by Angie Rodgers
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Summary
The District’s housing market has undergone dramatic changes in recent years, with sharp rises in both rents and home values throughout the city. As the District moves toward constructing a comprehensive housing strategy ‘ an effort led by a special housing task force established in 2004 ‘ there are tremendous challenges to establishing policies that will make the District a livable city for people of all income levels. Yet achieving this goal is critical to the city’s future because access to affordable and decent housing is a cornerstone of a healthy city.
This analysis uses data from the American Community Survey (U.S. Census) and the decennial census to highlight the impact of high and rising housing costs on the ability of District residents to afford their homes. It finds that, while housing cost burdens have increased for many residents and affordability problems are found at all income levels, the most severe problems are faced by DC’s lowest-income residents. Most low-income households pay far more for housing than what is considered affordable, with most paying more than half of their limited income on shelter. These findings suggest that aiding the District’s lowest-income residents should be a priority in a comprehensive housing strategy.
- The share of District households with unaffordable housing burdens ‘ meaning they pay 30 percent or more of their income on housing ‘ grew from 30 percent in 1990 to 37 percent in 2003. District households with severe housing cost burdens ‘ meaning they pay 50 percent or more of their income for housing costs ‘ also increased sharply, from 13 percent of households in 1990 to 19 percent in 2003.
- Housing affordability problems are concentrated among the District’s lowest-income households. Four out of five households with income below 30 percent of area median income (AMI) ‘ which is $25,440 for a four-person household’have unaffordable housing cost burdens. Half of the households with income between 30 percent and 50 percent of AMI ‘ $25,440 to $42,400 for families of four ‘ devote 30 percent or more of their income to housing costs. This contrasts with households that have income above 50 percent of AMI, where only one in six households has a housing cost burden.
- Severe housing affordability problems’needing to spend at least 50 percent of income on housing’are limited almost exclusively to low-income residents. Some 60 percent of the households with income below 30 percent of AMI have severe housing cost burdens. By contrast, no more than 17 percent of households with income over 30 percent of AMI have severe housing cost burdens.
- The District households most likely to face severe housing affordability problems ‘ those with incomes below 30 percent AMI ‘ are a diverse group, but they all have limited abilities to find affordable housing and absorb rising housing costs. One third of the households are elderly or disabled. Among the non-elderly, the majority are working but in low-wage jobs such as child care. Some extremely low income households with children rely on public assistance benefits that make it virtually impossible to find affordable housing.
Income trends in the District appear to have contributed to its affordable housing squeeze. A July, 2004 DCFPI analysis of income inequality found that the gap between low-income and high-income District households was as wide or wider than in any major city.[1] This gap, the result of steeply rising incomes for the top earners and stagnating incomes for the lowest income households, seems to have had an impact on the District’s housing market. Housing costs have escalated in the District, particularly since the late 1990s, and a number of low-income neighborhoods have experienced gentrification. The supply of low-cost housing has diminished greatly and the gap between the supply and demand for affordable housing has widened while the number of high-cost apartments and homes has risen dramatically.
- The District lost 5,000 ‘ or 15 percent ‘ of its apartments with rents under $500 per month in just the three years between 2000 and 2003. During the same period, the number of higher-rent units ‘ defined in this analysis as those with gross rent of more than $1,000 per month ‘ increased by almost 7,000, or 25 percent.
- At the same time, the number of low-income households is increasing. The number of households earning less than $20,000 increased by almost 5,000 between 2000 and 2003.
- As a result, the gap between the number of renter households with income below $20,000 and the number of apartments rented that would be affordable to them ($500 per month) has grown. In 2000, the gap was 13,600. By 2003, that gap grew to 23,900.
- A similar trend is reflected in owner-occupied units. The number of low-value homes in the District ‘ defined in this analysis as homes with values below $150,000 ‘ dropped from 46,000 to 25,000 between 2000 and 2003. By contrast, the number of high-value homes ‘ defined here as homes with values above $500,000 ‘ has grown from 10,800 in 2000 to 23,000 in 2003.
While these findings suggest that the District’s housing resources should be targeted significantly on households with low incomes facing the most severe housing burdens, it does not mean that moderate-income households face no housing challenges. Some moderate-income families may be able to find affordable rents only by living in crowded conditions, in substandard housing, or in high-poverty neighborhoods with limited access to city services, employment, or other amenities. Moreover, many moderate-income renters face serious barriers to becoming homeowners.
For the lowest income households, however, very high housing cost burdens create serious problems that affect their ability to find and keep employment and that affect the health, education, and safety of their children. High housing costs often limit job opportunities available to low-income families because they are forced to live far away from job centers to seek affordable housing. Moreover, high housing costs often force families to move frequently. This instability interferes with the ability of adults to secure and maintain stable employment. Additionally, high housing costs squeeze already limited budgets, forcing families to sacrifice other necessities that allow them to work like child care, work clothes, and money for transportation.[2]
High housing costs also have a number of negative effects on children. Frequent moves prompted by high housing costs result in poor school performance, especially since it leads to poor attendance.[3] High housing costs force some families to sacrifice money for adequate food. Children in these families are much more likely to suffer a litany of problems associated with inadequate nutrition, such as stunted growth.[4] Additionally, because limited affordable housing often leads families to live in substandard housing or in high-poverty neighborhoods, the children are more likely to experience serious asthma attacks or be the victim of violent crimes.[5]
The District’s current housing market, while a sign of the city’s economic progress, appears to be putting pressure on those least able to absorb rising costs. The stated goal of attracting 100,000 new residents to the District over the next decade is likely to exacerbate the shortage of affordable housing for the District’s poorest residents. The findings of this analysis suggest that identifying resources and policies to assist the District’s lowest income households should be addressed as part of policies to attract more residents to the District.
End Notes:
[1] Income Inequality in the District of Columbia is Wider than in Any Major U.S. City (https://www.dcfpi.org/?p=57), DC Fiscal Policy Institute, July 2004.
[2] The Increasing Use of TANF and State Matching Funds to Provide Housing Assistance to Families Moving from Welfare to Work, Center on Budget and Policy Priorities, February, 2000.
[3] See, e.g., “A Report from the Kids Mobility Project,” March 1998, available from the Hennepin County Office of Planning and Development, Government Center A-2308, 300 S. Sixth St., Minneapolis, MN 55487-0238, (612) 348-4466.
[4] Allan R. Meyers et al., “Housing Subsidies and Pediatric Undernutrition,” Archives of Pediatric Adolescent Medicine (1995), 149:1079-1084.
[5] Lawrence F. Katz, Jeffrey R. Kling, Jeffrey B. Liebman, Moving to Opportunity in Boston: Early Impacts of a Housing Mobility Program, Unpublished Preliminary Draft, 1999.