WORST CASE

HOUSING NEEDS

2015 REPORT TO CONGRESS

EXECUTIVE SUMMARY

U.S. Department of Housing and Urban Development | Office of Policy Development and Research EXECUTIVE SUMMARY

WORST CASE HOUSING NEEDS

2015 REPORT TO CONGRESS

The U.S. Department of Housing and Urban Development (HUD) finds that worst case housing needs decreased during the 2011-to-2013 period but persist at high levels across demographic groups, household types, and regions. Substantial unmet needs for affordable rental housing remain even as economic conditions are improv -

EXECUTIVE ing. The unmet need for decent, safe, and affordable rental housing continues to outpace the ability of federal, state, and local governments to supply housing assistance.

SUMMARY

Worst case needs are defined as renters with very low incomes—below 50 percent of the Area Median Income (AMI)—who do not receive government housing assistance and who pay more than one-half of their income for rent, live in severely inadequate conditions, or both. Worst Case Housing Needs: 2015 Report to Congress examines the causes of and trends in worst case needs, using the most recent data from the American Housing Survey.

Worst Case Needs Have Decreased

The number of renter households with worst case needs decreased to 7.7 million in 2013 from the record high of 8.5 million in 2011, ending a sustained period of large increases. The number of worst case needs in 2013 is 9 percent lower than in 2011, yet it remains 9 percent greater than in 2009 and 49 percent greater than in 2003.

The likelihood that a very low-income renter household had worst case needs de -

creased from 44 percent in 2011 to 42 percent in 2013, about the same as in 2009.

The decrease in worst case needs between 2011 and 2013 reflects both a smaller population of susceptible very low-income renters and a lower prevalence of severe housing problems among that population. The data suggest that the nation’s on -

going economic recovery is beginning to have beneficial effects on the incomes and housing problems of very low-income renters.

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WORST CASE HOUSING NEEDS 2015 REPORT TO CONGRESS

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Worst Case Needs Affect All

Fewer unassisted, very low-income renters mean less demand Demographic Groups and

for affordable units. Even if the housing supply were unchanged, we would expect decreased competition for affordable units, Household Types

de creasing rents, and decreasing prevalence of worst case Worst case needs affect very low-income renters across racial needs. The reduction in very low-income renters reflects, in part, and ethnic groups. The prevalence of worst case needs among the 7.2-percent increase in the median renter’s income over the such renters during 2013 was 44 percent for non-Hispanic Whites 2011-to-2013 period. Further, because median rent increased and Hispanics, 35 percent for non-Hispanic Blacks, and 42 per -

only 1.0 percent, rent burdens decreased for many households.

cent for others. The rate decreased between 2011 and 2013 for After demographic factors on net reduced worst case needs by non-Hispanic Whites, non-Hispanic Blacks, and Hispanics but 600,000, it is reasonable that market-driven reductions in the not for others.

proportion of unassisted very low-income renters with worst case needs should account for a further decrease of 200,000 cases.

Worst case needs also affect all types of households. In 2013, 2.8 million families with children, 1.5 million elderly households Modest expansions of the overall number of rental units were without children, 2.7 million other “nonfamily” households (un -

less important than household income and other demographic related people sharing housing), and 0.7 million “other family”

factors in affecting worst case needs. Although the total supply households experienced worst case needs.

of rental units increased by 900,000, or 2 percent, between 2011

and 2013, renter households expanded by 1.4 million, or 3.7 per -

Compared with 2011 levels, worst case needs decreased within cent. As a result, new renters absorbed all the net increase of the two largest categories—families with children and other non-rental units and also occupied 500,000 previously vacant units.

family households—but changed little for the other categories.

The rental vacancy rate declined from 9.8 to 8.4 percent as the The proportion of very low-income renters with worst case needs rental market tightened.

in 2013 ranged somewhat narrowly from a high of 46 percent for other nonfamily households, to 43 percent for other family house -

Although the number of renters increased overall, the number of holds, 40 percent for families with children, and 37 percent for renters with extremely low incomes (0 to 30 percent of AMI) de -

elderly households without children.

creased in 2013. An expanded number of affordable units became available for the smaller number of extremely low-income renters, About one in seven renters with worst case needs—14 percent—

increasing the ratio of affordable and available units by 5 from included a nonelderly person with disabilities. The 1.1 million 2011 levels to 39 units per 100 renters. For very low-income such households are 17 percent fewer than in 2011 but remain renters, there was little change in availability, leaving the ratio 10 percent above the 2009 estimate.

at 65 units per 100 renters.

Worst Case Needs Result From

Conclusion

a Shortage of Affordable

Worst case housing needs are a national problem. They have ex -

Rental Housing

panded dramatically during the past decade and were exacerbated by the economic recession and associated collapse of the hous-Most worst case needs are caused by severe rent burdens—

ing market, which reduced homeownership through foreclosures paying more than one-half of income for rent. Inadequate housing and increased demand for renting. During the most recent 2-year caused only 3 percent of worst case needs.

period, 2011 to 2013, worst case needs decreased modestly but significantly. The improvement is attributable primarily to demographic A decline by 1 million from 2011 to 2013 in the number of very factors, especially increasing renter incomes, that reduced the low-income renters who lack housing assistance—the group at number of susceptible households. Modest housing market re -

risk of experiencing worst case needs—explains about 600,000

sponses that reduced the proportion of unassisted very low-cases of the 800,000 reduction in worst case needs. Four con -

income renters with severe rent burdens played a secondary yet tradictory demographic factors affected the size of the at-risk substantial role.

group. Two factors contributed to an increase in worst case needs by 300,000 cases: a modest level of household formation and an Even with rental assistance, 6 of 10 extremely low-income renters ongoing (though slowing) shift from homeownership to renting.

and 3 of 10 very low-income renters do not have access to af -

These factors were more than offset by two other demographic fordable and available housing units. In 2013, there are 1.6 very factors that contributed to declines in worst case needs: renter low-income households with worst case needs for every very income increases (and changes in income limits) that raised rent -

low-income household with rental assistance. A broad strategy ers out of the very low-income population and, to a lesser extent, at the federal, state, and local levels is needed to continue to a mitigation of the gap in rental assistance, which together rebuild the economy, strengthen the market, and provide assist-accounted for 900,000 fewer worst case needs in 2013.

ance to those families most in need.

WORST CASE HOUSING NEEDS 2015 REPORT TO CONGRESS

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U.S. Department of Housing and Urban Development

Office of Policy Development and Research

Washington, DC 20410-6000

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