Consensus Continues to Build: Renter Burden is High and Projected to Grow Even More

Published by Peter Lawrence on Friday, October 9, 2015 - 12:00am

Last month, Enterprise Community Partners and the Harvard Joint Center for Housing Studies (JCHS) released Projecting Trends in Severely Cost-Burdened Renters: 2015-2025. The white paper examines how demographic and economic trends over the next decade are likely to affect the near-record number of renters with severe housing cost burdens – that is, paying more than half their income in rent. As a result, these households can face significant difficulty affording necessities such as food, clothing, transportation and medical care.

Assuming that current economic conditions remain constant, Enterprise and JCHS project the number of severely cost-burdened renters could grow by 11 percent to 13.1 million in 2025, up from 11.8 million in 2015. However, the groups note that if current trends continue, where rent gains outpace income growth, the number of severely cost-burdened renters could grow by as much as 25 percent and reach as many as 14.8 million households by 2025.

 

Blog Graph Projection of Severely Cost-Burdened Renter Growth
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In a blog post about the Enterprise/JCHS report, the Urban Institute revisited a report it published earlier this summer, Headship and Homeownership: What Does the Future Hold?, and compared projections. The Urban Institute’s projections were generally larger across the board. In addition, its blog post considers a more extreme scenario than the Enterprise/JCHS report: with rents up 3 percent but income up only 2 percent, the Urban Institute projects cost-burdened renters would grow from 28 percent to 31 percent of the total. This translates into more than 4 million new severely rent-burdened households, up more than 34 percent from now to 2025.

 

Blog Graph Urban Institute Projection, Severely Cost-Burdened Renter Growth
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As noted by the reports’ authors, these findings clearly illustrate how critical it is for policymakers to prioritize the preservation and production of affordable rental housing. Several promising options to meet the growing need have already been proposed, including the Bipartisan Policy Center (BPC) Housing Commission’s recommendation to increase the low-income housing tax credit (LIHTC) by 50 percent and the Obama administration’s fiscal year (FY) 2016 budget proposal to allow states to convert unused private activity bond cap into LIHTC authority.