Nearly 20 million American households nationwide spend more than half of their income on housing—a severe burden that leaves many with little left over to meet their basic food, clothing, health care, and education needs. Homeowners greatly outnumber renters in the U.S., and have therefore represented the majority of burdened households throughout the past decade, even though the rate of cost burden is much higher among renters. But newly released Census data suggest this historical pattern may be changing.
Based on a preliminary look at recently released Census data from the 2011 American Housing Survey, it appears the number of renter households with a severe housing cost burden has finally caught up with and may even now exceed the number of owner households with this problem. This is the result of two trends—a decrease in the homeownership rate and an increase in the share of renters with severe housing cost burdens. A finer analysis of the microdata will be needed to confirm this finding, but the trends point clearly in this direction.
This shift provides an important opportunity to reconsider the balance of priorities in the nation's housing policy. Renters now comprise half or more of the population with severe housing cost burdens. Yet an analysis of federal expenditures for housing (including both direct spending and tax expenditures) by a housing commission convened by the Bipartisan Policy Center found that the nation annually spends $120 billion to assist homeowners but only $62 billion to assist renters. Moreover, homeowner benefits flow disproportionately to higher income households rather than to the low- and moderate-income homeowners with the greatest housing needs.
To improve the balance of the nation's housing policy, the Housing Commission recommended consideration of modifications to the "federal tax incentives for homeownership to allow for an increase in the level of support provided to affordable rental housing." They were careful to reaffirm the importance of continued support for homeownership through the tax code. But they noted that these benefits have been modified before and suggested that further modifications be considered to free up funds to expand the availability of rental assistance to those with the greatest needs.
Given the partisan gridlock in Washington, it's refreshing to see a bipartisan commission reach common ground on how to strengthen the nation's housing policy. While most of the initial press attention has focused on the Housing Commission's recommendations for housing finance reform, the report includes a robust set of recommendations on rental housing that merit a closer look.
(Full disclosure: I served as a consultant to the Commission but was not a voting member.)
Jeffrey M. Lubell is executive director of the Washington, D.C.-based Center for Housing Policy and is a recognized expert in housing and community development policy. Prior to becoming head of the Center, Lubell worked as an independent consultant specializing in analyzing and developing recommendations for strengthening national, state, and local housing and community development policy.