Worst-Case Housing Needs Hit Record High in 2021 Per HUD Report
Published by Peter Lawrence on Wednesday, September 13, 2023 - 12:00AM
The number of households with worst-case housing needs hit a record high in 2021, according to the executive summary of the Worst Case Housing Needs: 2023 Report to Congress, released Aug. 23 by the U.S. Department of Housing and Urban Development (HUD).
Setting the Table
The report captures housing needs in mid-2021, roughly a year and a half after the onset of the COVID-19 pandemic and the corresponding economic disruption. The report found that the financial shock to the labor market and household incomes contributed to substantial increases in worst case housing needs. The data in the report comes from the 2021 American Housing Survey sponsored by HUD and conducted by the U.S. Census Bureau. The 2023 report is the 19th biennial report. The entire report has not been released but is expected to be later this month.
To fully understand the report’s findings, it’s important to understand what worst case housing need means.
Worst case housing need is defined as households with incomes at or below 50% of the area median income (AMI) that receive no government housing assistance and pay more than half of their income toward rent, live in severely inadequate conditions, or both.
HUD reports that the unmet need for decent, safe and affordable rental housing continues to outpace income growth and the ability of all levels of government to supply housing assistance as well as facilitate affordable housing production. Because of this, the number of families with worst case housing needs in 2021 set a record high.
In 2021, 8.53 million households were experiencing worst case housing needs. This topped the previous record of 8.48 million in 2011 and was 70% greater than the number of such households in 2001.
The rate at which very low-income (VLI) renters, which are renters earning at or below 50% AMI, experience worst case needs has also increased in recent years. The percentage of VLI renters experiencing worst case needs was 44.1% in 2021, an increase of 1.9 percentage points from 2019. This surpasses the record of 44.0% in 2011. Further, between 2019 and 2021, the number of households with worst case needs grew by 9.8%, which is significantly more than the overall number of VLI renters, which grew by 5.2%.
Since 2019, worst case housing needs have increased across: race, geography, and household types.
The percentage of VLI renters experiencing worst case needs varied among different races. In 2021, the prevalence of worst case housing needs was
- 52.6% among Asian households,
- 47.4% among Hispanic households,
- 44.1% among non-Hispanic white households,
- 41.6% among Native Hawaiian or other Pacific Islander households,
- 39.3% among non-Hispanic Black households and
- 36.4% among American Indian or Alaska Native households.
Furthermore, the prevalence of VLI renters with severe problems between 2019 and 2021 increased by
- 3.2 percentage points for non-Hispanic Black households,
- 2.3 percentage points for Hispanic households,
- 0.4 percentage points for non-Hispanic white households, and
- 12.2 percentage points for other races.
The prevalence of worst case housing needs stayed the same for Asian households. Despite the increased prevalence of worst case needs, the percentage of VLI renters receiving rental assistance decreased for non-Hispanic Black households but remained the same for non-Hispanic white and Hispanic households between 2019 and 2021.
Of the 8.5 million renter households experiencing worst case needs in 2021
- 3.17 million lived in the South
- 2.25 million lived in the West
- 1.62 million lived in the Northeast and
- 1.48 million lived in the Midwest.
The prevalence of worst case needs among VLI renters increased by about 2 percentage points between 2019 and 2021 in the Midwest, Northeast and South. The West, on the other hand, saw a decrease of worst case housing needs of almost 1 percentage point during that time. The prevalence of worst case housing needs decreased in central cities between 2019 and 2021 but increased in the suburbs and nonmetropolitan areas, with the greatest increase in urban suburbs.
For very low-income renters in 2021, worst case housing needs remained a problematic across all household types:
- 44.4% among families with children experience worst case housing needs,
- 40.1% among households headed by older adults without children,
- 50.0% among other family households, which include multiple family members without children, and
- 46.0% among other nonfamily households, which are mostly single individuals.
Between 2019 and 2021, the prevalence of worst case needs increased by 4.2 percentage points among families with children and 6.3 percentage points among the other families group, remained the same among nonfamily households, and slightly decreased among households headed by older adults.
Worst case housing needs increased among all household types since 2019. In 2021, households with worst case needs included 2.63 million families with children, 2.63 million other nonfamily households, 2.35 million older adult households, compared with 0.92 million other family households. About one in seven renter households with worst case needs–14.7%or 1.26 million–included people younger than 62 who have disabilities.
Importance of Rental Assistance
Rental housing assistance, such as programs offered by HUD, help many low-income renter households. Among VLI renters in 2021, 26.6% of households avoided worst case housing needs because they had rental assistance. However, rental assistance is in short supply largely because of inadequate funding. For example, only about one in four eligible households received rental assistance, according to the report. Another 29.3% of VLI renters avoided severe housing problems in the unassisted private rental market by finding affordable homes of adequate quality. The remaining 44.1%, however, were left with worst case needs and almost five in seven of those were extremely low-income households.
Addressing the Housing Need
Worst case housing needs affect all races, people living in any geographic location, and all household types.
The scarcity of housing affordable to the most vulnerable households makes it essential to produce more affordable housing, reduce regulatory barriers to affordable housing production and provide technical assistance to local governments to assist in removing barriers that drive up housing costs. Providing income support to VLI renters can also help address worst case housing needs. As these longer-term strategies take effect and as the nation emerges from the pandemic, increasing access to rental assistance is an essential step toward sustaining affordable housing and preventing homelessness.
While the COVID-19 pandemic played a role in increasing worst case housing needs and exacerbating rental affordability challenges, HUD’s worst case housing needs report and its predecessors provides evidence of the persistent, underlying structural gap in the affordable housing market. In addition to buttressing the case for more vouchers, the report also is evidence for the need for additional affordable housing supply. Novogradac has estimated that nearly 2 million affordable rental homes could be financed over 10 years if the Affordable Housing Credit Improvement Act (AHCIA, H.R. 3238/S. 1557) were enacted. AHCIA is expected to be included in tax legislation that is likely to be considered later this year.
The need for affordable housing, strategies to increase production and the prospects for ACHIA and other related legislation will be discussed by industry experts at the Novogradac 2023 Housing Tax Credit and Bonds Conference, Sept. 28-29 in New Orleans.