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The Far-Reaching Harms of Housing Unaffordability on Renters

February 7, 2024

According to the most recent State of the Nation’s Housing report, nearly half of U.S. households are rent-burdened, meaning they pay over 30 percent of their income on rent. Once they’ve crossed that threshold, most renters begin to cut back on necessities, including food and medical expenses. Beyond temporary cutbacks, how do increasing housing costs impact households and families? We respond to this question in a recent paper published in the Journal of Urban Affairs with Gary Painter, using data from an in-person survey that we conducted across Central and South Los Angeles.

During 2019, we spoke with 800 randomly selected renter households and found the high costs of housing had a wide range of impacts. A majority of renter households, regardless of rent burden status, were cutting back on several basic needs. In many cases, the cutbacks have lasted for years, becoming almost permanent. We also saw that many households were adjusting their living and work situations–such as renting out a room or adding additional work hours–to cut costs or earn more money. Still, one in five households could not cover an emergency expense of $400 even after making these shifts, indicating that the adjustments are not allowing households to overcome or avoid financial precarity.

By analyzing the survival strategies renters use, we show the significant and impactful steps that many endure to stay in their homes—regardless of rent burden status. Therefore, these data also reveal that the way we measure and study renters’ housing affordability–through indicators like rent burden–obscures the extent to which households have already taken actions to improve their economic situation, from budget cutbacks to living rearrangements and taking on additional jobs or hours.

1. Most renters cut back on basic necessities in impactful ways, and in many cases, these cutbacks have lasted for years. The vast majority of all renters are cutting back on necessities: 84.7 percent of survey respondents had cut back in at least one budget category (food, clothing, entertainment, health & medicine, education, transportation, or bills) to make life more affordable. Over half had cut back on food or entertainment (including family activities) and nearly half had delayed bill payments or increased their debt. Furthermore, these cutbacks were not just temporary adjustments, but rather semi-permanent changes to their quality of life: approximately one in four households had cut back on food, clothing, and family and entertainment—or had taken on bills and debt—for a year or longer. 

2. Households are changing their home and work arrangements. Roughly one-fourth of residents had taken on an additional job or work hours to increase their income, and one in five residents had changed their home environment to reduce housing costs, including renting out a room or adding household members to defray costs. Regression estimates suggest that severely rent-burdened households (paying over half of their income on rent) were more likely than moderately rent-burdened households (those paying 30 percent to 50 percent of their income toward rent) to have added household members than those moderately rent-burdened. This suggests that functional adjustments–living with more people and/or taking on more work– are strategies that are not available to everyone, or are a last resort that residents only use once other tactics (such as cutbacks) have been exhausted. 

More than one-third of all households had made functional adjustments to reduce housing costs or boost income by fundamentally altering their housing or employment situation. Even among households that are not rent-burdened, 40 percent had made functional adjustments, which in part means that the adjustments are effective in reducing rental costs or boosting income, therefore altering the rent-to-income ratios—which are the underlying metrics of precarity—and obscuring the extent of the problem. As a result, households that have undertaken functional adjustments may go uncounted using traditional measures like rent burden and shelter poverty because their survival tactics, by definition, impact monthly household income and housing costs.

3. Renters tend to use a combination of survival strategies. Among respondents, nearly one-third of households used both types of survival tactics–consumption cutbacks and functional adjustments. This was the case for both rent-burdened and non-rent-burdened tenants.

4. Even with these adjustments, renters are not more stable financially. To understand whether residents were cutting back to get ahead and improve their financial situation or just to survive, we asked how they would cover an unanticipated $400 expense. Residents making more cutbacks actually had a lower ability to pay for the expense. Moreover, we found a negative relationship between the ability to pay and respondents who had used both consumption cutbacks and functional adjustments simultaneously. While we know from previous research that adjustments to housing and employment are also used for upward mobility, these findings—alongside self-reported negative impacts related to sleep, family time, and crowding—suggest that the benefits of those adjustments have not kept pace with declining affordability.

What now?

As our study illustrates, renters have been struggling for years with high housing costs, which lead to cascading effects throughout their lives and their families. Cutting back on essentials, taking on additional jobs, and shared housing situations can all have negative impacts on both children and adult household members. Increased housing affordability would provide significant relief to the day-to-day budgets of the majority of renters. Municipalities have tools available to increase housing production, preserve existing affordable housing stock (both naturally occurring and subsidized housing), and enforce tenant protections. A multi-faceted approach can increase the available pool of affordable housing by making it easier to build while protecting long-time residents and alleviating the harmful effects of unaffordable housing and gentrification as well as the burden of implementing survival strategies that can tax families.

Note: This blog post is based on Angst, S., Rosen, J., De Gregorio, S., & Painter, G. (2023). How do renters survive unaffordability? Household-level impacts of rent burden in Los Angeles. Journal of Urban Affairs, 1-24.

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