Beasts of Burden: Characteristics of High-Burden and Low-Burden Renting Households
America’s cities are experiencing a rental affordability crisis, as the share of income renters should expect to pay on rent each month continues to rise. A number of economic and societal forces have converged to push rent burdens toward historic levels in many of America’s urban areas, including:
- The rapid growth in the number of new renter households due in part to the collapse of the housing market during the Great Recession.
- Years of underinvestment in new rental construction.
- Potentially shifting cultural preferences toward denser, urban living.
- Persistently slow growth in incomes – particularly at the bottom of the labor market.
Current renters are much more diverse than the renters of the 1990s and early 2000s, when policy decisions and loose lending standards made homeownership accessible to seemingly any household that so desired. But today’s influx of renters – many of whom likely would have opted to buy homes a generation ago – has led to tight supply, rising prices and stark contrasts between the affluent and the struggling.
The country’s vibrant, innovative Western cities are at the leading edge of many of these trends and contradictions. Zillow created profiles for renting households in six Western cities: Denver, Los Angeles, Portland, San Francisco, San Jose and Seattle. In each of these cities, we put renter households into three groups based on their rent burden (the share of monthly household income dedicated to rental payments) and compared these groups along several key dimensions. [1]
A summary of key findings is below, and full results can be found in tables 1 and 2, which can be clicked on to enlarge.
Most of the differences in rent burdens are due to differences in incomes.
- Rents are generally somewhat lower for households with a high rent burden, but most of the differences between low and high rent-burdened households can be attributed to wide differences in household incomes.
- The median household income among households with the lowest rent burden is typically four to five times the median household income among households with the highest rent burden. In San Francisco, it is nearly six times higher.
Households with the highest rent burden routinely spend upward of half their incomes on rent.
- Among the households with the greatest rent burdens, upward of half of household income is routinely dedicated to rental payments. In Los Angeles, the share is even higher: The highest rent burden households dedicated 68 cents of every dollar they earn to rent.
- By contrast, the lowest rent burden households spend between 14 cents and 15 cents of every dollar they earn on rent.
Poverty and low-incomes are widespread among households with the highest rent burden.
- Roughly half of households with high rent burdens in Denver, Los Angeles and Portland, and roughly one-third in San Francisco, San Jose and Seattle, live in poverty.
- Many more households have low incomes, defined as a household income below 125 percent of the Federal Poverty Level, the cutoff for many federal assistance programs.
Households with higher rent burdens live in smaller, older units.
- Homes rented by households with a high rent burden tend to have fewer bedrooms than those leased by households with a low rent burden.
- In many cities, households with a high rent burden are somewhat less likely to live in a property built in the past decade.
Overly burdened renters tend to be older.
- The median age among households with the lowest rent burdens was three-to-five years younger than households with the highest rent burdens.
- However, despite being older, households with high rent burdens tend to have fewer working-age adults and fewer full-time employed adults per household.
High rent burden households are more likely to have children present, and are more likely to be single-parent homes.
- Between 20 percent and 50 percent of households with a high rent burden have children present.
- Across the six cities analyzed, households with high rent burdens are almost twice as likely as those with low rent burdens to be single-parent homes.
Households with a high rent burden are much more likely to not own a car.
- The biggest gaps in car ownership between low and high rent-burdened households are in Seattle, Portland and San Francisco.
- In San Francisco, half of high rent burden households don’t own a car, compared to 29 percent of low rent burden households. In Seattle, the shares are 34 percent and 12 percent, and in Portland the shares are 36 percent and 14 percent.
In most cities, adults living in households with a high rent burden are likelier to spend more time commuting and to commute via public transit.
- Employed adults in high rent burden households are more likely to commute via public transit and less likely to commute via personal car.
- Commute times are also generally longer for employed adults living in high rent burden households.
High rent burden households are much more likely to be racial/ethnic minorities.
- In all six cities analyzed, households with a high rent burden are much more likely to be racial/ethnic minorities than low rent-burdened households.
- In San Jose, 55 percent of people in high rent-burdened households are Black or Hispanic, compared to 31 percent in low rent-burdened households. Similarly in Denver, 58 percent of people in high rent-burdened households are Black or Hispanic, compared to 42 percent in low rent-burdened households.
Immigrants are generally more likely to face a high rent burden.
- In four of the six cities studied (excluding San Jose and Los Angeles), immigrants were more likely to live in high rent-burdened households than low rent-burdened households.[2]
Young adults are overrepresented in households with a low rent burden, and seniors are overrepresented in households with a high rent burden.
- Young adults – millennials aged 23 to 34 – are overrepresented in low rent-burdened households. In San Francisco, 42 percent of people living in households with low rent burdens are millennials, compared to 27 percent of those living in high rent-burdened households.
- By contrast, 14 percent of San Francisco residents living in households with a high rent burden were senior citizens aged 65 or older, compared to 5 percent in low rent burden households.
Adults living in high rent burden households are less educated than adults living in low rent burden households.
- Adults aged 25 to 54 living in low rent burden households are much more likely to have earned a Bachelor’s degree or higher than adults in high rent burden households.
[1] Analysis based on Zillow tabulations of data from the U.S. Census Bureau’s American Community Survey, 2011-2013, made available by the University of Minnesota, IPUMS-USA. San Jose corresponds to Santa Clara County. Incomes and rents are updated using appropriate changes in the Consumer Price Index.
[2] Immigrants include individuals born outside the United States without U.S. citizenship at birth.