America’s Affordable Housing Check-Up: HUD’s 2021 Worst Case Housing Needs Report

The Bipartisan Policy Center’s J. Ronald Terwilliger Center for Housing Policy recently hosted a webinar on HUD’s 18th biennial Worst Case Housing Needs report on renter households finding that the number of American households facing worst case needs held steady at 7.77 million. Although published this year, the report analyzes data from the American Housing Survey (AHS) through 2019 and reflects housing conditions before the onset of the COVID-19 pandemic.

HUD characterizes renters with very low incomes that “lack housing assistance and have either severe rent burdens and/or severely inadequate housing,” as experiencing worst case housing needs. Of primary concern are very low income (VLI) and extremely low income (ELI) renters, households with incomes that are less than 50% and 30% of the area median income (AMI), respectively. For reference, the national median income for a VLI family of four in 2019 was approximately $32,000, and $21,000 for an ELI family.

While favorable economic conditions raised median incomes nationwide between 2017 and 2019, a subsequent rise in average rents negated this positive development. As a result, severe rent burdens stemming from “insufficient income relative to rent” remained the primary driver of worst case needs, with an estimated 95.2% of the 7.77 million impacted households spending more than 50% of their incomes on housing costs.

HUD identifies several key factors that contribute to severe rent burdens:

1. Insufficient growth in the supply of affordable and available rental units;
2. Insufficient government assistance; and
3. Inadequate income growth relative to the increase in average rents.

To reduce the number of families with worst case housing needs, the report calls for dramatically increasing both the availability of government assistance and the supply of affordable rental homes. Of the nearly 18.4 million VLI households in the U. S. 5.05 million, roughly one in four of those eligible, received housing assistance. The current shortage of affordable rentals is also striking: For every 100 VLI households, there were just 62 rental homes affordable and available to them, while only 40 rental homes were affordable and available to every 100 ELI households.

One contributing factor to insufficient availability is the vigorous competition for good quality, affordable housing and the presence of higher-income earners living in rentals otherwise affordable to ELI and VLI households. Between 2017-2019, an estimated 42.7% of rental homes that were affordable to VLI and ELI households were occupied by higher-income families. Additionally, the report notes how increased landlord participation in the Housing Choice Voucher program can “improve access to [affordable and physically adequate] units among very low-income households.”

Worst case housing needs do not discriminate on the basis of geography or demography. Geographically, those facing worst case needs are dispersed throughout the country. Demographically, every racial and ethnic group witnessed increased numbers of those facing worst case needs, except for non-Hispanic whites who saw a 2% decrease among those contending with severe housing issues. Furthermore, the report found that the number of older adult renters with worst case needs increased by 607,000 between 2017-2019, a full percentage point higher than the number observed in HUD’s previous report. As our population continues to age, this concerning trend demands additional study.

While the report analyzed a period predating COVID-19, the authors included a special addendum hypothesizing what the pandemic could mean for housing conditions moving forward. Where a global economic shock and record unemployment would usually indicate “unavoidable” increases in worst case housing needs, HUD notes that “there is little clarity about how the pandemic and the policy responses will play out for vulnerable rental households.” The effectiveness of the government’s sweeping legislative response to COVID-19 will dictate how severely the pandemic will impact VLI and ELI earners throughout the country, a topic that will undoubtedly be a focus of HUD’s next Worst Case Housing Needs report.