Severe Cost Burdens Decline for Low to Moderate Income Working Households

The National Housing Conference released their annual Housing Landscape 2016 report, which examines housing affordability trends for low to moderate income (LMI) working households. LMI working households are defined as those with at least one household member working on average at least 20 hours a week and with income at or below 120% of the area median income (AMI). The report shows a decline over the past three years in the percentage of LMI working households who are severely housing cost burdened, meaning they spend more than half of their income on housing costs. Severely cost-burdened LMI working renter households declined from 26.4% to 25.1%, while severely cost-burdened LMI homeowner households declined from 20.9% to 16.2%.

Despite the decline in severely cost-burdened LMI working households, nearly 79% of extremely low income working households with income below 30% of AMI are severely cost burdened. Severe cost burdens were less prevalent for other income groups: 36.5% of very low income working households with income between 31% and 50% of AMI, 10.9% of low income working households with income between 51% and 80% of AMI; and 3.1% of working households with income between 81% and 120% AMI.

Minority LMI working households were more likely to have severe housing cost burdens than white LMI working households. LMI Asian and Pacific Islander (API) households were the most likely be severely cost burdened (27%), despite having the highest median household incomes ($45,379) because the greatest concentrations of API households are in the high-cost states of California, New York, and Hawaii. Hispanic and African-American LMI working households had lower median household income ($36,303 and $33,681, respectively), and nearly 25% of both groups were severely cost burdened. Among white LMI working households, 17.8% were severely cost burdened.

The cost of renting for LMI working households increased 6.3% between 2011 and 2014, while homeownership costs for LMI working households decreased 5.1%. The demand for rental housing has increased substantially as the number of LMI working households who rent has grown from 22.7 million households in 2011 to 24.2 million in 2014. The number of LMI working homeowners has held steady at 21.9 million.

Housing Landscape 2016 is available at http://bit.ly/1mLiCms