On February 24, The Center for Housing Policy (CHP) released a research brief analyzing changes in the housing cost burdens of low to moderate income working households from 2008 to 2010. According to the report, 10.6 million working households experienced a severe cost burden (spending 50% or more of income on housing costs), or 23.6% of all working households, up from 21.8% of working households in 2008. In other words, nearly one in four working households spent more than half of its income on housing costs in 2010.
The brief finds that America’s 45.1 million working households are nearly evenly split between owners (22.6 million) and renters (22.5 million), but renters face a steeper affordability challenge. Finding a steady two-year trend of decreasing costs for owners and increasing costs for renters, closer analysis reveals that the 2% decrease in housing costs for working owners was outweighed by a 5% decrease in income since 2008. Therefore, actual affordability for working homeowners has not improved, despite falling home values. By the same token, the 4% decline in median income experienced by working renters since 2008 was compounded by a 4% increase in housing costs during the same period, indicating that affordability for working renters has deteriorated substantially.
CHP researchers looked into the underlying causes of these issues and found that national trends in employment and income are contributing to eroding housing affordability. Primarily, fewer low and moderate income households have jobs that employ them for 20 hours or more per week. The CHP defines working households as those that report household members working at least 20 hours per week on average, with incomes no higher than 120% of the median income in their area.
The share of all U.S. working households decreased from 41.8% to 39.3% between 2008 and 2010. The change can largely be explained by increases in the share of low and moderate income households that were not working or working less than 20 hours, which increased by 1.7 percentage points between 2008 and 2010. Incomes for all households, working or not, have declined since 2008. Working owners saw decreases in income strongly correlated with lower number of hours worked, while median hours for working renters held steady over the same period. This suggests a more dramatic real decrease in income occurred for renter households than owner households between 2008 and 2010.
It is worth noting that since households working less than 20 hours per week were not included in the analysis, even if they were severely cost burdened, these numbers do not reflect the full extent of severe housing cost burden across all households. Data for the study are from the 2008, 2009, and 2010 one-year American Community Survey results.
To read the report, Housing Landscape 2012: An Annual Look at the Housing Affordability Challenges of America’s Working Households, visit http://www.nhc.org/media/files/Landscape2012.pdf