Low-Income Renters Continue to Be Hit Hardest By Housing Shortage

In 2021, the lowest income renters faced a shortage of 7 million homes. It was a deficit more extreme than those experienced by other income brackets, and one with far-reaching impacts.  

According to a new report, there were about 33 affordable units available for every 100 extremely low-income renters nationwide in 2021, the most recent year data is available. Extremely low-income renters are those with incomes at or below either the federal poverty guideline or 30% of the area median income, whichever is higher. 

The shortage is even more acute in some states and cities. In Las Vegas, for instance, there are only 14 affordable units for every 100 extremely low-income renters.

The report, published last week by the National Low Income Housing Coalition (NLIHC), examines how the shortage of affordable housing for extremely low-income renters affects the greater affordable housing landscape, and what different levels of government can do about it. 

Overview

The report uses data from the most recent U.S. Census American Community Survey and found that the shortage of units affordable to extremely low-income renters increased from 6.8 million to 7.3 million, or about 8%, the previous year. 

“The thing that really stood out to us in this year's report was the fact that the shortage of housing for renters with extremely low incomes has increased pretty significantly,” said Andrew Aurand, NLIHC’s vice president of research. 

The increase wasn’t entirely unexpected. In many places, low-wage earners have trouble paying rent, even when working full-time. Those workers were also hardest hit by the pandemic, and when combined with rapidly increasing rental rates, it’s no surprise that the country’s lowest-income households are finding few housing options. 

There are about 7 million units that extremely low-income households can afford to rent, meaning they wouldn’t spend more than 30% of their income on housing costs. However, about 3.3 million of those homes are occupied by higher-income renters, leaving just 3.7 million units for approximately 11 million extremely low-income renters. 

While extremely low-income renters face an absolute shortage, there are enough affordable units to accommodate all other income levels. In fact, there are cumulatively more rental units in the United States than there are renters.

In other words, the situation is most severe for extremely low-income households, a group that accounts for a quarter of the 44 million renters in the U.S. And because the shortage is so severe, these renters are left with little choice but to rent units they can’t afford, thus impacting the options of other income brackets. About 1.3 million extremely low-income renters live in units that are affordable for middle- and high-income renters, and even larger shares are in homes that could otherwise be rented by low- and very low-income households.

Units for Extremely Low-Income Renters by Geography 

In every state, more than half of extremely low-income households pay more than 50% of their income on housing costs. 

For every 100 extremely low-income renters in Nevada, there are only 17 affordable homes, making it the state with the most acute relative shortage. Rounding out the top five states with the most extreme shortages are Florida and Oregon, which each have 23 units for every 100 households, and Arizona and California, which have 24. 

South Dakota, meanwhile, has 58 affordable homes for the same demographic, followed by Rhode Island’s 53 units for every 100 extremely low-income renters and Mississippi’s 51 units.

There’s also a shortage of affordable housing in each of the country’s 50 largest metropolitan areas. Along with Las Vegas, the Orlando, Dallas and Austin metropolitan areas have the most acute shortages, with 15 or 16 units for every 100 extremely low-income renters. 

At the other end of the spectrum, the Providence, Rhode Island, and Pittsburgh metropolitan areas both had about 48 affordable and available units for every 100 extremely low-income renters. They’re joined by Boston, Kansas City and Cincinnati to round out the top five. 

Nearly half of the extremely low-income renters are seniors or people with disabilities. Another significant share is workers with full- or part-time jobs. 

Government’s Role

In order to guarantee more affordable housing, governments must create incentives for developers to build affordable units.

The report suggests that states and localities should focus on zoning reform and development regulations. It cites a 2019 survey that found that up to three-quarters of land in many cities was zoned exclusively for single-family housing. Minimum lot size requirements—which determine how small a developer can subdivide a lot—have continued to favor larger and more expensive homes. Smaller lots, the report argues, would allow for building types that have higher densities and keep housing cheaper.

Relaxing zoning regulations can benefit households outside the extremely low-income bracket as well. The report cites recent research that showed that in states where it's difficult to “up-zone” single-family lots to allow apartments, renters pay an additional $122 dollars a month in rent. 

Building more homes in general can make more units available to the lowest-income renters. A lot of rental housing is priced to be affordable to households making 60% to 80% of the area median income, Aurand said. So while low-income renters may not be able to afford to live in those new developments, the higher-income renters moving into them will leave behind their less expensive units, making them available for the extremely low-income renters. This process is known as “filtering.” By itself, however, it is not enough to help extremely low-income households afford rent. 

“We need to develop more housing that's subsidized in some markets, because there’s just not enough rental housing, so we need the local reforms,” Aurand said. “But they also have to be combined with more resources for housing, and it's the federal resources … that could be spent at scale, to really solve the problem.”

The report calls on the federal government to develop more “deeply” affordable housing, provide housing vouchers to more eligible households and strengthen renter protections.