Consequences of high housing costs


CONSEQUENCES OF HIGH HOUSING COSTS After paying large shares of their incomes for housing, cost- burdened households cut back spending on other vital needs. According to the 2014 Consumer Expenditure Survey, severely burdened households in the bottom expenditure quartile (a proxy for low income) had just $500 left over to cover all other monthly expenses, while otherwise similar households living in affordable housing had more than twice that amount to spend. As a result, severely cost-burdened households spent 41 percent less on food and 74 percent less on healthcare than their coun- terparts living in housing they could afford.

To avoid cost burdens, low-income households often trade off location for affordability. In consequence, low-income house- holds living in housing they can afford spend nearly three times more on transportation than households with severe burdens. Low-income households without cost burdens are also more likely to live in inadequate units (Figure 33).

Very low-income renters (earning up to 50 percent of area medi- an) with severe burdens are at high risk of housing instability. In 2013, 11 percent of these households reported they had missed at least one rent payment within the previous three months, and 18 percent had either received a shutoff notice or had their utilities shut off for nonpayment. Furthermore, 9 percent stated that they were likely to be evicted within the next two months. Very low-income owners with severe burdens also faced these hardships, with 11 percent missing at least one mortgage pay-

ment within the previous three months and 10 percent having received a shutoff notice or had their utilities shut off.

One possible outcome for these vulnerable households is home- lessness, particularly if they live in the nation’s high-cost coast- al cities. Although overall homelessness fell 11 percent between 2010 and 2015, to about 565,000 people, the problem in some cities has reached crisis proportions. Indeed, more than one in five homeless people live in New York City or Los Angeles. In 2014–2015 alone, the homeless population in New York City increased by 11 percent and in Los Angeles by 20 percent.

Progress in eliminating homelessness varies widely across vulnerable populations. Thanks to targeted federal funding, homelessness among veterans fell by 36 percent between 2010 and 2015, and several cities—including Houston, New Orleans, and Philadelphia—have even declared an end to homelessness among this group. Chronic homelessness also fell 22 percent in 2010–2015, due largely to the expansion of permanent sup- portive housing, which offers services to address the mental health and substance abuse issues common to this population. The reduction in homelessness among people in families with children, however, has been much smaller (Figure 34).

One possible solution to family homelessness is to improve access to permanent housing subsidies. As HUD’s Family Options study has demonstrated, families leaving homeless shelters with housing vouchers are more than twice as likely as

Notes: Moderately/severely cost-burdened households pay more than 31–50% of income for housing. Households with zero or negative income are assumed to be severely burdened, while renters paying no cash rent are assumed to be without burdens. Source: JCHS tabulations of US Census Bureau, American Community Survey 1-Year Estimates.

Owners Renters

● Moderately Burdened ● Moderately Burdened ● Severely Burdened ● Severely Burdened







0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

While the Number of Cost-Burdened Owners Has Fallen, the Number of Cost-Burdened Renters Has Reached a New High Households (Millions)





those without vouchers to remain stably housed. Accordingly, President Obama has proposed $11 billion in mandatory funding in his FY2017 budget for a new 10-year initiative to end home- lessness among families with children, significantly expanding housing choice vouchers and rapid rehousing assistance.

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