A severe shortage of affordable and available homes

Summary of The Gap Report 2023

Key takeaways on affordable rental housing shortage from The Gap report (2023), published by the National Low Income Housing Coalition.

The National Low Income Housing Coalition (NLIHC) published their annual report, The Gap, in March. The report outlines how the nation’s lowest-income renters continue to face severe housing shortages, despite the flattening of rent prices in early 2023. At Builders Patch, we provide a high-level summary of the key takeaways from this report, especially focusing on Extremely Low Income (ELI) renters.

Who are the extremely low-income renters in the US?

The ELI group consists mainly of those who work very low-wage jobs or do not have any paying job at all, with incomes below 30% Area Median Income (AMI). The breakdown for the 2023 stats shows that 39% of extremely low-income renter households in the labor force worked at least 40 hours per week, while 30% worked between 20 and 39 hours per week.

However, low-wage employment does not provide adequate income to afford housing. To afford a modest one-bedroom apartment, a full-time worker needs a national average wage of $21.25, and for a two-bedroom, it’s $25.82. Unfortunately, many of the largest occupations in the country, such as home health aides, janitors, and nursing assistants, pay far less.

A severe shortage of affordable and available rental homes

Low-income renters are facing an acute shortage of affordable and available housing. While higher-income households have a surplus of affordable homes (46 million units available to 12.5 million high-income households), extremely low-income renters are facing an absolute shortage of 4 million rental homes, an increase from 3.6 million in the 2022 report.

Extremely low-income renters face the most acute housing crisis. They account for 11 million households, representing 25% of all renter households and 9% of all U.S. households. They face the most severe housing crisis, with only 7 million affordable rental homes available.
Statewide shortages in affordable and available homes for ELI renters. In 12 states, over three-quarters of ELI renters are severely cost-burdened, including Nevada (86%), Florida (83%), Oregon (80%), Arizona (80%), and Texas (79%). Maine and Rhode Island have lower percentages of severely cost-burdened ELI renters.

ELI renters have fewer housing options now than pre-pandemic

ELI renters are the hardest hit by the housing shortage. They are the only income group facing an absolute shortage of affordable homes, whereas other income groups have enough affordable rental units.

Extremely low-income households represent one-quarter of the nation’s 44.1 million renter households.
Only 7.0 million affordable rental homes are available for these households.
Of these 7.0 million units, 3.3 million are occupied by higher-income households, leaving 3.7 million available.
Overall, there is an absolute shortage of 4.0 million affordable rental homes for extremely low-income households.

Reasons for the worsened shortage of affordable and available rental homes for ELI renters

Three primary reasons for the increase in shortage from 2019-2021:

Increase in the ELI renter population: The number of extremely low-income renter households grew from 10.8 million to 11 million, partly due to greater unemployment following the COVID-19 pandemic.
Decrease in the supply of affordable homes: Median rents increased by 18% from January 2021 to January 2022, combined with low rental vacancy rates.
Increase in higher-income renters occupying units: The number of higher-income renters occupying affordable units for ELI renters remained constant, which limits availability.

Racial and ethnic disparities in access to affordable housing for ELI renters

The shortage disproportionately affects Black, Latino, and Native and Alaska Native households. These groups are both more likely to be renters and have extremely low incomes.

57% of Black households are renters; 19% are extremely low-income renters.
52% of Latino households are renters; 14% are extremely low-income renters.
Disparities are a result of years of discrimination in banking, real estate, and federal policies.

Federal and local solutions to affordable housing development

The report suggests several local tools to address housing affordability that should be prioritized:

Amendments to exclusionary zoning practices to boost high-density housing development.
Encouragement of state and local government housing programs targeting specific income levels.
Increased funding from Congress for preserving affordable housing stock.
Enactment of federal protections against discrimination and eviction, and limits on rent increases.

Conclusion: long-term federal policy solutions are critical for lowest-income renters

Lowest-income renters continue to bear the brunt of cost-burdened housing. There is an urgent need for long-term investments in federal housing policy, improving security among the lowest-income renters and focusing on both short-term and long-term housing needs.