Housing Cost Burden Among Housing Choice Voucher Participants
The Department of Housing and Urban Development’s Housing Choice Voucher (HCV) program, administered through local Public Housing Agencies (PHAs), provides housing assistance payments (HAP) to cover the difference between 30 percent of a household’s adjusted gross income and the cost of renting a standard, quality housing unit. Although the program is designed to alleviate participant’s housing cost burden (defined as paying more than 30% of a household’s adjusted gross income toward rent and utilities), in practice, some households exceed the 30 percent housing cost target.
A new report conducted by the Multidisciplinary Research Team (MDRT) for HUD’s Office of Policy Development and Research is the first comprehensive analysis of trends in housing cost burden for HCV households over time. As the nation’s renter households pay ever-larger percentages of income in rent, the report explores how this trend affects renters participating in HUD’s largest tenant-based rental assistance program. The report found an increase in the incidence of housing cost burden among program participants over a 12-year period from 2003 to 2015.
The research on housing cost burden among HCV participants builds on earlier research efforts seeking to understand the effectiveness of rental housing assistance programs in alleviating housing cost burden. A study completed in 2002 found that 38 percent of HCV participants spent more than 31 percent of their income on housing and that 17 percent spent more than 40 percent. An analysis completed in 2015 found that 42 percent of extremely low-income HCV renters — those earning less than 30 percent of the area median income (AMI) — were housing cost burdened.
The MDRT researchers in this study used administrative data from HUD’s Public and Indian Housing Information Center to develop a cross-sectional database of households for each year between 2003 and 2015 and a longitudinal database of households who leased up in 2003 and 2008. The data allowed the researchers to explore the duration of housing cost burden as well as characteristics of households experiencing housing cost burden. Households were classified into the following four groups:
- No cost burden: Households spending 30 percent or less of adjusted gross income on housing expenses.
- Moderate cost burden: Households spending 31 to 40 percent of income on housing expenses.
- High cost burden: Households spending 41 to 50 percent of income on housing expenses.
- Severe cost burden: Households spending 51 percent or more of income on housing expenses.
The researchers used the data to answer the following questions.
How has the prevalence of housing cost burden changed over time?
The data indicate a significant increase in the number of HCV households experiencing a housing cost burden. Although the number of households participating in the program remained stable between 2003 and 2015, the number of cost-burdened households increased by 52 percent, rising from 517,665 households in 2003 to 786,958 in 2015. Overall, the proportion of HCV households experiencing a housing cost burden increased by 13 percent between 2003 and 2015.
What factors increase the odds that an HCV household will experience a housing cost burden?
The research finds that household characteristics including household income is a factor in housing cost burden and that the prevalence of housing cost burden declines dramatically as income increases. Households earning 10 percent or less of AMI are 1.4 times more likely to experience a cost burden than households earning between 51 and 80 percent of AMI and 3.9 times more likely to experience a severe cost burden than households earning between 51 and 80 percent of AMI.
Physical characteristics of the housing stock are also correlated with housing cost burden. For example, households living in single-family homes are more likely to experience housing cost burden. Geographic characteristics are also related to housing cost burden; households living in central cities were more likely to experience a housing cost burden than those living in suburban communities. Households living in areas with higher median rents and low vacancy and poverty rates were also more likely to experience housing cost burden.
When tracking cohorts of households over time, what was the duration of households’ housing cost burden, and what were the potential causes of increased housing cost burden?
The data suggest that declines in housing cost burden were much more likely to be caused by increased income rather than decreases in rent. For example, between 2014 and 2015, those who experienced a decrease in rent burden experienced an average income increase of 200 percent compared with average rent decreases of 1 percent. Households that experienced an increase in housing cost burden and became or remained severely cost burdened have seen significant decreases in their income. The researchers note that these findings suggest that non-housing initiatives such as workforce development may reduce housing cost burden.
Are there typical, longitudinal trajectories of housing cost burdens experienced by individual HCV households or clusters of households, and are such trajectories associated with the length of program participation?
Overall, HCV households typically participate in the program for 5 to 6 years and experience a housing cost burden for an average period of 2 years. The average duration of program participation was 6 years for households entering the program in 2003 compared with 5 years for those entering the program in 2008. Among HCV households who experienced a housing cost burden, the average duration of participation was 4 years for those entering the program in 2003 compared with 3 years for households entering the program in 2008.
The study concludes that while the number and share of HCV households with housing cost burden has increased since 2003, the year to year trend in housing cost burden roughly corresponded to the recent housing market boom – bust cycle. And that local payment standards play an important role in shaping HCV households’ housing cost burden.