JCHS Report Sheds Light on Lack of Affordable Housing Production

Harvard University’s Joint Center for Housing Studies (JCHS) recently released its annual report, “The State of the Nation’s Housing 2019.” The report examines the state of the housing market in 2018, finding that, while the housing market improved in many respects over the previous year, including household growth and formations, the continued production shortfall has led to an increasing number of low- and moderate-income families who lack access to affordable housing options.

The report states that, since the low mark in 2011 when 633,000 new units were constructed, the available housing stock has grown at an average annual rate of just 10 percent. In 2018, the number of units completed and placed into service was 1.2 million. Excluding the 10-year period between 2008 to 2017, 1.2 million units was the lowest annual housing production number since 1982. JCHS believes the sluggish recovery of new housing construction from the Great Recession has increased pressure on home prices and rents, which, in turn, negatively impacts affordability for moderate- and low-income households, especially in high-cost metro areas.

According to the report, 2017 measures showed small signs of improvement for cost-burdened renters. In 2017, 20.5 million renter households were cost burdened (compared to 20.8 in 2016), including nearly 10.7 million renter households who were severely cost burdened (compared to 11 million in 2016). “Cost burdened” is defined as households spending more than 30 percent of income on housing, with “severely cost burdened” defined as spending more than half of their income on housing. Cost-burdened renter households outnumbered the 17.3 million homeowners who faced cost burdens in 2018. Last year, the share of cost-burdened renter households dropped slightly to 47.4 percent, 3.4 percentage points below the 2011 high, but up 6.8 percentage points from 2001.

The incidence of cost burden is especially prevalent among lower-income renter households. In 2017, nearly 83 percent of renter households earning less than $15,000 and more than half of renter households earning $30,000–$44,999 faced cost burdens. Furthermore, the share of cost-burdened renter households was significantly higher among households of color. Nearly 55 percent of black renter households were cost burdened, followed by Hispanic households at 53.5 percent, and Asian households at 45.7 percent, compared to 42.6 percent for white households.

The report explains that renter households facing significant cost burdens often prioritize monthly rent payments over other expenses, cutting spending on basic necessities, such as food, healthcare, and transportation. In 2017, severely cost-burdened households in the bottom expenditure quartile (group that consists of 25 percent of households with lowest incomes who are severely cost burdened) spent less than $550 on non-housing expenditures. Compared to their counterparts without burdens, these households with severe cost burdens spent 13 percent less on food, 40 percent less on healthcare, and 23 percent less on transportation each month. Severely cost-burdened households with children spent less than $700 on average for all non-housing costs per month.