Growing Share of Renters Experiencing Longer, More Frequent Periods of Housing Cost Burden

A study published recently in the Journal of Urban Affairs, “The Dynamics of Housing Cost Burden among Renters in the United States,” reveals that the share of renters experiencing housing cost burdens has grown over the last 50 years and that experiences of housing cost burden are becoming longer and more frequent. The study finds that renter households of color and those of lower socioeconomic status are disproportionately impacted by these trends.

“Housing cost burden” refers to the percentage of household income spent on housing costs like rent and utilities and provides an important measure of housing affordability. Generally, households spending more than 30% of their income on housing costs are considered cost-burdened, while those spending more than 50% of their income on housing costs are considered severely cost-burdened. Most estimates of housing cost burden rely on cross-sectional data from sources like the U.S. Census Bureau’s American Community Survey and American Housing Survey, which provide information on a representative sample of households across the country for a single point in time. In contrast, the new study utilized the Panel Study of Income Dynamics (PSID), a large-scale survey managed by the University of Michigan’s Institute for Social Research that collects data from the same households year after year. This longitudinal structure allows researchers to examine how individual households are affected by socioeconomic and policy changes over time.

The researchers analyzed 50 years (1970-2019) of PSID data on renter households’ incomes and rental costs to better understand the dynamics of housing cost burden “spells,” or periods of time in which households experienced housing cost burdens. Specifically, researchers looked at four measures:

  • Average spell length, or duration.
  • Aggregate exposure, or the total share of time households were cost-burdened.
  • Probability of a new (first-time) spell, or the likelihood of households that have never been cost-burdened becoming cost-burdened in a given year.
  • Probability of recurrence, or the likelihood that previously cost-burdened households experience a new cost burden spell in the next 10 years.

Using statistical models, the researchers examined the relationship between the four measures and the severity of housing cost burden, the racial identity of the householder, and the educational attainment of the householder (a reliable proxy for socioeconomic status). They found that the average spell length doubled between the 1970s and 2010s, from 1.5 years to 3 years for cost-burdened households and from 1.1 to 2.4 years for severely cost-burdened households. Similarly, the total amount of time renter households are cost-burdened has doubled over the last 50 years.

In terms of socioeconomic status (SES), the researchers found drastic differences between the experiences of householders with a high school degree or less (a proxy for lower SES) and those of householders with a college degree or higher level of education (a proxy for higher SES). While average spell lengths were similar between the two groups, lower SES householders experienced far greater aggregate exposure to housing cost burdens, with shares consistently 8 to 9 percentage points higher than higher SES householders across the last five decades. Lower SES householders were also consistently more likely than higher SES householders to experience a first-time cost burden spell or a spell recurrence throughout the study period.

The researchers also found persistent differences when comparing the experiences of householders of color to White householders, noting that “throughout the study period, households of color had spell lengths that were nearly half a year longer than those of White households” and spent “a significantly greater share of all years in a cost burdened state.” While the probability of experiencing a first-time cost burden spell was roughly the same, householders of color were consistently more likely to experience a spell recurrence, with probabilities remaining roughly 4 percentage points higher than for White householders from the 1970s to the 2010s.

The study’s findings not only demonstrate that the share of renter households affected by housing cost burdens is increasing over time, but that the experience of being cost burdened is lasting longer and recurring more frequently. This is especially true for households of lower socioeconomic status and households of color. In fact, lower SES householders of color were found to spend four out of every 10 years in a cost-burdened state. As housing costs continue to rise while real incomes for lower-income households fall, the authors emphasize the need for greater investments in programs that increase “the purchasing power of low-income households through the use of either rental subsidies or cash transfers,” calling attention to the effectiveness of the Housing Choice Voucher program in supporting low-income households. The authors also stress that these programs must be equipped to support renters for longer periods of time, given the increasing duration and recurring frequency of housing cost burden spells.

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