Housing Affordability Affects Renters and Owners in Different Ways

Photo of author

By Krasimir Hristov

Affordable housing has become a pressing concern in many communities, as rising costs and incomes leave families struggling to make ends meet.

Affordability is typically measured as a percentage of household income, yet measuring affordability this way may miss key details. For instance, homes which appear affordable in relation to this percentage could still be located far from jobs or services that need accessing.

Cost-Burdened Households

Affordable and safe housing arrangements are essential components of family well-being, but when housing costs consume too much of a household’s income, families may face difficult choices that pit other basic needs against one another. For instance, a single mother earning minimum wage who spends more than half her pretax income on housing will only have $124 available each week or $17 daily to spend on other essential expenses like food or clothing expenses.

As a rule of thumb, households should spend no more than 30% of their income on housing costs. Unfortunately, however, an increasing proportion of renter and homeowner households are severely cost burdened–that is spending over 50% of their income on housing expenses.

This trend is alarming, and not simply related to rent or home prices. Affordability issues exist across the board but particularly so in high-cost markets such as Miami, San Diego and New Orleans where over one quarter of renter households experience severe cost burdening while one fifth in less costly cities like Los Angeles experience it as well.

Severe cost burdens are particularly prevalent among low-income households, including renter and homeowner households in the lowest two income categories. Our research indicates that almost all renter households and over three quarters of poor homeowners experience severe cost burden. Contrary to popular belief, homeownership doesn’t protect these households from housing affordability issues – the leading cause for severe cost burden among both renters and owners is housing costs being greater than incomes.

The American Community Survey (ACS) collects information on various housing expenses, such as contract rent and utilities for renter households, mortgage payments and real estate taxes, insurance premiums, condominium or mobile home fees paid by homeowners, condominium or mobile home fees paid by condominium/mobile home associations and insurance premiums paid by mobile home associations for homeowner households, and condo/mobile home fees paid by condo or mobile home associations for homeowner households. We use the ACS to calculate housing costs as a percentage of household income; further, we examine their impact over time while comparing costs across nations across borders.

Also Read:  Buy Foreclosed Homes For These Unique Advantages


As housing affordability declines, renters experience different effects. Renters with lower incomes are more likely to be cost burdened – spending over 30 percent of their income on rent – while households with higher incomes outbid low-income renters for affordable rental units that they need; additionally, rental units affordable to those with the lowest incomes have decreased since 2001.

Housing affordability can be measured in several ways. One important measure is how much a household’s income can afford in rent and utilities; one standard definition suggests that housing units that cost less than 30 percent of area median income are considered affordable by someone earning 80% AMI; however, this figure could differ greatly depending on location, type of unit, etc.

As the pandemic has progressed, low-income households have found it increasingly difficult to secure affordable rental housing that meets their needs. This is partly because many who require housing have either been left without employment or been forced from their homes as a result of it; even when employed it can be hard finding apartments at reasonable rates in an apartment market that has seen rapid rent increases.

Short-term rental proliferation has also had an adverse impact on affordable housing supply. When units that were once occupied by low-income households become Airbnb rentals, this shifts the housing out of long-term rentals into short-term ones, increasing demand while simultaneously decreasing supply. Furthermore, vacant lots that once housed affordable units often change hands multiple times while waiting approval from city authorities; those new owners may or may not honor agreements between themselves and original developers that stipulate certain numbers of affordable units should be built upon those vacant lots.

Also Read:  Business Planning Tips For Real Estate Agencies

Policymakers face the task of meeting these challenges by creating and preserving more affordable housing, expanding rental assistance programs, and encouraging innovative forms of housing such as micro-apartments. Together these measures can ensure everyone can access affordable and decent homes.


Households that own homes must consider housing affordability by factoring the portion of their income that goes toward mortgage payments; but increasing home prices and higher interest rates have reduced homeowners’ purchasing power, while new construction is slowing due to tightening supplies.

Homeowners with mortgaged properties who were severely cost-burdened reached its peak in 2011, when approximately 28% spent more than half of their income on housing costs. Although that number has since diminished slightly, millions of families remain financially stressed as a result of housing expenses.

Families should be able to subtract their monthly housing and utility costs from their take-home pay and still have enough for life’s essentials, but if more than 30 percent of their income goes toward housing costs they are failing this basic need; further compounded for low-income households living in high cost communities.

Evidence continues to demonstrate that households spending over 30% of their income on housing is associated with various economic and health problems, including lower savings rates, greater risk of foreclosure, and decreased levels of health insurance coverage – and these effects often last over time.

No wonder the Cato Institute Housing Affordability National Survey found that 87% of Americans are concerned about housing affordability. With house prices growing at an astounding 40% annual pace across the US and mortgage rates increasing significantly – qualifying for loans has become even harder in comparison with years past.

Local leaders in cities and states with an acute lack of affordable housing must find ways to increase homeownership opportunities and expand rental options through creative approaches like expanding financing avenues, lowering property taxes for low-income households, or offering incentives to private developers for building more units at an affordable cost.

City officials need to be proactive about expediting new development approval processes, according to Salamanca and Stein. Both individuals noted how vacant lots frequently change hands as buyers wait for city approval without legally being bound by agreements made between the city and original developers.

Also Read:  Claiming Abandoned Real Estate Properties

Community Leaders

Community leaders possess strong leadership and communication abilities, working well with people from diverse backgrounds and perspectives while simultaneously managing multiple roles and tasks. Community leaders show great care in caring for the needs of their community by making sure its residents remain healthy, safe, and have access to necessary resources.

There are various strategies a community can implement to increase housing affordability. Local governments, for example, can implement zoning changes that allow more affordable units to be constructed; as well as expanding development space by eliminating restrictions on lot sizes and density – both policies that have a profound effect on overall cost of housing.

Financial incentives can also help promote affordable housing development in their cities and towns, including tax deductions or credits for developers of affordable homes, which is an effective way of attracting investors while helping people afford living costs. Furthermore, they could support community land trusts to broaden the supply of such homes within their community.

Philanthropic efforts that fund mission-driven organizations that aid families find and keep quality, stable housing that connects to jobs and opportunity can also support families in finding stable, quality housing – including mortgage and eviction prevention programs as well as homeownership pathways for BIPOC households who have been historically marginalized due to restrictive covenants, discriminatory zoning or other intentional barriers preventing affordable housing production.

Families can make it easier for themselves to access affordable housing by making permits easier to secure. For instance, they could change zoning regulations to permit more density and smaller unit sizes as well as investigating accessory dwelling units (ADUs) which provide income-generating space or extra living space for family members. Furthermore, they could run awareness campaigns about ADUs as well as offer financing support for homeowners looking to add them onto their property.