Housing costs are rising faster than wages for lower-income families—a lot faster—and are taking up a greater share of income for these families than for others, a new analysis from the Pew Charitable Trusts shows:
Over the past two decades, spending on housing increased for Americans in all income tiers. In 2014, households in the lower third spent much less in absolute dollar terms (about $9,200) than those in the middle or upper thirds, whose median housing expenditures reached $11,500 and $18,000, respectively. However, the typical lower-income household spent far more on housing as a share of income (40 percent) than those in the middle (25 percent) or at the top (17 percent).
It’s not that low-income families have decided they need luxury apartments, cost be damned. They’re struggling to find a place in a housing market that’s become far more competitive:
Since the start of the housing crisis in 2007, homeownership rates have declined among households in the middle- and upper-income tiers. These decreases have affected the rental market, as former owners became renters, leading to rental vacancy rates at historical lows below 7 percent.4 The diminished supply of rental properties increased the cost of rental housing dramatically; in 2014, renters at each rung of the income ladder spent a higher share of their income on housing than they had in any year since 2004.
Food and transportation expenses have also risen, and with all households seeing a 25 percent growth in expenditures since 1996, lower-income households have ended up in the red, going from having $1,500 left after expenses in 2004 to having negative $2,300 left after expenses in 2014. And it’s no wonder, with a full-time minimum wage job not being enough to make rent affordable in any state in the country.