Millions spend majority of income on housing

In 1997, 2.4 million working families spent more than half their income on housing, but by 2003 this number had grown to 4.2 million, according to a news release from Freddie Mac, which funded the study. The study also compares immigrant working families to their native-born counterparts and reveals that immigrant working families are 75 percent more likely to pay more than half their income for housing.

Working families are defined as low- to moderate-income families that work the equivalent of a full-time job and earn from the minimum wage of $10,700 a year and up to 120 percent of the median income in their area.

This study focuses on working families that had critical housing needs between 1997 and 2003, and was released at an Affordable Housing Forum in Los Angeles sponsored by Century Housing, Freddie Mac and the NHC.

One in eight, or 14.1 million families, had critical housing needs in 2003 – that means they paid more than half their income for housing, and/or lived in physically dilapidated conditions. Five million of these families are low- to moderate-income working families. In addition, six out of 10 immigrant working families with critical housing needs are Hispanic and one-third are from Mexico.

A severe cost burden is the reason why almost 85 percent of working families had critical housing needs while the other 15 percent were living in physically dilapidated conditions.

“These new findings help shed light on a troubling trend across America – working a full-time job does not guarantee families a decent, affordable place to live,” said Barbara Lipman, research director for the Center for Housing Policy, in the news release. “In fact, the housing problems of working families are more persistent and pervasive than many experts may have thought, and are not only confined to cities, renters, or the East and West coasts.”

“It’s vital for the public and private sectors to work together on this issue that affects one of the country’s greatest sources of strength – working families,” said Bob Tsien, senior vice president of Freddie Mac. “Affordable housing needs to be addressed nationwide for both renters and homeowners. Every family, regardless of income, should have the opportunity to live in decent, affordable housing.”

Owning vs. renting

In 1997, the number of working families with critical housing needs was nearly split 50-50 between owners and renters, at 51 percent homeowners and 48 percent renters. However, by 2003, the number of homeowners with critical housing needs reached 55 percent and the number of renters with these needs was lower at 45 percent.

In addition, most homeowner and renter working families with critical housing needs were paying more than half their income for housing, but homeowners were more likely to face this problem than renters – almost nine out of 10 homeowners versus eight out of 10 renters.

Affordability does, however, account for a growing share of critical needs among renters. For example, in 1997, affordability was the problem for approximately 71 percent of renters with critical housing needs, and the problem grew steadily to 79 percent in 2003. Working family renters with critical housing needs were more than twice as likely as their homeowner counterparts to live in dilapidated conditions.

Regional data

By region, the data reveals that the highest incidences of critical housing needs are found in the West and Northeast. However, despite slight declines between 2001 and 2003 in the South and Midwest, all four regions have seen substantial growth in critical needs since 1997.

Crowding, although it has remained relatively stable for working families since 1997, is highest in the West, where in 2003 working families were two to 3.5 times more likely as working families in other regions to live in housing with more than one person per room.