Biennial Worst Case Housing Needs Assessment Reveals Ongoing Challenges in Years Before Pandemic
Every 2 years, HUD has produced a report analyzing the current state and long-term trends of the worst case housing needs in the United States. The 2021 report is the 18th that HUD has produced since Congress first requested the reports in 1991. Worst case housing needs measure the extent of unmet need for quality affordable rental housing, focusing on very low-income (VLI) renters, who earn less than 50 percent of the area median income (AMI), and extremely low-income (ELI) renters, who earn less than 30 percent of AMI and typically have annual incomes below the federal poverty level. To be considered as having worst case housing needs, households must be renters, earn no more than 50 percent of AMI, receive no housing assistance, and either have a severe rent burden (paying more than half of their income on rent and utilities) or live in severely inadequate housing (living in units with one or more physical problems related to heating, plumbing, electrical systems, or unit maintenance).
Relying on data from the 2019 American Housing Survey (AHS), the 2021 report covers the period just before the start of the coronavirus pandemic and the associated economic downturn in 2020. Although the next biennial report will include the pandemic years, the 2021 report includes a special addendum discussing the pandemic-triggered recession and its expected impact on future worst case assessments as well as reviewing key aspects of relief measures, such as emergency rental assistance.
Continuing trends, with ELI renters facing increased housing difficulties
Overall, the report finds few significant changes between the 2017 and 2019 AHS data. After falling 7.1 percent in the period from 2015 to 2017, worst case housing needs leveled off in the period from 2017 to 2019, with 7.77 million renter households having worst case needs. The burden of need, however, shifted away from households with income of 30 to 50 percent of AMI, who experienced 175,000 fewer cases of worst case needs in 2019 than in 2017, and toward ELI renters, who experienced 225,000 more cases of worst case housing needs than in 2017. As has long been the case, the main problem facing VLI renters is inadequate income relative to housing costs. Among all renters experiencing worst case needs in 2019, 97.5 percent had severe rent burdens, whereas only 4.8 percent lived in inadequate housing and 2.3 percent experienced both severe problems — findings that reflect decades of effort to improve the condition of the nation’s housing stock. Although the average income for all renters increased by 10.8 percent between 2017 and 2019, the 8.1 percent increase in median rental housing costs consumed nearly all those gains. Strong economic conditions and rental assistance programs, the report found, helped keep worst case needs from becoming more prevalent. One ongoing challenge is the crowding-out effect, in which renter households that could afford more expensive units outcompete lower-income households on more affordable units.
Although worst case housing needs affect 6.3 percent of all U.S. households, they are experienced by 29.9 percent of VLI renter households earning between 30 and 50 percent of AMI and 49.2 percent of ELI renter households. These needs are found across all types of communities nationwide and affect every racial and ethnic group. From 2017 to 2019, worst case needs slightly decreased among non-Hispanic White households and slightly increased among households of color; more than half of all worst case needs occurred in households headed by a person of color. A separate but related report, HUD’s Native American Housing Needs Study, reported that overcrowding and doubling up were much more common among Native American households than other U.S. households. Nonfamily households (households consisting of single adults, unmarried couples, or roommates) constituted the largest share of worst case needs in 2019, followed by families with children and older adult households without children.
Housing markets and affordability
Most low-income renters, especially renters with extremely low incomes, find housing on the open market but struggle with an inadequate supply of “affordable and available” units, meaning units that are affordable at a given income level and are either occupied by renters at or below that income level or are vacant. In 2019, only 70 affordable units — including units with rental assistance — existed for every 100 ELI renters. Because higher-income households occupy some of these units, however, the actual number of affordable and available units is only 40 per 100 ELI renter households.
These trends vary by region and by urban typology. Although AHS data are not sufficiently fine grained to analyze most metropolitan areas or highly localized submarkets, the data do support analysis of the four national regions: the Northeast, the Midwest, the South, and the West. The report also analyzes general differences among central cities, urban suburbs of central cities, rural suburbs of central cities, and nonmetropolitan areas. In 2019, the report found that 52 percent of worst case housing needs nationally occurred in the central cities and in the urban suburbs of the West and South regions, which tend to have lower levels of housing assistance than similar areas in the Northeast and Midwest regions. Suburban areas nationwide also have disproportionately high levels of worst case needs.
The report describes several policy options that can be effective in reducing worst case housing needs. Increased rental assistance can help reduce the gap between the number of VLI and ELI renter households and the number of affordable and available units. Second, increasing landlord participation in voucher programs can ensure that available assistance is being fully utilized. Finally, the report recommends implementing efforts to preserve existing affordable housing and remove regulatory barriers constraining new housing production, including the production of rental housing for middle-income households, which could reduce competition for the more affordable units that lower-income renters need.
Anticipating the effects of the pandemic
Because the 2021 Worst Case Housing Needs report is based on AHS data that ends in 2019, it does not capture the effects of the coronavirus pandemic. A special addendum to the report attempts to anticipate housing needs that will emerge and measurement challenges that may affect the 2021 AHS, which will form the basis of the next Worst Case Housing Needs report.
Some early indications of the pandemic’s effects, however, can be discerned in the Household Pulse Survey, developed with HUD and conducted by the U.S. Census Bureau. The Household Pulse Survey captures trends closer to real time thanks to its frequent administration. The survey allowed researchers to examine the landscape of housing needs as recently as February 2021, when the total number of renters reporting feeling that eviction was “very likely” or “somewhat likely” was equivalent to 49 percent of the total number of households with worst case needs in 2019. The results also suggest that the pandemic’s housing impacts have not been experienced uniformly, with 12 percent of non-Hispanic White renters behind on rent compared with 29.8 percent of non-Hispanic African-American renters, although these preliminary data are not statistically significant.
Additional data from the Consumer Finance Institute at the Federal Reserve Bank of Philadelphia indicate that nearly 80 percent of renters who were behind on payments as of early 2021 were able to negotiate some type of agreement with their landlords regarding back rent, although these agreements were often informal. Household Pulse Survey data also show that federal pandemic relief helped renters. When the February 2021 survey was taken, 31.4 million people had received a stimulus payment in the previous month; of those, 7.7 million spent it on rent.
As the 2021 Worst Case Housing Needs Report shows, the United States faces a persistent, widespread problem of VLI and ELI renter households facing severe housing cost burdens. Although early indicators from the pandemic indicate the potential for further housing challenges, early results also point to a role for expanded housing assistance to prevent worst case needs. To better understand the impact of the pandemic and relief programs on housing, HUD and the U.S. Census Bureau have included eviction-related questions in the 2021 AHS.