October 10, 2017

Tracking the Nation’s Worst Case Housing Needs

Image of Marge F. Martin, Director of PD&R’s Policy Development Division.Marge F. Martin, Director of PD&R’s Policy Development Division.

I am delighted to announce the release of Worst Case Housing Needs: 2017 Report to Congress. For the past 32 years, the Office of Policy Development and Research (PD&R) has conducted this analysis on the housing problems faced by some of our most vulnerable citizens: low-income renters. The report uses data from the biennial American Housing Survey (AHS). In 2015, PD&R and the U.S. Census Bureau, which conducts the survey on HUD’s behalf, debuted a major redesign of the survey that included new national- and metropolitan-level samples that provide important data on housing markets, conditions, and dynamics. Policymakers, including members of Congress, use these data to track the need for housing assistance and the availability and affordability of rental units for those at the lower end of the income scale, especially very low-income renters — those with incomes less than half of the area median income (AMI).

Worst case needs households are very low-income renter households who receive no housing assistance and pay more than 50 percent of their income for rent or live in severely inadequate units. Three important things to examine are the absolute numbers of these households, their proportion among the total very low-income renter population, and the extent and potential causes of changes in those numbers over time.

The number of households in the United States experiencing worst case needs was 8.3 million in 2015, up from 7.7 million in 2013 and nearly as many as the record high of 8.5 million in 2011. More than one-half of extremely low-income renters with incomes less than 30 percent of AMI had worst case needs in 2015.

The most significant contributor to the increase in worst case needs from 2013 to 2015 was a shift in tenure from homeownership to renting, with higher-income households occupying more rental units that would be affordable to renters with lower incomes. The data show that higher-income renters are occupying a growing share — 43 percent — of the units affordable to renters at the lower end of the income scale, which reflects growing competition for a shrinking supply of affordable rental units. Unlike more expensive units, the stock of rental housing affordable to very low-income renters shrank while vacancy rates were high among the most expensive units.

One of the most exciting new features of the AHS redesign is the ability to track worst case needs across the largest metropolitan areas over time and examine the variation in housing problems in cities and suburbs. Over the years, reporters and local officials have asked the same question about worst case needs reports: “What does this mean for us, and how do these national numbers reflect what is happening in my community?” For the first time, we can estimate housing problems among low-income renters for specific metropolitan areas. This report provides summary statistics for 25 metropolitan areas and establishes a baseline for measuring future changes in worse case needs in these communities. The 15 most populated metropolitan markets highlighted in this report will be tracked every 2 years, and the remaining 10 will be tracked every 4 years.

“So, what do these changes mean for housing policy? HUD programs that provide rental assistance, spur the production of affordable housing, support income gains among renters at the lowest income levels, and stimulate sustainable homeownership are crucial for establishing housing stability for very low-income renters. The report indicates that increasing the supply of more expensive rental stock may not filter down to creating affordable units for low-income renters. Therefore, the preservation and production of affordable rental units through both federal and local initiatives goes hand-in-hand with increasing the supply of the higher-end stock and expanding homeownership opportunities.

This report adds to HUD’s longstanding documentation of the nature and extent of the need for affordable housing and housing assistance. Previous reports on worst case needs, going back to the first one that was published in 1991, have used a consistent methodology. This latest report takes advantage of the AHS redesign for 2015 to include summary statistics for 25 metropolitan areas. Our analysis documents a severe and persistent affordability squeeze facing the nation’s lowest-income renters and its causes, with additional insights on the mitigating role of government housing assistance. Going forward, comparing differing settings across metropolitan areas is likely to shed new light on policies that can reduce worst case needs.

 
 
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