Renters getting crushed by U.S. housing costs

Share of working households with a severe housing cost burden by state, 2011
Share of working households with a severe housing cost burden by state, 2011

In the grand scheme of personal finances, your take home pay is like an apple pie. Your bills are the hungry flock of kids banging their fists on the table to get their share.

For renters in America, housing is usually the hungriest of the bunch. Ideally, it would gobble up one-third of the pie –– anymore than that, and you likely wouldn’t have enough to feed the rest.

Unfortunately, one in four working renters watched housing devour more than half of their paycheck pie in 2011, according to the latest Housing Landscape Report from the Center for Housing Policy. The report analyzed the period between 2008 and 2011, when the rate of renters putting more than half their income toward housing jumped nearly 4%.

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“The growing rate of severe housing cost burdens among renters is not a new trend, but it is clearly an unsustainable one,” said lead report author Janet Viveiros. “While rental costs have steadily risen over the last few years, wages for these working families have not fully recovered from the hit they took between 2008 and 2009. Spending most of your paycheck on rent means cutting back on other necessities, including health care and even food.”

Among working households earning less than 30 percent of their area’s median income (AMI), a whopping 80% spent more than half their pay on housing alone. Among the toughest states for renters are usual suspects like New York, California, Florida, Nevada, and Arizona (see map above).

Much of the strain on renters has to do with fallout from the housing crisis of 2009. Homeowners fled their underwater homes and flooded rental markets to downsize, driving up demand on a stagnant supply of properties and sending rental prices skyrocketing. At the same time, the job market floundered and people’s take home pays dwindled –– basically a perfect storm in personal finance hell.

Homeowners who stuck out the crisis haven’t fared much better, but their cost burden remained relatively stable throughout the economic recovery, according to CHP. One in five working homeowners experienced severe housing affordability challenges, versus one in four working renters. However, their income dropped 4% between 2008 and 2011.