Rents in the U.S. are excessively high, with over half of renters spending more than 30% of their income on housing costs. Low-income renters are disproportionately affected, with 81% of those earning under $30,000 paying more than 30% of their income towards rent. While some argue that a lack of housing supply is the primary issue, research indicates that increasing the housing stock won't significantly reduce prices. The best solution is to expand existing subsidies that help renters manage housing costs, ensuring affordability for lower-income households.
According to the U.S. Department of Housing and Urban Development, a household that spends more than 30% of its income on housing is deemed to be cost-burdened. If it spends more than 50%, it’s considered severely burdened. In 2023, 54% of all renters spent more than 30% of their pretax income on housing. That's up from 43% of renters in 1999.
Our research shows little connection between a shortfall of housing and rental affordability problems. Even a massive infusion of new housing would not shrink housing costs enough to solve the crisis.
A financial sinkhole exists for renters with low incomes, as 81% of renters making less than $30,000 spent more than 30% of their income on housing, and 60% spent more than 50%.
The most effective solution is to make existing subsidies, which ensure that some renters in the U.S. pay no more than 30% of their income on housing costs, much more widely available.
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