Chapter 2

Acute needs for housing assistance, at an all-time high in 1993, did not drop between 1993 and 1995 despite the strong, sustained economic growth experienced during that period. In 1995, as in 1993, more than 5.3 million very-low-income renter households -- almost 12.5 million individuals -- paid more than one-half of their income for housing or lived in poor-quality housing. Among very-low-income renters, the share with worst case needs rose very slightly, to 37 percent.¹ These 5.3 million households represent 4.9 percent of the Nation's population and over one-seventh of all U.S. renters. Without Federal housing assistance, they lack the income to afford adequate, market-rate housing. One missed paycheck, an unexpected medical bill, or some other emergency is all that separates many of these families from homelessness.

Finding 1:

Despite robust economic growth between 1993 and 1995, the number of very-low-income renters with worst case housing needs remained at an all-time high -- 5.3 million.

• In the economic expansion of the mid-1980s, the number of households with worst case needs declined. No comparable drop occurred between 1993 and 1995, when housing assistance was no longer increasing each year.

During the economic expansion of the mid-1980s, worst case needs dropped significantly between 1985 and 1987 (see exhibit 6). Between 1993 and 1995, economic growth brought greater declines in both poverty and unemployment rates than had occurred between 1985 and 1987. Unemployment dropped from 6.8 percent in 1993 to 5.6 percent in 1995, whereas the 1985-1987 decline in unemployment was from 7.2 to 6.2 percent. The poverty rate dropped from 15.1 percent in 1993 to 13.8 percent in 1995, whereas the 1985-1987 decline in poverty was from 14.0 percent to 13.4 percent.² In light of the strong 1993-1995 economic growth, the absence of a decline in needs between 1993 and 1995 is both surprising and discouraging.

Part of the explanation for the different pattern of worst case needs between 1985 and 1987 and 1993 and 1995 may be that the mid-1980s was a period of continued rapid growth in housing assistance (see exhibit 7), whereas the mid-1990s was not. Housing developments funded by production programs in the late 1970s and affordable by the poorest households were completed and occupied in the mid-1980s.³ In addition, Congress then was adding about 100,000 incremental units of tenant-based rental assistance each year.

The failure of worst case needs to ameliorate during the economic expansion of the 1990s demonstrates that acute housing needs are a persistent problem in American society that cannot be solved through overall management of the economy. An explicit Federal housing policy response is needed.

For as long as worst case needs have been reported, affordability rather than housing quality has been the predominant problem facing unassisted renters. In 1995, more than 95 percent of those households with worst case problems paid more than one-half of their reported income for housing. The proportion of worst case households living in housing with severe physical problems continued to drop, falling below 8 percent in 1995.

Reversing earlier declines, the incidence of overcrowding rose slightly between 1993 and 1995, both among all renters (from 4.4 to 4.9 percent) and among very-low-income renters (from 6.8 to 7.9 percent). However, overcrowding is not included in estimates of worst case needs in this or previous reports to Congress because it did not automatically give a household a Federal preference for admission to assisted housing programs. Despite the slight increase in crowding, severe rent burdens were the only housing problem for almost four of five worst case households (79 percent).

1. A slight decline from 5.34 million worst case households in 1993 to 5.32 million in 1995 is statistically insignificant. Despite a modest decline of about 200,000 in the number of households whose incomes fell below 50 percent of the area median, among very-low-income renters, the share with worst case needs increased slightly and insignificantly, from 36.3 to 36.53 percent.

2. Bureau of the Census. Current Population Reports, Series P­60, Nos. 184 and 188.

3. Public housing and Section 8 new construction units are affordable by the poorest households because rent is set at 30 percent of the actual income of the households.