Homelessness and Housing Affordability Connection

Renters on Bottom Rung of Rental Ladder Risk Falling Into Homelessness if Rents Increase Even Slightly

Communities where people spend more than 32 percent of their income on rent can expect a more rapid increase in homelessness. This trend is according to new Zillow-sponsored research on the size and root causes of the nation’s homelessness challenge.

The research also estimates that the scale of homelessness nationwide has been under-counted by roughly 115,000 people, or 20 percent.

This research demonstrates that the homeless population climbs faster when rent affordability – the share of income people spent on rent – crosses certain thresholds. In many areas beyond those thresholds, even modest rent increases can push thousands more Americans into homelessness.

Income growth has not kept pace with rents, leading to an affordability crunch with cascading effects that, for people on the bottom economic rung, increases the risk of homelessness.

Rising Rents and Homelessness in America
  • The areas that are most vulnerable to rising rents, unaffordability and poverty hold 15 percent of the U.S. population – and 47 percent of people experiencing homelessness.
  • The U.S. median rent has risen 11 percent over the past five years, requiring an American renter earning the national median income to spend 28.2 percent of their earnings on the typical U.S. rental.
  • That measure of affordability is up from 25.8 percent historically – and far above the 17.7 percent that median-income households buying a typical home today spend on their monthly mortgage payment.
  • In pricey coastal markets including New York, Boston, Los Angeles, San Francisco and Seattle, rising rents have created a no-win situation for many financially strapped renters.
  • Most of Northern New Jersey is affected by the pricey rents in the New York metro area.
  • Incomes in those markets tend to be higher than the national median, income growth has not kept pace with rents, leading to an affordability crunch with cascading effects.
  • Some high-income renters who typically rent more expensive apartments turn to lower-priced rentals, pushing middle-income renters into even less expensive housing.
  • The lowest earners are forced to work multiple jobs, find multiple roommates and otherwise struggle to make ends meet.
  • There are a variety of ways to address housing affordability through policy solutions.
  • It is important that public policy creates not only housing but specifically affordable housing.
  • And this affordable housing needs to be accessible.

On December 11, 2018, Zillow hosted a roundtable discussion in Washington D.C. that focused on this research. You can watch a replay of the roundtable discussion here.

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