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September 2016

Housing affordability a growing problem with dire consequences

Annual wages in many occupations fall below income thresholds to afford a one-bedroom apartment in many metro areas around the country - and the consequences can be far-reaching, according to researchers at The Joint Center for Housing Studies of Harvard University.

In its 2016 State of the Nation's Housing report, analysts at JCHS say the private market is failing to supply housing that is affordable to lower-income households, but other factors are compounding affordability problems. (Data from a National Low Income Housing Coalition report indicates for every 100 very low-income renters - those earning up to 50 percent of area median income - only 57 rental units were affordable and available.)

"Wage stagnation among low-income households is certainly part of the problem," writes Elizabeth La Jeunesse, one of the research analysts. Along with inadequate supply of low-rent units, the report's authors also cited intense competition for federal housing assistance and the fact that many existing low-rent units are occupied by higher-income households as factors.

Research shows the inability to afford stable, secure and healthy housing even while working full-time poses particular health and developmental risks to young children in these households.

Le Jeunesse also emphasized the strength of our cities is tied to all residents having an affordable and stable place to live. "Employers also stand to benefit when the workforce can afford to live within reach of employment centers," she wrote.

Using the standard assumption that a household should spend no more than 30 percent of its income on housing, JCHS data show most full-time cashiers, retail and sales persons, and food preparation workers are unable to afford even a modest one-bedroom apartment in many metro areas.

Other occupations the report mentions as having inadequate median annual wages include EMTs and paramedics, childcare workers, security guards, and various healthcare support positions. "All of these jobs are vital to local economies, and support a variety of businesses and services required for healthy, growing communities," the report's authors concluded.

Investments in affordable, stable, and well-located housing for "the millions of families serving our communities" are important in this era of rising housing costs, low wages among many full-time workers and weak income growth, the researchers stated, adding, "Given the high cost of building new housing, preservation of our nation's existing supply of affordable housing is essential."

The Joint Center for Housing Studies is a collaborative unit affiliated with the Harvard Graduate School of Design and the Harvard Kennedy School.