America's Housing Affordability Challenges

Updated September 2014


Among America’s current challenges:

  • 40.9 million households—or more than a third of US families and individuals—had “burdensome” housing costs in 2012. (Those are housing costs above the generally recognized standard of affordability—30 percent or less of household income.)
  • That 40.9 million total actually was 1.7 million less households than in 2011—halting a long, upward trend—but still more than 9 million more than in 2002.
  • About 5.8 million of the increase since 2002 was among severely burdened households (paying more than 50 percent of income for housing).
  • Almost all of the cost burdens eliminated were on the homeowner side—down from 22 million homes in 2011 to 20.3 million in 2012. “But even with this decline, more than a quarter of homeowners (27 percent) still had cost burdens, including more than one in ten with severe burdens.”

(Joint Center for Housing Studies, Harvard University, The State of the Nation’s Housing (“SONH”) 2014, p. 27, posted at


“The picture for renters is even less encouraging.” Id. Most renters’ incomes are disproportionately low.  (E.g., Joint Center for Housing Studies of Harvard University, America’s Rental Housing (“ARH”), p. 3 (Dec. 9, 2013), posted at

  • The number of rental households with burdensome housing costs “rose slightly to 20.6 million in 2012, marking the sixth straight year of increases. And although the cost-burdened share edged down, it still remained close to 50 percent. Moreover, more than one in four renters (27 percent) were severely housing cost burdened.”
  • More than 80 percent of American households with incomes below $15,000 (which essentially is one fulltime job at the federal minimum wage) paid more than 30 percent of income for housing—and more than two-thirds paying over 50 percent. “Within this lowest-income group, the cost-burdened shares differ little between owners and renters.”
  • “In the next-lowest income group (earning $15,000–29,999), three-quarters of renters were cost burdened compared with 52 percent of owners. Even so, the severely cost-burdened shares for both owners and renters in this income group were similar (27 percent vs. 34 percent).”

(SONH 2014, p. 27) Overall, there were approximately 43 million in the nation by early 2013—35 percent of total households, compared with 31 percent in 2004—and the number of renters was still rising. ARH 2013, p. 1) Overall, about 45.3 million Americans lived in poverty in 2013 (14.5 percent of the population, down from 15.0 percent in 2012). U.S. Census Bureau, Income, Poverty and Health Insurance Coverage in the United States: 2013 Release Number: CB14-169 (Sept. 16, 2014).  

            Homeless persons

Some progress has been made on homelessness, in spite of the severe recession of 2007-09 and the very slow recovery. “The January 2013 point-in-time count is the most recent national estimate of homelessness in the United States for which data are available. The count identified 610,042 people experiencing homelessness.” National Alliance to End Homelessness, The State Of Homelessness In America 2014, p. 1 (posted at

The comparable, one-night count in January 2012 showed that 633,782 persons were homeless—4 percent more. Based on those one-day counts:

With the exception of a small increase in 2010, homelessness has in fact fallen steadily since 2007. All major at-risk groups have shared in this improvement, with an 11 percent drop among individuals in families, 12 percent among the chronically homeless, and 6 percent among veterans. Virtually all of the decrease in homelessness has come within the unsheltered population, while the number living in shelters has held fairly constant at just under 400,000.

(SONH 2014, p. 31)  “Federal funding for homeless assistance increased 34 percent between FY2007 and FY2013, contributing to the addition of 95,662 beds in permanent supportive housing.” (Id.)

This new housing has made a profound difference in reducing homelessness among such vulnerable groups as veterans and the chronically homeless. Increased funding for healthcare services that target those with complex medical, mental health, and substance abuse issues has also contributed to the overall decline in homelessness.

(Id.) According to the U. S. Conference of Mayors. lack of housing affordability is a leading cause of homelessness in the cities it surveys (which include many of the nation’s biggest metropolitan areas). (E.g., U. S. Conference of Mayors, Hunger and Homelessness Survey, p. 2 (Dec. 2013), posted at Nineteen percent of homeless adults were employed during 2013, despite a dauntingly high rate of unemployment, underemployment, and people who had given up looking for work.) (Id., p. 3) 

            Related affordability issues

SONH 2014 summarizes related housing difficulties of low-income Americans, such as:

  • The serious tradeoffs they must make between paying the rent (or mortgage) and providing food, clothing, health care, and other basic needs of their family members;
  • The extreme and growing shortage of affordable housing units available to renters with incomes of 30 percent or less of their area’s median income (AMI) (by 2012, there were 11.5 million of those households but only 3.3 million housing units affordable to them);
  • The continuing shrinkage of federal rental assistance programs (by 2011, the number of eligible households—those with incomes 50 percent or less of AMI—had risen to 19.3 million, but less than a quarter of them (4.6 million) were receiving assistance; 58 percent of households that were not being assisted were paying more than 50 percent of their income for rent, or living in severely inadequate housing, or both);
  • And that shortfall in assistance “has no doubt worsened since 2011,” due to federal sequestration, which resulted in 42,000 fewer households receiving assistance in 2013 than in 2012;
  • The possible loss of upwards of 190,000 subsidized units annually over the next decade, due to expiration of current affordability restrictions on units that have received federal assistance;
  • The persistent, negative equity of many homeowners in neighborhoods that have predominantly minority-group residents or high poverty (the share of homeowners with negative equity in such neighborhoods remained at 27 percent in 2013, nearly double the share in white and low-poverty areas).

(SONH 2014, pp. 28-32) On the plus side, there has been a good deal of multi-family housing construction in many cities (more than 300,000 multi-family starts in 2013 nationwide)—although the activity has been uneven. With the addition of new apartments and the slower growth in the number of renters, occupancy rates were stable and rent gains more modest in 2013.

Gains in new construction may, however, be set to slow. The number of multifamily permits issued was up 59,000 in 2013—about half the increase in 2012. Even so, completions of new units should continue to ramp up because of the lengthy development process for multifamily properties. 

(SONH 2014, p. 23) High transportation costs are another major issue for many low- and moderate-income people, due to the lack of housing availability and affordability reasonably near their jobs. “On average, transportation is the second largest household expenditure after housing, and transportation costs are directly related to a key characteristic of housing: location.” (U.S. Department of Housing and Urban Development (HUD), Office of Policy Development and Research, Creating Connected Communities, p. 5 (April 2014))

HUD cites a 2006 Virginia Tech study of 28 metropolitan areas, which indicated that households with incomes up to $50,000, located away from employment centers, spend at least as much on transportation as on housing. For such households earning $20,000-$35,000 annually, transportation expenses averaged about 38 percent of income, and housing cost averaged 32 percent—for a total of about 70 percent of household income. (Id.) For households earning $35,000-$50,000, transportation expenses averaged about 28 percent of income. (Id.)  

            Role of regulatory barriers (exclusionary housing policies)

As mentioned on EHI’s Home Page: "State and local regulations are among the principal culprits behind the nation’s persistent affordability problems.” (Joint Center for Housing Studies, Harvard University, The State of the Nation’s Housing 2007, p. 28)

There is rigorous economic evidence that zoning restrictions raise the price of basic, single-family housing by at least 40 percent above the cost of construction in many major American metropolitan areas. That degree of difference between prices and construction costs is considered excessive. In some major markets, such restrictions appear to add 100 percent or more to prices, above construction costs.  Read more on ECONOMIC EFFECTS OF EXCLUSIONARY HOUSING POLICIES.

Exclusionary housing policies (such as excessive zoning restrictions) play havoc with the availability and affordability of housing. By driving up housing prices and aggravating housing shortages, those policies contribute to hyper-inflation in housing costs. They also increase Americans’ transportation costs and woes by aggravating things such as sprawl, excess road building, traffic congestion, consumption of motor fuels, and air pollution.

Rapidly rising prices lead to real estate speculation and risky financing schemes, which can result in a severe downturn affecting the general economy, as in recent mortgage meltdown, which in turn contributed to the severe recession and national financial crisis of 2007-09. “The collapse of the housing market was a key factor in the genesis of the Great Recession, and its painfully slow rebound is one of the major impediments to the broader economic recovery.” ARH 2013, p. 4. Read more on EXCLUSIONARY HOUSING POLICIES.

EHI’s mission is to promote housing affordability by removing exclusionary housing policies. It is the only national organization whose primary focus is on eliminating such policies.