October 10, 2017

Lessons From the Worst Case Housing Needs: 2017 Report to Congress

Worst Case Housing Needs: 2017 Report to Congress

Since 1991, HUD has published periodic reports on the extent of worst case needs in affordable rental housing. People with worst case needs are very low-income renters who earn 50 percent or less of the area median income; receive no government housing assistance; and face severe housing cost burden (in rent and utilities), reside in severely inadequate housing, or both. Using data from the 2015 American Housing Survey, HUD produced the Worst Case Housing Needs: 2017 Report to Congress, which describes the causes and recent trends in worst case needs from 2013 to 2015. During the past decade, worst case needs have increased by 39 percent. In this 16th report, researchers determined that the number of worst case needs renters increased from 7.7 million in 2013 to 8.3 million in 2015. From 2013 to 2015, the likelihood that a low-income renter household had worst case needs increased to about 43 percent — 1 percentage point higher than it was in 2013. The rise in worst case needs is evidence of an increase in severe housing cost burden among very low-income renters.

Causes of Worst Case Needs

Of the 582,000 new cases of worst case needs over the 2-year period, most (563,000) are attributable to a shift away from homeownership to renting. As the homeownership rate declined, the number of renter households increased by approximately 9 percent. In an increasingly competitive market, rents increased between 2013 and 2015 and the supply of rental housing stock affordable for very low-income renters shrank by over 1 million units. This affordable unit competition, representing the extent to which the market responded to increased demand, accounts for an additional 180,000 new cases of worst case needs. Despite more than 10 percent increase in the total supply of rental units, the affordable rental housing market remained tight with a vacancy rate of less than 4 percent, with many higher-income renters occupying units that would be affordable to those with lower incomes. Growth in household formation and the gap in rental assistance relative to need also added to the number of households susceptible to worst case needs between 2013 and 2015, accounting for an additional 154,000 and 89,000 new worst case needs cases, respectively. . Rising incomes, however, was found to have a mitigating effect on worst case needs by lifting some renters out of the very low-income category, offsetting growth in worst case needs by about 404,000 cases. Still, for the average renter, income increases were nearly matched by a nearly 9 percent rise in median monthly housing costs.

Only 4.4 percent of worst case needs renters dealt with inadequate housing, with 1.8 percent of worst case needs renters having inadequate housing but not being rent burdened and 2.6 percent of worst case needs renters having inadequate housing and being rent burdened. Inadequate housing can be classified as housing with broken-down heating equipment resulting in cold units; a lack of hot water or flush toilets; electrical problems like exposed wires, broken power outlets, or blown fuses; or poor physical conditions such as peeling paint, cracks, leaks, or rats. This small percentage of worst case needs because of inadequate housing reflects the success of national efforts to improve and maintain the housing stock.

Demographics of Worst Case Needs

The growth in worst case needs affected all racial and ethnic groups and household types. At nearly 46 percent, non-Hispanic white renters made up the highest proportion of those with worst case needs. Renters who were Hispanic, non-Hispanic black, and other races and ethnicities were approximately 25 percent, 22 percent, and 8 percent, respectively, of the total population with worst case needs. Thus, combined, nearly 55 percent of those experiencing worst case needs in 2015 were minority households. Out of the estimated 8.3 million households with worst case needs, approximately 2.89 million were families with children; 1.85 million were elderly households without children; 2.76 million were considered nonfamily households composed mostly of single adults; and 805,000 were households composed of childless married couples, adult children residing with parents, cohabitating siblings, and households with in-laws.

Geographic Differences

In 2015, the distribution of worst case needs encompassed every region and metropolitan type across the United States. Approximately 50 percent of very low-income renters in the West had worst case needs, and among very low-income renters living in the South, Midwest, and Northeast, approximately 44 percent, 37 percent, and 40 percent, respectively, had worst case needs. In absolute numbers, central cities were home to more worst case needs households than any other type of metropolitan location. Prevalence rates among very low-income renters living in central cities of the West and South were approximately 51 percent and 46 percent, respectively. Worst case needs were most prevalent among very low-income renters in densely populated suburbs of the West (approximately 55%) and South (approximately 53%). One reason for this trend is that housing assistance, which protects about 25 percent of very low-income renters nationwide from experiencing worst case needs, is much less available in densely populated suburbs, especially in the South and West.

Policy Implications

Worst case needs vary by household type, racial and ethnic group, and geographic area. This report’s findings call for a multifaceted strategy at the federal, state, and local levels to boost the economy, improve the housing market, and make housing assistance more readily available to the most vulnerable.

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