The 50th Anniversary of President Kennedy’s assassination has rekindled many memories of a bygone era. One important aspect of American life that has undergone a profound change, and not for the better, is how much the typical family has to pay for rental housing.
When President Kennedy was elected in 1960, only about a tenth of renters spent more than half their income on rent and utilities. Today, according to a biennial report on rental housing issued by Harvard's Joint Center on Housing Studies, fully one-quarter of all renters face such extreme rental cost burdens. Rental affordability problems have escalated every decade except for the 1990s, when the longest peacetime expansion in US history managed to temporarily halt the trend.
The last dozen or so years have been especially harsh. Inflation-adjusted median incomes and rents moved in opposite directions even during the economic expansion phase of the 2000s. Then the Great Recession and Gradual Recovery took an even worse toll. After climbing by 1.4 million from 2001 to 2007, the number of households with extreme rent burdens increased by another nearly 2.5 million from 2007-2011.
These extreme rental affordability problems are far worse among those with low incomes. Indeed, among renters with household incomes of $15,000 or less—roughly equivalent to full-time minimum wage work—a whopping seven in ten have extreme rent burdens. But even among those with incomes in the $15,000-$30,000 range, one-in-three are also burdened.
Working full-time just doesn’t necessarily cut it anymore. The National Low Income Housing Coalition reports that even in the lowest cost state it takes a full-time job and an hourly wage of $12 to afford the rent of a modest apartment at the federal standard of no more than 30 percent of income. Yet the federal minimum wage is set at only $7.25.
What’s it like to shoulder extreme rent burdens and be among the bottom quarter of rental households (with annual outlays of $15,800 or less)? It leaves the average renter in these circumstances spending about 40 percent less a month, or $130 less, on food than those at the same income level but lucky enough to find housing that doesn’t take up more than 30 percent of their income. As if that were not bad enough, it leaves them likely to save about half as much a month for retirement.
This is not good for public health. This is not good for security in old age. This is not good for the economy.
What will it take to stop this devastating trend? To some degree, the answer varies depending on geography.
In very high cost markets where supply is constrained, efforts to build our way out of the problem could bear some fruit. To do that, state and local governments have to ease restrictions on higher densities and overall levels of development.
But even in low-cost markets there remains a gap between what’s affordable at the lowest incomes and the cost to supply even modest rentals. There are really only two ways out of this dilemma: take actions to raise income or subsidize rents in some fashion. But the economy just has not shown the capacity on its own to earn our way out of this problem—apart from a fleeting moment of meager relief in the 1990s. Even then, a fifth of renters needed more than half their income to cover their monthly housing costs.
In the end, there is no escaping the fact that more assistance is needed to help low wage workers and the nonworking elderly and disabled to obtain affordable housing. During a period of fiscal austerity, this is not a popular message – but it is an honest one.
Pressing for reforms of HUD programs, which the current HUD Secretary has rightly championed, is one part of the solution. These include steps like expanding programs that support and encourage work among federal housing assistance recipients, which evidence shows lift earnings and savings and could help graduate them out of assistance. Or permanent supportive housing for the chronically homeless, which saves money and brings meaningful reductions in homelessness. In fact, since an important act was passed in 2009 the number of chronically homeless has fallen a promising 10 percent.
Sadly, what we are getting instead are deep cuts to vital block grant programs that are essential to the operability of the popular and highly successful Low Income Housing Tax Credit program, which has been supporting production and preservation of over 100,000 affordable rentals annually. And we are likely getting sequestration, which HUD estimates could end up driving down assisted renter households by 125,000 in one year alone.
In a time when these rental affordability problems were less acute, President Kennedy famously said, "I would rather be accused of breaking precedents than breaking promises."
What has become of the nation’s stated goal of seeing to it that every American can afford a decent home in a suitable living environment?