Article from the Joint Center for Housing Studies Examines Residual Income Cost Burden on Renters

By Ella Izenour, NLIHC Opportunity Starts at Home Intern 

The Joint Center for Housing Studies at Harvard University recently published a paper, “The Rent Eats More: Residual Income Housing Cost Burdens from 2019–2023,” exploring the impact of rising housing costs on renter households’ income. The study uses residual income—the income left after paying rent—to assess how many households fall short of a modest standard of living. The authors argue that utilizing a residual income measure complements traditional housing cost burden measures that do not account for whether households have enough money after paying rent to meet all other expenses. It also explores policy options to reduce these residual income burdens.   

The paper uses data from the Economic Policy Institute’s Family Budget Calculator and the US Census Bureau’s American Community Survey to calculate residual income cost burdens. Based on these calculations, the authors find that financial pressure on renters has increased since 2019. In 2023, nearly two-thirds (65%) of working-age renter households were cost-burdened by residual income standards. On average, renters had $2,000 less left after expenses in 2023 than in 2019, largely due to the rising cost of living. The report highlights how increasing housing and living expenses are pushing low-income renters further from achieving a modest standard of living. Many are forced to cut back on essential needs, like food or healthcare, or take on debt to cover basic expenses. Both options can have critical consequences for the mental, physical, and financial well-being of renters.   

Through measuring residual income, the authors identified an additional 5.3 million renter households burdened by residual income but not captured under traditional housing burden metrics. Additionally, unlike traditional housing-cost burden metrics, rural and non-metropolitan counties were found to have among the highest residual-income burden rates. Both findings expand the commonly understood scope and geography of housing unaffordability in America.      

The authors conclude by recommending expanding affordable housing stock, increasing housing subsidies, and introducing flexible, generous income supports to enable households to afford the many costs they face. They argue that addressing the full scope of affordability challenges through targeted policy action is key to reducing housing affordability burdens for renters nationwide.   

Read the paper here.