Severely Cost-Burdened Renters Projected to Increase

Report looks at likely scenario for low-income renters in the next 10 years.

By Donna Kimura

A recent report by Enterprise Community Partners and the Harvard Joint Center for Housing Studies paints a bleak picture for low-income renters in the next decade.

Projecting Trends in Severely Cost-Burdened Renters: 2015-2025 shows how the number of households with severe cost burdens—those spending more than half their incomes on rent—will significantly increase in the near future.

Here are five takeaways from the study:

· In a baseline scenario where both rents and incomes grow in line with inflation (set at 2%), researchers found that demographic trends alone would raise the number of severely burdened renter households by 11%, from an estimated 11.8 million in 2015 to 13.1 million in 2025.

· Under the base-case scenario for 2015 to 2025, the number of severely burdened households ages 65 to 74 and those ages 75 and older would rise by 42% (830,000 to 1.2 million) and 39% (890,000 to 1.2 million), respectively, a sign of the critical need for housing and services for the elderly.

· More than any other racial or ethnic group, Hispanic households are projected to have the largest increase in severe-renter burdens in the next decade under the base-case scenario. Overall, the number of severely burdened Hispanic households is expected to increase by 27%.

· Researchers also looked at several alternative scenarios. They found that for each 0.25 percentage point gain in rents relative to incomes, the number of severely cost-burdened renters would increase by about 400,000. Under the worst-case scenario of real rent gains of 1 percentage point higher than real income gains per year over the decade, the number of severely cost-burdened renters would reach 14.8 million by 2025, a 25% increase above today’s levels.

· The study team examined what would happen if income growth were to outpace rent growth over the next decade. According to projections, the number of severely burdened renters would still continue to rise until income growth exceeded rent growth by 1 percentage point. And, even then, the number would drop by just 169,000 households, or 1.4%.

Donna Kimura is deputy editor of Affordable Housing Finance. She has covered the industry for more than a decade. Before that, she worked at an internet company and several daily newspapers. Connect with Donna at [email protected] or follow her @DKimura_AHF.