Severe Housing Cost Burden Remains a Problem

By Jeffrey Steele, Contributing Writer

Washington, D.C.—According to Housing Landscape, the recently released annual report of the National Housing Conference, housing affordability improved slightly for low- and moderate-income working households during the economic recovery. However, housing expenses continue to grow for renters.

In 2013, approximately 25 percent of working renter households spent more than half their income on housing every month. From 2010 to 2013, the median income of working renters increased by 6.7 percent, but rents climbed 4.9 percent. That resulted in only slight improvements in housing affordability.

Homeowners also are discovering that affordability is an issue. One in four working homeowner households suffered severe housing cost burden even as their median housing costs declined.

Is there any reason for even cautious optimism? “There is,” National Housing Conference Center for Housing Policy research associate and study author Mindy Ault told MHN. “The economy seems to be on an upswing, which is great.

“On the other hand, although the economy is improving, there is still a large share of households struggling with affordability. The areas where the jobs are booming — say San Francisco, New York City and areas of Florida—tend to be very expensive places, so affordability continues to be a challenge in those areas for working households.”

Added Janet Viveiros, senior research associate at the Center for Housing Policy and report co-author: “Improvements in housing affordability have been limited for working renters due to consistently rising rents. Severe housing cost burden puts many working renters in a tough situation, as they find it increasingly difficult to afford other essential expenses, like transportation, food and health care.”

In an unprecedented development, this year’s edition of Housing Landscape examined housing affordability trends by race and ethnicity.

It found that with the exception of households headed by American Indians and Native Alaskans, households headed by a member of a minority racial or ethnic group endured a notably higher rate of severe housing burden than did households headed by whites. For instance, about a quarter of working households headed by African-Americans and more than 25 percent of Hispanic-headed households spend more than half their income on housing costs.

That compares unfavorably with the less than 20 percent of households headed by whites that spend more than half their income on housing costs.

“The unfortunate truth is renters do not have much control over prices and the available stock,” Ault said. “Owners are in an improving position with interest rates being lower over the past year. Some at least have the option of refinancing their mortgages and getting better rates. And we believe the cost of housing for working owner households dropping as it has over the past three years is the result of lower interest rates and refinancing.

“There are some promising signs, but affordability remains a significant issue, particularly for working families who are renting.”