Volume X, Number 5
RENTAL HOUSING AFFORDABILITY GAP
The US Department of Housing and Urban Development (HUD) recently released The Widening Gap: New
Finding on Housing iK., JKl,;ibrr in America. The report addresses the number ofAmerican families
continuing to suffer "worst case" housing needs. Using data from the latest American Housing Survey and
recent data from the Bureau of Labor Statistics, the report gives a preliminary look at the growing
shortage of affordable housing for millions of, ir ..i ii- i American families. The HUD report is
summarized in this newsletter in order to reemphasize the critical and growing need for affordable rental
A copy of this report and other housing-related reports are available from HUD USER at 800-245-2691 or
via the World Wide Web at t,' ,1 iii.... ,,i iiI r.org.
In 1949, Congress it a national goal to provide "a decent home in a suitable living environment for every
American family." Unfortunately, this 50-year-old goal has not yet been achieved. In fact, the findings
presented in the HUD report show that the gap between struggling Americans and the Nation's supply of
affordable housing continues to widen.
Data from the American Housing Survey (AHS) is the principal source of information on the U.S. housing
stock and served as the primary source of data for the report. The AHS us conducted for HUD by the U.S.
Census Bureau, which completes interviews of occupied households in a biennial national sample of
Finding #1: New data from the Census Bureau's AHS shows that, despite a period of robust
economic expansion, the housing stock affordable to struggling American families continues to
The affordable housing stock, as measured by the number of total rental units that are affordable for
struggling households without rental assistance, is declining. The number of such affordable rental units
decreased by 372,000 units, a 5 percent drop, between 1991 and 1997. In this case the term ".Il'I', l.Ile '
refers to units that rent for 30 percent or less of the household income for households at or below 30
percent of the area median income level. This decline is shown graphically in Figure 1.
Rental Units Affordable to Struggling Families in
= t 6.6
1991 1993 1995 1997
The steady decline in affordable units has added to the financial pressures facing low-income working
families, the elderly, and the disabled. As a result of the shortage of affordable housing, many families are
forced to spend far too much of their incomes on rent. Without housing assistance of any kind, these
renters face severe financial pressures, many merely a paycheck away or unexpected medical bill away
from homelessness. Their families are at risk, challenged to meet other basic needs, such as food and
medical care. Particularly serious are the pressures faced by millions of American families in transition
from welfare to work families for whom housing is typically the number one cost burden.
Finding #2: Adding to the gap between affordable supply and growing demand is the rapid rise in
rents in American communities. In 1997 and 1998, rents increased at twice the rate of general
In 1997, rents increased 3.1 percent while the overall Consumer Price Index (CPI) increased only 1.6
percent. In 1998, rents increased 3.4 percent while the overall CPI increased 1.7 percent.
In addition to the data from the Census Bureau's AHS, additional data on broader economic trends support
the conclusion that housing affordability continues to worsen. Low inflation is one of the hallmarks of
America's extraordinary economic expansion, yet according to the Bureau of Labor Statistics' May 1999
Monthly Labor Review, rents increased over 1997-1998 at twice the rate of general inflation.
Rent Increase vs. CPI Increase
H CPI increase
* Rent increase
There is also evidence that incomes of struggling Americans have failed to keep pace with these steep
increases in rents. According to the Department of Commerce's study Money Income in the United States:
1997, average incomes for the poorest 20 percent of the population increased only 1.9 percent from
$15,107 to $15,400 between 1996 and 1997.
Finding #3: As the affordable housing stock shrinks, the number of renters at or below 30 percent of
median income continues to grow.
Between 1995 and 1997, the number of renters at or below 30 percent of median income increased by 3
percent, from 8.61 million to 8.87 million. One of every four renter households in America is struggling at
or below 30 percent of median income.
The continuing decline in affordable housing is exacerbated by the increase in the number of struggling
families who are competing for scarce affordable rental units. The 3 percent increase in the number of
struggling renter households between 1995 and 1997 is 50 percent greater than the overall growth rate for
American households. Coupled with the diminishing supply of affordable housing, this significant increase
in demand for affordable housing further widens the affordability gap.
Number of Struggling Families
o o 8.2
Finding #4: The gap between struggling renter households and housing units affordable to them is
large and growing.
The gap between the number of struggling renter households and the number of affordable housing units
continues to worsen. As indicated by the findings cited above, there is an overall gap in the supply of
affordable housing. By 1997, for every 100 extremely low-income renters, there were only 76 units with
rents that would have been affordable to them. However, the number of affordable units that were actually
available for rent was much lower 36 for every 100. This ratio is a serious decline from the 1995 figure
of 44 units per 100 households and continues a worsening trend throughout the 1990s. The available and
affordable housing stock is eroding at an alarming rate.
Struggling Families vs. Units They Can Afford
The following graph displays the trend through the 1990s of the ratio of renter households to affordable
units (upper trend line) and the ratio of renter households affordable/available units (lower trend line). The
upper trend line illustrates the growing mismatch between the number of struggling renters and the overall
supply of units that they can afford. Even more troublesome is the lower trend line that shows a sharper
decrease in the number of units both affordable and available to those renter families. It shows a drop from
47 affordable/available units per 100 renter families in 1991 to only 36 affordable/available units per 100
renter families in 1997 a 23 percent decline in just six years.
Renters vs. Affordable & Available Units
--All affordable units
1991 1993 1995 1997