Housing Cost Burden for Low-Income Renters Has Increased Significantly in Last Two Decades

The U.S. Government Accountability Office (GAO) issued a report that details changes in renter households and affordability from 2001 to 2017. The report, As More Households Rent, the Poorest Face Affordability and Housing Quality Challenges, describes rental housing trends, including rental affordability and rental housing quality. The report finds that since the Great Recession, the United States has seen the number and share of rental households increase dramatically. The report concludes that low-income renters making less than 80% of the area median income suffer the most severe affordability challenges and reside in poor quality housing at a much higher rate than higher income groups.

Far more households qualify for rental assistance than the number of available federal housing subsidies. This disparity was exacerbated by the Great Recession. In addition to widespread foreclosures, many households suffered from poor credit or lost income, impeding pathways to home ownership. In 2017, HUD found that 7.7 million rental households had very low incomes, did not receive housing assistance, and were severely cost-burdened, lived in poor housing conditions, or both. Federal housing rental subsidies, however, are only available for approximately 4.4 million households annually.

GAO used data from the American Community Survey, American Housing Survey, recent research reports, and subject area experts to inform its analysis. The report finds that the share of households who rent in the United States began rising after the start of the financial crisis in 2007. In 2017, there were nearly 7 million more rental households compared to 2001. As of 2017, renter households comprised approximately 36% of all households.

Many demographic groups saw increases in renters, but this growth was particularly drastic for middle-aged households, Black households, and higher-income households. The authors attribute higher rental rates among middle-aged households to the lack of financial recovery following the Great Recession. The share of Black households renting increased four percentage points, from 54% in 2001 to 58% in 2017. These rates are approximately double that of white households during the same time period. Higher-income households also saw a marked increase in rentership, moving from the second smallest income group renting in 2001 to the second largest income group renting in 2017.

Despite the growing number of rental households, the supply of rental units has not kept up. This trend has led to decreased affordability, particularly among low-income households. GAO found that in 2017, 48% of renter households were cost burdened, paying more than 30% of their household income on rent. This is a six-percentage point increase from 2001, when 42% of renter households were cost burdened. Low-income households bore the brunt of this cost burden. The share of cost-burdened extremely low-income, very low-income, and low-income renters in 2017 was 89%, 83%, and 54%, respectively. By comparison, 20% of moderate income and 6% of higher income households were cost burdened. Similar trends existed for renters experiencing severe cost-burden – or paying more than 50% of their household income on rent.

Lastly, GAO assessed the state of rental housing quality, finding that 15% of rental units, housing over 5 million households, had serious quality issues or were incomplete. The most common quality issues were cracked walls, rodent infestations, problems with heating systems, and water leaks. Low-income households disproportionately resided in units with serious deficiencies. As of 2017, low-income households made up approximately half of all households living poor quality units. Housing stock containing serious deficiencies were more likely to be units built prior to 1980 and single-family detached homes/mobile homes.

This report is the first in a GAO series that aims to provide a detailed assessment of the country’s housing market. The report can be found at: https://bit.ly/38fx3ZD