In-brief: One-third of U.S. households in 2015 were “cost burdened,” meaning they spend 30% or more of their incomes to cover housing costs. Of that group, nearly 19 million are paying more than 50% of their income to cover their housing needs, a report from Harvard’s Joint Center for Housing Studies concludes.
CNN picked up on a report from Harvard’s Joint Center for Housing Studies estimating that nearly 39 million households can’t afford their housing.
The report, The State of the Nation’s Housing 2017, finds that the U.S. housing market has nicely recovered from the deep plunge in housing prices that accompanied the Great Recession in 2009 and 2010. But a continued housing shortage means millions of Americans are paying more than 30% of their monthly income for housing – the generally accepted measure of “affordable” housing.
Fully one-third of households in 2015 were “cost burdened,” meaning they spend 30% or more of their incomes to cover housing costs. Of that group, nearly 19 million are paying more than 50% of their income to cover their housing needs.
Renters, as well as homeowners, are affected, Harvard researchers found, with renters more likely to face cost burdens. In fact, the number of cost-burdened renters (21 million) considerably outstrips the number of cost-burdened owners (18 million) even though nearly two-thirds of US households own their homes. Nearly half (48 percent) of all renters were cost burdened in 2015, but that figure masks what amounts to a crisis of affordability in lower-income households. Eighty three percent for renters with incomes under $15,000 and 77 percent of those with incomes between $15,000 and $29,999 were cost burdened, the researchers found.
In addition, some 26 percent of renter households paid more than half their incomes for housing in 2015. Among those earning under $15,000 per year, the share with severe burdens exceeded 70 percent
Amongst home owners, the Harvard data shows steady improvements from 2010, driven by decreases in interest rates and increases in median income. The percentage of cost-burdened homeowners fell steadily from a peak of 30 percent in 2006– 2010 to 24 percent in 2015—close to the level in 2001 well before the housing crisis hit. Still, 10 percent of owners, or more than 7.6 million households, were severely burdened in 2015.
Minority communities are also disproportionately affected by high housing costs. The researchers estimate that 47 percent of black households and 44 percent of hispanic households were cost burdened in 2015, compared with 37 percent for Asian households and 28 percent of white households . Black households were nearly twice as likely to pay more than half their income for housing as white households (25% vs. 13%).
There are costs to the cost of housing. Families that are cost burdened skimp in other, important areas such as food purchases or medication. Severely cost-burdened households in the bottom expenditure quartile (a proxy for low income) spent 53 percent less on food, healthcare, and transportation combined than households without cost burdens. Severely cost-burdened households in the lower-middle expenditure quartile also spent 47 percent less on these basic needs than their counterparts without burdens, the researchers found.