A Deeper Look at Rent-Burdened Households

Households paying 30 percent of more in rent, a threshold long used by the federal government to identify “rent-burdened” households, has been a significant housing issue for some time. Nearly half of renter households (48 percent) in the U.S. were rent-burdened in 2015.[1] 

The large share of rent-burdened households is a symptom of the broader affordability problem in the housing market. For the last several years, stagnant household incomes, supply-side challenges, such as lot and labor shortages, and government regulations have contributed to the lack of affordable options for renters and buyers.

This analysis takes a look at the geographic distribution of rent-burdened households as well as how age, marriage, and unemployment affect rent-burdens. Analyzing rent-burdened households through these perspectives can provide a more comprehensive picture of the issue at hand.

The concentration of rent-burdened households varies by region. Figure 1 shows the share of renter households in each county paying 30 percent or more in rent, with dark blue counties signifying a higher share of rent-burdened households. Counties with large shares of rent-burden households are located in  metropolitan statistical areas (MSAs) along the east and west coasts. There is also a cluster of counties in Colorado with large shares, as well as counties scattered throughout the Southeast.

Source: 2015 American Community Survey (5 year, 2011-2015)
(click down and move mouse to the right to see counties in Alaska and Hawaii)

When drilling down to the regional and MSA level, it is clear that age has a varying relationship with rent-burdens. Figure 2 shows the median age of householders by county and its association with rent-burdens (defined as the share of households paying 30 percent or more in rent) by region and by inside/outside of MSAs. In Midwest MSAs, median age is negatively correlated with rent-burdens, which indicates that as one ages the likelihood of having a higher rent-burden subsides. In contrast, the association between age and rent-burdens in Midwest counties outside of MSAs is very weak, indicating that age does not matter as much in these areas.

The opposite is true for the Northeast: while age is negatively associated with rent-burdens outside of MSAs, age does not matter as much in counties inside of MSAs.

Often, marital status alters the financial picture for many households, and consequently can affect the share of income used to pay rent. Figure 3 displays the share of married households in a county and rent-burdens by region and by inside/outside of MSAs. As seen in the figure, the share of married households is generally negatively associated with rent-burdens, regardless of region and inside/outside of MSAs. In other words, the higher the share of married households in a county, the less likely they are rent-burdened.

However, this pattern does not hold for counties in Northeast MSAs. Among counties with higher shares of married households, the share of rent-burdens households remains relatively high.

Another perspective is to look at the labor market and its association with rent-burdens. Being unemployed or marginally attached to the labor force can limit one’s ability to generate sufficient income for rent. Figure 4 shows county unemployment rates and its relationship with rent-burdens by region and by inside/outside of MSAs. For each case, the log of unemployment rates is associated with rent-burdens (all cases are statistically significant).

This figure suggests that, regardless of where you live, the health of the labor market matters when paying rent. However, these data also indicate that, compared to counties outside of MSAs, most counties inside MSAs do not have extremely low unemployment rates, nor very low rent-burdens.

Deconstructing rent-burdens by geography, demographics, and labor variables provides an overview of where rent-burdened households are and the different groups affected – most likely young and single households in MSAs. The rising share of rent-burden households is evidence that housing affordability continues to be a significant issue in this country.

 

[1] Source: 2015 American Community Survey (five year, 2011-2015)

 

 



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