A new report by the National Low Income Housing Coalition (NLIHC) reveals a significant shortage of affordable rental housing for extremely low-income households in the United States. Only 35 affordable rental homes are available for every 100 extremely low-income households nationwide. This translates to a deficit of approximately 7.1 million affordable rental homes.
The report attributes the shortage to a number of factors, including stagnant wages, rising rent costs, and insufficient housing supply. The study found that most extremely low-income renters work in low-paying service jobs, and their wages have not kept pace with escalating rent prices. Nearly half of renter households are cost-burdened, spending over 30% of their income on rent.
The report also highlights significant disparities in housing affordability based on race and ethnicity. Black, Latino, and Indigenous households are disproportionately affected by the shortage compared to their white counterparts, a consequence of historical employment and housing discrimination.
The NLIHC suggests two primary approaches to address this issue. These include increasing incomes through subsidies like housing vouchers or expanding the supply of affordable housing units targeted towards extremely low-income renters. The report notes a slight decrease in the affordable housing shortage in 2023, potentially correlated with the national push to raise the federal minimum wage to $15.
A quarter of all renter households are extremely low-income — and there's a huge shortfall in apartments they can afford, per a new report from the National Low Income Housing Coalition.
There are 35 rental homes available for every 100 extremely low-income households — or those at or below either the federal poverty level or 30% of their area's median income, whichever is higher — across the country, per the data analysis published in March. The US housing market has a shortage of around 7.1 million rental homes that are affordable and available to the 10.9 million households that fall below those thresholds.
"You can either boost their incomes through a demand side subsidy, like a housing voucher as a choice voucher," said Dan Emmanuel, an author of the report and a research manager at NLIHC. "Or you can construct units right and expand supply and target those units to extremely low-income renters."
Using data from the 2023 American Community Survey from the US Census Bureau, the NLIHC aggregated information on household economics and demographics. The study found which rental units are affordable for each household based on the units' rent and utility bills falling below 30% of the household's income.
Every state has a shortage of affordable housing for those at the bottom of the income distribution, the worst being Nevada at 17 affordable rentals not already occupied by a higher-income household for every 100 extremely low-income households. The best being North Dakota at 62 rentals.
Although the state of Massachusetts has one of the most expensive housing markets in the country, its capital is ranked second for the availability of affordable rentals. On the other hand, three major cities in Texas — Houston, Dallas, and Austin — are listed among the top five cities with the most severe rental shortages despite the fact that the median price of a home in Texas is around $40,000 less than the national median price.
"It's much easier and cheaper to build housing in Texas," Emmanuel said of the laxer regulatory requirements on developers in the Lone Star State. But he said that doesn't always mean that housing elasticity will ensure affordability. "Some states invest a lot more in housing assistance than other states do."
Most extremely low-income renters work in low-paying service industry roles like retail or as home health aides, Emmanuel said. Forty-two percent of the labor force in the extremely low-income category works more than 40 hours a week, he added.
Pay has not kept up with rent increases and nearly half of all renter households are cost-burdened, meaning they spend more than 30% of their income on rent, per the Census Bureau.
Emmanuel also said that the national push to raise the federal minimum wage to $15 coincided with a slight decrease in the shortage of affordable housing for extremely low-income renters in 2023 compared to the year prior.
Some renters are experiencing higher rates of housing unaffordability than others.
Black, Latino, and Indigenous households are more likely to be extremely low-income renters than their white peers.
"The history is employment discrimination and housing discrimination that kept communities of color out of home ownership and generating wealth and transmitting wealth generationally," Emmanuel said.
Do you have a story to share about rising rent costs in your city? Reach out to this reporter at jdeng@businessinsider.com to share your story.
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