It has long been HUD's position that a household should spend about 30% of its income on mortgage or rent and utilities--any more than that and a household is officially "cost burdened." A household that spends more than 50% of its income on housing expenses is "severely cost burdened." As you can imagine, having to spend such a high portion of your income on housing costs leaves little money for other needs, such as nutrition, transportation, education, health care, and so forth. And such families are unable to save--so a single unanticipated expense or income disruption, something as simple as a car repair or reduction in work hours, can put that family easily into crisis.
Okay. But how many U.S. households are really dealing with these kinds of precarious circumstances? After all, the official U.S. poverty rate is only about 15%--so we must only be talking about one or two families out of ten, right?
Nope. According to figures released earlier this week by the National Low-Income Housing Coalition, the wage needed to afford a 1-BR apartment in the U.S. without being cost burdened now exceeds the earnings of a household at the 50th income percentile in the U.S., and a household needs to be at about the 60th income percentile to afford a 2-BR apartment. In other words, well over half of U.S. renter households are cost burdened--many of them severely so.
The good news is, we could actually solve this problem. The NLIHC estimates the national affordable housing shortage at 7.2 million units. So all we'd need to do is close that gap, using any combination of additional construction and funding for housing vouchers. This would not be cost-prohibitive; I've seen estimates as low as $22 billion (in 2016) for fully-funding the voucher program--construction could cost more but may also exert downward pressure on rents.
If only we had a government that might actually listen.
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