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U.S. Ranks Poorly in Housing Affordability among Advanced Countries

A paper by the Joint Center for Housing Studies at Harvard University titled Rental Housing: An International Comparison finds that of 12 advanced countries the United States has the greatest share of renters (28.5%) who are severely cost burdened, spending more than half of their income on their housing. The second highest share is found in Spain (27.5%). The United States fares even worse in a comparison of severe cost burdens among the lowest income renters. Sixty-nine percent of the poorest 20% of renters in the United States are severely cost burdened. The median poor renter household in the U.S. spends 74.8% of its income on rent.

The authors utilized data primarily from the American Housing Survey (AHS) for the U.S., the National Household Survey (NHS) for Canada, and the European Union Statistics on Income and Living Conditions (EU-SILC) for European countries to examine renters and the rental housing stock. The analysis also examined housing assistance in each country. 

The median renter household spends 32.3% of its income on housing in Spain, 31.1% in the U.S., 30.1% in the United Kingdom, 26.2% in Canada, 22.2% in Germany, 19.3% in Switzerland, and 19.0% in Austria. Among the poorest renters, the U.S. fares the worst. Among renters with the lowest incomes (bottom 20% of incomes), the median renter household spends 74.8% of its income on housing in the United States, 67.6% in Spain, 54.9% in Italy, and just 34.5% in Switzerland, 32.8% in the Netherlands, and 31.1% in France.

These international differences in affordability appear to be driven by the availability of housing assistance, income inequality, and the level of housing consumption in each country. Housing Choice Vouchers in the U.S. provide a robust housing allowance to recipients, allowing poor renters to spend 30% of their income on housing. Vouchers are available, however, only to a small portion of qualified households in the U.S; a sizable majority of eligible U.S. households receive no housing assistance. Other countries, such as the Netherlands, France, and the United Kingdom, provide housing allowances to more eligible households but at lower levels of assistance per household. The median housing allowance to households was $7,200 in the U.S., $4,988 in the United Kingdom, $2,257 in France, and $2,170 in the Netherlands. Housing allowances refer to demand-side subsidies. Income inequality in the U.S. also contributes to high cost burdens for the poorest renters who must compete with higher income households for housing. Finally, housing in the U.S. tends to be larger and newer than in other countries, which drives up housing costs.

Rental Housing: An International Comparison is available at: http://bit.ly/2cu9XkC