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

When talking about low-income households, the most vulnerable amongst them are the ELI, or extremely low-income group, mostly consisting of those who work very low-wage jobs or do not have any paying job at all, and their income is below 30% AMI (area median income).

The breakdown is: labor force earning low wages (37%), seniors (27%), householders with disability (19%), students (4%), single-adult caregivers to a young child or to a household member with a disability (3%), other unspecified (10%).

                Extremely low-income renter households
  Source: The Gap Report (2020)

A severe shortage of affordable and available rental homes

Low-income renters across the US are facing an acute shortage of affordable and available housing. While households with higher incomes (above area median income) have a cumulative surplus of affordable homes (46.1m units available to 12.5m high-income households), extremely low-income renters are facing an absolute shortage of 3.6 million rental homes.

  • Extremely low-income renters face the most acute housing crisis
    11 million extremely low-income renter households account for 25% of all renter households and 9% of all U.S. households. They are a numerically significant demographic that is facing the most acute housing crisis in the U.S. There are only 7.4 million affordable rental homes available to these 11 million households.
Affordable and available rental homes per 100 extremely low-income renter households by state
Source: The Gap Report (2022)

  • The disparity in income and affordability for renters
    For every 100 renter households with an income at or below 50% of the area median income (AMI), there are only 58 available and affordable homes. For renter households with incomes at or below 80% of AMI, this number jumps up to 93

  • High-income renters capture affordable units for low-income renters
    1.3 million of the 7.4 million affordable rental homes for low-income renters are occupied by higher-income (middle-income and above median income) households. This has furthered the shortage of availability of affordable homes, specifically for extremely low-income renters. As a result, they are the most cost-burdened demographic across American cities.  

  • Cumulative shortage at lower levels of income and surplus at high levels
    The report analyzed 5-year ACS PUMS data and found that the shortage in housing decreases as income rises. This indicates that extremely low-income renters are disproportionately bearing the housing cost burden, owing to the lack of affordable and available housing for this demographic.
  • Rental units and renters in the US, matched by affordability and income categories (in millions)
    Source: The Gap Report (2022)

    The poorest renters face the greatest housing cost burdens

    According to HUD, a household is considered cost-burdened when it spends more than 30% of its income on housing (rent + utilities). If this cost is more than 50%, the household will be considered severely cost-burdened.  

    The 2022 State of the Nation’s Housing report by JCHS (read our key takeaways) points out that the poorest households spend the most on housing. This leaves them with much less to spend on other important utilities such as food, transportation, clothing, and healthcare, which severely deteriorates their quality of life.

    • Although 47% of all renters are cost-burdened across the U.S., 46% of that number is made up of 86% of extremely low-income renters. This is an alarming statistic, which indicates that those with the lowest incomes have to pay the highest housing costs.
    • 92% of all the cost-burdened renters in the country are made up of extremely low, very low, and low-income renter households.
    Severely housing cost-burdened renters by income
    Source: The Gap Report (2022)
    • The following states are those in which extremely low-income renters face the gravest challenges in finding affordable and available rental housing. The scores display the number of affordable and available rental homes for every 100 low-income renters in the states - Nevada (18/100), California (23/100), Arizona (26/100), Oregon (26/100), and Florida (26/100)

    Need for more HUD-assisted housing for low-income renters  

    The report found a relationship between greater housing vulnerability among low-income renters and less availability of HUD-assisted housing in metropolitan areas. Public housing, Housing Choice Vouchers, and project-based rental assistance are the different types of housing assistance that HUD provides. Wherever there is a lack of such subsidized housing, a greater percentage of low-income renters face housing insecurity and challenges to housing affordability.

    • Las Vegas and Orlando metropolitan areas have recorded 85% of extremely low-income renters as severely cost-burdened. HUD-assisted housing in these metro areas represents 4% and 3% of the rental housing stocks, respectively.
    • Alternatively, 21% of Providence’s rental housing stock is HUD-assisted housing. The percentage of severely cost-burdened, extremely low-income renter households in Providence stands at 58%, much lower than Las Vegas and Orlando metro areas.

    Racial and ethnic disparities in access to affordable housing for extremely low-income renters

    Centuries of racial inequality have created an unequal landscape when it comes to access to affordable housing. In 2019, the net worth of the median Black household was roughly 13% of the median white household’s net worth, while the median Latino household’s net worth was 19% of the median white household’s net worth. Since income and housing affordability are deeply intertwined, it comes as no surprise that renter households of color constitute a large percentage of the extremely low-income renter population facing severe cost burdens.

    • 20% of Black households, 18% of AIAN households, 15% of Latino households, and 10% of Asian households are extremely low-income renters, compared to only 6% of white non-Latino households.
    • Renters of color are most likely to be cost-burdened as compared to their white counterparts. Black and Latino renters are especially cost-burdened: 55% of Black and 53% of Latino renters compared to 43% of white renters are cost-burdened.
    • Black renters also face a disproportionate risk of eviction: Data collected by the Princeton Eviction Lab showed that the average eviction filings rates and eviction were the highest for Black renters in their sample, 6.2% and 3.4% respectively.
    Renter household cost burdens by race and ethnicity​​
    Source: The Gap Report (2022)

    Impact of the pandemic on low-income renters and the support they received

    Several industries such as accommodation and food services, retail, manufacturing, transportation, etc. were identified by the Bureau of Labor Statistics (BLS) as the most impacted by pandemic shutdowns. 60% of the lowest-income renters in the labor force worked in these industries and were the hardest hit by the pandemic.

    • By August 2020, almost 6 million (14.5%) renter households were behind on rent. By January 2021, this number grew to 7.9 million (19.4%) renter households. By March 2022, 14% of these renter households were still behind on rent.  
    • Renters of color were disproportionately behind on rent: One out of every five Black renter households, 16% of Latino renter households, 15% of Asian renter households, and 10% of white renter households were behind on rent.
    Renter households behind on rent (in millions)​​
    Source: The Gap Report (2022)
    • The Emergency Rental Assistance (ERA) program launched by Congress allocated $46.6 billion to states and localities to house renters. By February 2022, $24.4 billion in ERA funds were disbursed for household assistance, administrative costs, and housing stability services.
    • As of March 2022, 21% of renters who had received rental assistance were still behind on rent and will likely need longer-term assistance.

    Nationwide shortage of rental housing for extremely low-income households is a structural issue

    The lack of sufficient public subsidies restricts the ability of the private market to produce new rental housing units that are affordable to extremely low-income households. The rents of such units are not enough to cover the development and operating costs, hence greater federal and state-level funding is required to plug the gap. The downfall of this structural issue is the addition of new housing units exclusively in the higher sections of the market.

    • New rental units are unaffordable for extremely low-income renters
      A typical extremely low-income family can afford to pay $615 rent, whereas the asking rent of a new apartment building was $1,604 in the first quarter of 2020 and had grown to $1,715 by the first quarter of 2021.
    • Loss of low-cost homes from the rental market
      Between 1990 and 2017, the number of homes with monthly rents lower than $600, after adjusting for inflation, declined by a staggering 4 million.

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

    Lowest-income renters are facing the brunt of cost-burdened housing in the United States and federal assistance programs are falling behind. There is a need for long-term investments in federal housing policy, specifically catered to improving housing security among the lowest-income renters. The report also suggests the need to parallelly focus on the short-term housing needs of this vulnerable demographic. A permanent emergency housing assistance fund can prove useful for lowest-income renters facing housing instability, evictions, and other economic shocks.

    View the original report by the National Low Income Housing Coalition