Renter Households with Incomes between 0% and 30% of HUD-Adjusted Area Median Family Income (2007)

The recent turmoil in U.S. mortgage and housing markets has affected millions of families. Some are lower-income homeowners trapped in mortgages they cannot afford, and some are lower-income renters who are facing eviction because their landlords defaulted on their mortgages.

But there is a housing crisis of much longer standing: the number of lower-income families who pay a high proportion of their income on housing, and the consequences for other parts of their budgets.

Many families are paying a large percentage of their income on housing, leaving little money for other necessities such as food, clothing, and health care. In the chart above (2007 figures), the vast majority of families labeled as having severe housing problems are paying more than 50 percent of their income for housing. The HUD figure that extremely low-income rental households have on average 0.82 children each gives us a total of almost 3.5 million children living in families that are in this extreme financial position. (Many households with severe housing needs are elderly households.)

In addition, more than 3.6 million lower-income home-owning households are in the same high-cost housing situation, adding another 3 million children (assuming the same family size in home-owning families) to the number of children growing up in financial distress induced by housing costs. These figures are more troubling because they represent a growing trend. From 1991 to 2007 the number of all households who were paying more than 50 percent of their monthly income for housing costs rose from 8.9 million to 18.5 million, an increase of more than 100 percent.

The strain of housing costs spills over into other key aspects of a family’s life. Severely cost-burdened renters in the bottom quartile of household monthly expenditures spend, on average, 33 percent less on food, 42 percent less on health care, and 60 percent less on clothing than renters with the same total monthly household expenditures but living in affordable housing. (1) These housing-unsubsidized households also spend 74 percent less on transit, meaning that many lack even second-hand cars and are thus excluded from job markets that can only be reached by car.

The figure on food expenditures is striking in light of the importance of sound nutrition for growing children and the higher rate of health care problems among lower-income children—33.3 percent of children aged 0–17 in families below the poverty line have less than very good health compared to 7.1 percent in higher-income groups or groups with family incomes at four or more times the poverty level. (2) The U.S. daily food stamp allowance is just several dollars a day, per person for a family of four depending on the family’s income and housing costs; the average person eats $7 worth of food per day. (3, 4) The result of the budget crisis is that many low-income families survive on junk foods, some of which are far less expensive than nutritious fruits and vegetables and take little or no preparation time, a consideration for parents working and traveling to work for long hours.

The good news is that families who get housing assistance are elevated out of the severe housing problems category, resulting in their having more money for other necessities. Moreover, the American Recovery and Reinvestment Act of 2009 included significant new (albeit temporary) funds for housing, including extra tax credits for low-income housing construction, and additional funds for Section 8 housing vouchers. The debate about which parts of the stimulus packet will be made permanent will start in early 2010 in the context of growing concerns about the size of the federal budget deficit. But as this brief analysis shows, a large number of low-income families are in financial distress as a result of the high proportion of their income they have to devote to housing costs, and this distress has consequences for their children.

Notes

(1) Joint Center for Policy Research, Harvard University, American’s Rental Housing: The Key to a Balanced National Policy, 2008, p.16.

(2) Robert Wood Johnson Foundation, American’s Health Starts with Healthy Children: How do the States Compare? Princeton, NJ. October 2008, p.15, http:/www.commissionhealth.org/ChildrensHealth_Chartbook.pdf.

(3) The Center on Budget and Policy Priorities calculates that for a family of four in 2008, with an income of $1150 a month and $700 in housing costs, the food stamp allocation would be $402 a month or $3.35 per person. Center on Budget and Policy Priorities, Washington, D.C., Food Stamp Benefits Falling Further Behind Rising Food Prices, http://www.chpp.org/7-22 08fa.htm. It also calculates that this allotment falls $64 per month below that family’s requirements for a minimally adequate diet.

(4) This information comes from the Center for Public Health Nutrition at the University of Washington as reported by Tara Parker-Pope, New York Times, “Money is Tight and Junk Food Beckons: November 4, 2008, http://www.nytimes.con/2008/aa/04/health/nutrition/04well.html?pagewanted=all.