Rental Cost Burdens in Major US Cities

Housing affordability is, and probably always will be, a hot topic. There are a number of ways to measure affordability but one of the most popular is by measuring “rental burden”. This measure, estimated yearly by the US Census’s American Community Survey, looks at gross rent as a percentage of renting households’ income over the last 12 months.

With a rule of thumb that no more than 30% of your income should go to housing expenses, there are two categories of cost burden:

  • Moderately-cost burdened households spend between 30% and 49.9% of their income on rent.
  • Severely-cost burdened households spend over 50% of their income on rent.

I decided to look at rent burdens in 2015 (the latest year with data) across the 10 most populous US cities, plus my hometown of Washington, DC and famously expensive San Francisco.

What does rent burden look like in these cities?

  • Of the cities reviewed, the city with the lowest proportion of rental cost burdened households was San Francisco (37%)!!! This number surely comes as a surprise to many however, if we consider a few characteristics of SF, this makes more sense. Chiefly, many lower income residents (more likely to be cost burdened) were priced out a while ago, SF has a high number of rent controlled properties, and although SF is famously expensive to rent in it also has a very high average income.
  • The next lowest cost burdens were in Washington, DC (44%) and in San Antonio, TX and Dallas, TX (each with 45%). In DC, despite high living costs, average incomes are also high. Conversely, in the Texan cities, average incomes are significantly lower but so are housing costs.
  • Over half of renting households in New York, San Jose, Philadelphia, San Diego, and Los Angeles are at least moderately burdened. A whopping 58% of renting households in Los Angeles pay at least 30% of their income in rent.

2015 rent burden by city

How has rent burden changed since 2005?

  • Cities hit harder by the financial crisis of ’07-’08 tended to see corresponding increases in their rental cost burdens. In Phoenix and Los Angeles, for instance, the proportion of households at least moderately rental cost burdened increased from 2005 to 2010 by 12% and 6% respectively. On the other hand, fast growing Texan cities, which weathered the financial crisis pretty well saw cost burden decreases or stagnation over that period: -4% for Houston, -3% for Dallas, and 0% for San Antonio.
  • From 2005 to 2015, a majority of cities surveyed have seen a decline in the proportion of renters that are severely cost burdened: declines of 9% in Dallas and Chicago and 11% in San Antonio and San Francisco. However, San Antonio has actually seen an increase, by 8%, in the proportion of moderately cost burdened renters over the same period.
  • San Francisco saw a decline of 24% in the number of rent-burdened households from 2005-2015. Although surprising on the surface, as discussed above, it makes more sense when you consider the dynamics and characteristics of the SF market.
  • From 2005 to 2015, New York, San Jose, and Los Angeles all saw increases in the proportions of both moderately and severely cost burdened renters – with Los Angeles leading the way with an 11% proportional increase of renters that are at least moderately cost burdened (see above).

 

Change in rent burden by city

Caveats

It goes without saying that this is an incomplete picture. The vast majority of the country (92%) lives outside of these cities and even within them, there are many variables and factors at play that impact whether a place is “affordable” or not. For instance, some wealthy families may choose to spend over 50% of their income on rent but not be “burdened” and, alternatively, poor families may spend only 25% of their income on rent but still find total living expenses untenable or living conditions unbearable. However, rental cost burden is an easy way to get one snapshot of rental affordability for most people.

Highlights from the American Housing Survey

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Source: Flickr User Pasa47

Earlier this month, the US Census Bureau released statistics from its 2015 Housing Survey. The survey provides incredible info about the characteristics of occupied housing units in 25 large metropolitan areas and the US as a whole.

There isn’t too much “new” in this latest survey, but it’s given me an opportunity to revisit the overall data.I thought I’d highlight some interesting stats that demonstrate the differences between two metro areas particularly important to me (DC and NYC) and the nation as a whole (see table below).

  • The most common housing type in the DC and NYC metro areas is the same as for the country as a whole – the ubiquitous single family detached home.
  • The second most common housing type shows each area’s uniqueness. For DC, it’s the familiar townhouse and for NYC it’s large buildings with over 50 units.
  • While nearly 6% of housing units in the US are mobile/trailers, only 0.5% of housing units in the DC or NYC areas are.
  • The busiest decade for housing construction was the 1950s for NYC, the 1970s for the US, and the 2000s for DC. Perhaps as a result of this age, fully 71% of units in NYC require step(s) to access (it’s about 55% for DC and the US).
  • While a third of all US housing units are in 1-story structures, only 6% and 5% are in DC and NYC, respectively.

housing-data

Source: Author, via 2015 American Housing Survey (Census Bureau), Accessed 1/25/2017

Note: While I say “DC” and “NYC”, the data is looking at their metropolitan areas, not just the city proper.