
HIGH HOUSING COSTS ARE CONSUMING HOUSEHOLD INCOMES – Harvard JCHS
“While rents have risen across the board, income trends have diverged. Households earning $75,000 or more saw a 3 percent increase in median incomes between 2001 and 2022, while middle- and lower-income renter households saw reductions in their real earning power. The median income for renter households earning between $30,000 and $74,999 fell by 2 percent in this period, while the median income for households with incomes below $30,000 fell by 12 percent. For lower-income renters, this reduction in real income accelerated since the pandemic, as unemployment climbed and many lower-income workers lost wages due to economic disruptions.
“Caught between rising rents and falling incomes, lower-income renters’ residual income has plummeted to record lows (Figure 2). From 2001 to 2022, the median residual income for all renter households declined by 4 percent. Among households making less than $30,000, the median residual income fell by a staggering 47 percent, leaving the median lower-income renter household with just $310 each month to cover all non-housing expenses. The pandemic accelerated the long-term decline in residual incomes. Between 2019 and 2022 alone, the median residual income for lower-income renters fell by $160, a greater decline in three years than the entire amount lost between 2001 and 2019 ($110)…
“Low residual incomes leave households without enough to cover essential expenses such as food, healthcare, transportation, and childcare. Our tabulations of data from the Economic Policy Institute’s Family Budget Calculator indicate that even in the most affordable counties in the United States, a one-adult household still would need a minimum of $2,000 per month to afford all non-housing expenses and maintain a modest yet adequate standard of living in 2022. A household with two adults would need a minimum of $2,800 in the most affordable counties, and a household with one adult and one child would need a minimum of $2,900.”
This article explains the use of “residual income” to measure housing affordability: IS THERE A BETTER WAY TO MEASURE HOUSING AFFORDABILITY?
Ways to make housing more affordable:
- Ease zoning and build more units: THERE’S AN EASY FIX THAT WOULD SOLVE OUR HOUSING CRISIS: LIGHT TOUCH DENSITY – AEI
- Subsidize renters: Policymakers Can Solve Homelessness by Scaling Up Proven Solutions: Rental Assistance and Supportive Services – CBPP
- Suggest lots of approaches and see what’s possible: FACT SHEET: President Biden Announces Plan to Lower Housing Costs for Working Families