost one-third of all U.S. households have housing cost burdens, spending more than 30 percent of their incomes on housing in 2016. This includes about 20.8 million renter households, of which more than half are severely cost-burdened, paying over 50 percent of their incomes for housing. Progress has been made with the number of cost-burdened households falling by 4.6 million between 2010 and 2016. However, the majority of these households—3.8 million—are owners with incomes higher than $45,000.
Whether an owner or a renter, households earning less than $30,000 suffer high housing cost burdens. In 2016, 80 percent of these lower-income renters were cost burdened, with 55 percent having severe cost burdens. For lower-income owners earning less than $30,000, 63 percent were cost burdened, with 42 percent carrying severe cost burdens.
In addition, households in the bottom income quartile have seen their housing costs rise and incomes fall between 2001 and 2016, leaving little left over for basic necessities, such as food and health care. According to the findings, the amount left over each month for these households declined from $730 to $590 in real terms over this period. The decrease was even more substantial for the lowest-income households with children, with just $490 left each month after housing costs.
According to its findings, over the past three decades federally subsidized rental housing has increased by 950,000 units while low-cost stock with rents under $800 in real terms has fallen by approximately 2.5 million units. The shortage of subsidized rental housing isn’t expected to lessen any time soon. According to the report, affordability restrictions on 533,000 LIHTC units; 425,000 project-based Section 8 units; and 142,000 other subsidized units will expire within the next 10 years. This is in addition to the tax system overhaul at the end of 2017 that reduced the value of LIHTCs, which will also result in a decrease of units.
To address households’ cost burdens and increase the production and preservation of safe, affordable housing, the report urges the federal government to enhance and expand the LIHTC and Housing Choice Voucher programs, as well as provide additional funding to the HOME and Community Development Block Grant programs.