Housing Crisis Fact Sheet


December 22, 2006

Winter 2006-07

Misplaced Federal Budget Priorities

In 2005, the federal government spent just over $39 billion on housing assistance for low income Americans. This figure is expected to be 19% lower in 2011, if plans to trim housing assistance are fully implemented. Yet, the federal government also paid $121 billion in tax expenditures in 2005 - more than three times the amount spent on housing assistance - to subsidize homeownership through mortgage interest, capital gains, and property tax deductions.

These deductions disproportionately serve the homeowners with the highest incomes.  When both housing assistance and tax benefits are taken into account, the poorest one-fifth of American households - those earning less than $19,000 per year - will receive approximately $34 billion in housing subsidies in 2006. By way of contrast, the richest fifth of American households (those earning over $92,000) will receive approximately $94 billion in subsidies, nearly three times more than the poorest fifth and accounting for roughly half of all housing subsidies distributed in 2006.

NLIHC. (forthcoming). Federal housing subsidies: A policy of inequity.


An Insufficient Supply of Affordable Housing Units

In 2003, there were nearly two million fewer rental units affordable at 30% of the area median income, the top threshold for what HUD defines as extremely low income (ELI), than there were renter households in this income category. This "absolute shortage" of apartments affordable to the lowest income Americans increased by more than 200,000 between 2001 and 2003.

Because many units affordable to these households were occupied by households with higher incomes and therefore were not available to meet the housing needs of ELI households, the effective shortfall is actually closer to five million units nationwide. In 2003 there were just 42 units of housing that are were both available for and affordable for to every 100 ELI renter households in America.

NLIHC. 2006. The Rental Housing Affordability Gap: Comparison of 2001 and 2003 American Housing Surveys.


An Overabundance of Renters Burdened by Housing Costs

When the demand for affordable housing exceeds the supply, low income households have no choice but to live in unaffordable units.  In 2003, 5.18 million households - nearly 5% of all U.S. households - with incomes below 50% of their area's median were unassisted renters living in severely unaffordable and/or inadequate housing.  These are households considered to have "Worst Case Housing Needs" by Congress and HUD.

HUD. 2005. Affordable Housing Needs: A report to Congress on the Significant Need for Housing.

The average ELI household spent 79% of its income on housing costs in 2005.  In the same year, roughly three-quarters of the 6.3 million ELI renter households spent more than half of their monthly income on housing costs.

NLIHC. 2006. Research Note #06-05: Recent Data Shows Continuation, Acceleration of Housing Affordability Crisis.

Insufficient Wages Keep Housing Out of Reach

Today, an individual working full-time, 40 hours a week 52 weeks a year, at the locally prevailing minimum wage cannot earn enough to afford the Fair Market Rent of a one-bedroom apartment in any county in the U.S.

On a national basis, a person needs to earn a Housing Wage of $16.31 an hour, working 40 hours per week, 52 weeks per year, to afford a two-bedroom apartment at the Fair Market Rent.  The estimated average wage of American renters was $12.64 in 2005.

Roughly 86% of metropolitan renters today live in areas where working 40 hours per week, 52 weeks per year at the mean renter wage is insufficient to cover the cost of a two-bedroom apartment at the Fair Market Rent.

NLIHC. 2006. Out of Reach 2006 and NLIHC tabulations of Out of Reach data.

While the federal minimum wage has stagnated since September 1997, rents and utilities have increased by roughly 28% since 2000.  By comparison, the most recent data available estimate the seven-year growth rate for average household income at 22%, while the poorest fifth of American households saw their income increase by less than 16%.

NLIHC tabulations of data provided by the US Department of Housing and Urban Development and the Bureau of Labor Statistics.


US Voters Experience Housing Affordability Problems

In 2005, nearly a third (32%) of likely voters reported either housing payments that were difficult to make or that made it difficult to cover medical expenses.

Roughly 17% of likely voters say housing costs are prompting them to consider moving more than 50 miles from their current home.

NLIHC. 2005. Housing Costs Make Paying Medical Expenses Difficult for Third of Likely Voters in New Poll.

Low Income Renters Disproportionately Impacted by Hurricane Katrina

An estimated 302,000 housing units were severely damaged or destroyed by Hurricane Katrina in the fall of 2005. Approximately 216,000 units - an astounding 71% of the total - were affordable to low income households, and the overwhelming majority of these units were in the rental sector.

Hurricane Katrina severely damaged or destroyed more than 22,000 rental units affordable to extremely low income (ELI) households, further exacerbating the well-documented shortage of units affordable to those with the fewest resources.

NLIHC. 2005. Research Note #05-02: Hurricane Katrina's Impact on Low Income Housing Units.  


Local Data Provided by NLIHC