Acute Affordable Housing Shortage for Lowest-Income Renters

A new and notable brief from the National Low Income Housing Coalition provides further evidence of the shortage of housing that low-income individuals and families can afford to rent.

As in the past, NLIHC flags the acute shortage of units that extremely low-income households could rent at an affordable rate, i.e., for no more than 30% of their income.

ELI households are the poorest category used for publicly-subsidized affordable housing — and the poorest analysts customarily use. They’re those whose incomes are at or below 30% of the median for the area they live in.

The most notable thing about the NLIHC analysis is that it introduces a new poor category — deeply low-income households. Their incomes are, at most, 15% of the applicable AMI.

ELI and DLI Renters Nationwide

DLI households are part of the ELI category, but we can see how recent housing and income trends have disadvantaged them the most. For example, in 2012, the latest Census figures NLIHC had to work with:

  • There were 10.3 million ELI renter households nationwide, but only 3.2 million available units they could afford — in other words, 31 for every 100 households.
  • Of these households, 4 million were DLI.* The shortage for them was nearly as great as their number — 3.4 million units. This translates into 16 units for every 100 households.
  • All but 13% of ELI households paid more than they could afford for rent, plus basic utilities. And 75% of them paid more than half their income for these basic needs.
  • Housing burdens, as they’re called, were even worse for DLI households. Ninety percent paid more than they could afford and 95% more than half their income.

Drilling Down to DC

Another notable thing is that NLIHC includes (un)affordability figures for states and the District of Columbia and for major metropolitan areas, including the one used to set the AMI for the District. So we who have a particular interest in affordable housing for the District’s lowest-income residents have new grist for our mills.

Somewhat surprising, at least to me, is the fact that the crunch for them is apparently somewhat less severe than the nationwide crunch — at least, according to the NLIHC figures. We should take them with a grain of salt, however, because the AMI for the District is considerably higher than the District’s own median income.

That said, the local housing market is hardly friendly to the District’s lowest-income renters. And we’ve got a lot of them. NLIHC reports that:

  • There were 26,485 ELI households in 2012 and only 45 affordable, available rental units for every 100 of them.
  • Nearly 71% of them — 18,750 — were DLI households. For them, the affordable housing shortage was worse — 34 units for every 100 households.
  • All but 29% of the ELI households — and all but 23% of those in the DLI subgroup — paid more than half their income for rent.

So for large majorities of both, rental housing wasn’t just somewhat unaffordable, but so unaffordable as to represent a significant risk of homelessness — or if not that, then other hardships.

Trade-Offs Made to Pay for Unaffordable Housing

A recent survey for the MacArthur Foundation found that nearly two-thirds of childless adults — and 75% of parents — whose rents or mortgages were unaffordable had made at least one trade-off in order to cover their housing costs.

Trade-offs included cutting back on health care and/or “healthy food,” amassing credit card debt and giving up on saving for retirement.

Why ELI and DLI Renters Can’t Find Affordable Units

As NLIHC has explained before, part of the problem is that more higher-income households are choosing to rent. So the law of supply and demand has kicked in, driving up what landlords charge.

At the same time, developers have seen a money-making opportunity. Of the 2.5 million rental units added to local markets since 2009, fewer than half a million were affordable for households with incomes below 80% of the AMI, i.e., the highest of the low-income tiers.

It’s also the case, however, that higher-income renters are occupying units that ELI households could afford — about 45% of them nationwide. A recent in-depth study of the Washington metro area came up with virtually the same crowd-out figure.

So there’s a large unmet need for low-cost units. But, as NLIHC says, organizations that want to help meet it face significant challenges, e.g., insufficient subsidies for both developers and operators, who can’t otherwise cover their costs with the rents they’ll collect.

A clarion call for greater public investments in affordable housing programs, of course. And since we can’t look to Congress any time soon, state and local governments, including the District, will have to do more for their lowest-income residents.

Obvious, but I felt I had to say it.

* The American Community Survey, which NLIHC used for most of its analysis, reaches only people who are in some manner housed. So the affordable housing shortage for the very lowest-income individuals and families is even greater than reported, as the brief duly notes.

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