According to the common measure of housing affordability, a household is considered "cost-burdened" when housing expenses consume over 30% of occupant's total gross income. Those that spend more than 50% of their income on monthly housing costs are classified as "severely" cost-burdened.
The most recent data derived from the 2022 Census American Community Survey reveals that the proportion of American renters facing housing cost burdens has reached its highest point since 2012, undoing the progress made in the ten years leading up to the pandemic. The majority of this increase can be attributed to a surge in severely burdened households—those expending more than half of their earnings on rent.
The latest report by Apartment List explores the cost burden rate and what it says about the state of housing affordability in the U.S. Here are some of their takeaways:
1. The pandemic burdened nearly 2 million renters in the last three years
The number of cost-burdened renter households have been decreasing steadily since 2011. In a five-year span alone, the number of homes fell by 826,000 between 2014 and 2019. By 2019, just under 20 million renter households were considered cost-burdened.
In 2022, however, the number of cost-burdened renter households has increased by 1.9 million—making the total 21.8 million—and the number of non-burdened households fell by 957,000.
![2019 versus 2022 chart of renters who spend more than 30 percent of income on housing](/sites/default/files/inline-images/headline.jpg)
2. Severely-burdened households make up 27% of those affected
Renter households that spend more that 50% of their income on housing costs are considered severely-burdened. In the past three years, the share of these households among the total of those burdened increased by 3% to 26.7 percent.
Though the cost burden rate is much lower for those who own homes, it has also been rising in recent years. In 2022, the percentage of homeowners that are cost-burdened jumped to 27.9 percent, up from 26.6% in 2019.
![House cost burden chart comparing moderately to severely burdened renters since 2005](/sites/default/files/inline-images/cost-burden-graph.jpg)
3. The cost burden is driven by rent prices rising faster than household incomes
After the Great Recession, renter cost burden improved gradually for several years. While the median rent rose 26 percent, the median renter household income increased 37 percent in the same eight years.
Since 2019, renter cost burden has increased 4% and median rent jumped up 19 percent, while renter income rose only 16 percent. According to the Apartment List analysis, 74 of the 100 largest U.S. metros have experienced rent prices growing faster than renter income. Since 2019, the cost burden has worsened in nearly all (94%) of the top metros.
![Chart of renter cost burden since 2011](/sites/default/files/inline-images/rents_v_incomes.jpg)
Future outlook from Apartment List
"Preliminary data from the Bureau of Labor Statistics shows that incomes in the second quarter of 2023 are up 5.7% year-over-year (1.7% after adjusting for inflation). And while these statistics are not available for renters specifically, other breakdowns show that recent wage growth is higher for lower-earners and non-white workers, who are both more likely to rent.
However, rent growth may also continue on an upward trajectory. For more than half of all renter households, monthly rent payments are eating up a large enough share of their income to put financial stability at risk. And more than one-in-four renter households spend more than half of their income on rent—a level which can often necessitate extreme measures such as overcrowding and cutting back on spending on other basic needs. Thankfully, policymakers have demonstrated an increased focus on this issue in recent years, but solutions are still urgently needed."
To read the full report, visit Apartment List
Related Stories
Market Data | Apr 1, 2019
Nonresidential spending expands again in February
Private nonresidential spending fell 0.5% for the month and is only up 0.1% on a year-over-year basis.
Market Data | Mar 22, 2019
Construction contractors regain confidence in January 2019
Expectations for sales during the coming six-month period remained especially upbeat in January.
Market Data | Mar 21, 2019
Billings moderate in February following robust New Year
AIA’s Architecture Billings Index (ABI) score for February was 50.3, down from 55.3 in January.
Market Data | Mar 19, 2019
ABC’s Construction Backlog Indicator declines sharply in January 2019
The Construction Backlog Indicator contracted to 8.1 months during January 2019.
Market Data | Mar 15, 2019
2019 starts off with expansion in nonresidential spending
At a seasonally adjusted annualized rate, nonresidential spending totaled $762.5 billion for the month.
Market Data | Mar 14, 2019
Construction input prices rise for first time since October
Of the 11 construction subcategories, seven experienced price declines for the month.
Market Data | Mar 6, 2019
Global hotel construction pipeline hits record high at 2018 year-end
There are a record-high 6,352 hotel projects and 1.17 million rooms currently under construction worldwide.
Market Data | Feb 28, 2019
U.S. economic growth softens in final quarter of 2018
Year-over-year GDP growth was 3.1%, while average growth for 2018 was 2.9%.
Market Data | Feb 20, 2019
Strong start to 2019 for architecture billings
“The government shutdown affected architecture firms, but doesn’t appear to have created a slowdown in the profession,” said AIA Chief Economist Kermit Baker, Hon. AIA, PhD, in the latest ABI report.
Market Data | Feb 19, 2019
ABC Construction Backlog Indicator steady in Q4 2018
CBI reached a record high of 9.9 months in the second quarter of 2018 and averaged about 9.1 months throughout all four quarters of last year.