The number of severely cost-burdened renters – those paying more than half of their income in rent – has reached an all-time high of 11.4 million households, according to the Harvard University Joint Center for Housing Studies’ (JCHS) newly released The State of the Nation’s Housing 2016. Rental demand has increased in recent years, with a net increase of 1.4 million renter households in the past year alone – the largest-ever single year increase. At the same time, rents rose by more than 3.6 percent in 2015, far outstripping the pace of inflation and growth in wages (just 1.2 percent), making rents increasingly unaffordable.
In order to afford rent, many low-income households face difficult choices, sacrificing basic needs like food and transportation to pay for housing costs. The report finds that nearly one in five very low-income renters received utility shutoff notices or had their utilities shut off for nonpayment, one in five low-income families live in overcrowded apartments, and one in ten low-income families live in inadequate units. Unaffordable rents also put families at risk of eviction – a threat faced by over two million low-income families each year.
With apartments in the private market rapidly becoming more expensive, the need for affordable housing is at an all-time high. The affordable housing supply, however, has fallen far short. Another recently released report, the National Low Income Housing Coalition's Out of Reach 2016, found that for every 100 extremely low-income renter households, there were only 31 affordable apartments available. The share of eligible low-income households receiving rental assistance has also declined. Over the past 20 years, the share of income-qualified renters receiving federal assistance fell from 29 to 26 percent.
The finding that the number of severely burdened renters has reached an all-time high after declining for several years points to an alarming trend. Rental demand is expected to remain robust, and “without public subsidies,” the JCHS report predicts, “the cost of a typical market-rate rental unit will remain out of reach for the nation’s lowest income households.” In 2015, Enterprise partnered with the JCHS to further explore how many and what types of renters will be severely cost-burdened in the coming years in Projecting Trends in Severely Cost-Burdened Renters: 2015-2025. The report found that demographic trends alone will result in an 11 percent increase in the number of severely burdened renters to 13.1 million in 2025, and if rent gains continue to outpace income growth, the number could reach 14.8 million severely cost-burdened renter households.
The State of the Nation’s Housing report cites expanding the Housing Credit as one of several policies that could make significant strides towards meeting the affordable housing needs of low-income renters. “Current proposals to expand the Low-Income Housing Tax Credit program, as well as to reform the public housing and other rental assistance programs, may help broaden access to affordable housing for the nation’s most vulnerable households,” the report states. The JCHS notes that applications for the Housing Credit, our nation’s primary tool for financing new affordable housing, far exceed the supply.
The findings in these reports underscore the need for an expansion of the Housing Credit in order to make a meaningful dent in the shortage of affordable housing. Senator Maria Cantwell (D – Wash.) and Senate Finance Committee Chairman Orrin Hatch (R – Utah) recently introduced the Affordable Housing Credit Improvement Act of 2016 (S. 2962), which would expand Housing Credit authority by 50 percent.
We encourage ACTION Campaign members to reach out to their Senators and encourage them to co-sponsor the Affordable Housing Credit Improvement Act of 2016. In the early stages of our co-sponsor outreach, it is especially important to reach out to Republican Senators. To help make the case for this legislation, see our new talking points and bill summary, and use our state fact sheets showing the impact of the Housing Credit in every state as well as the affordable housing needs that still remain.