Making tradeoffs to afford housing

March 17, 2021

PSRC’s new Regional Housing Needs Assessment finds that a household needs to earn about $30 per hour—more than double the minimum wage—to afford a median priced apartment.

The incomes of many residents are not keeping up.

Across the region, most lower- and moderate-income renters—households with less than $50,000 annual income—spend more than 30% of their incomes on housing. This disproportionately includes American Indian, Black, and Latinx households who are more likely to be cost-burdened than white households.

A household is considered cost-burdened if it pays more than 30% in housing expenses and severely cost-burdened if it pays more than 50%.

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The affordable housing challenge is not distributed evenly among residents based on income, race, age, or household size, nor is it evenly spread geographically. Cost burden is relative; a high-income cost-burdened homeowner is most likely in a different financial position than a low-income cost-burdened renter. Lower-income individuals have less disposable income to manage changing housing costs and cover other household expenses.

Low-income households who are severely cost-burdened struggle to make housing payments and are at high risk of becoming unhoused if a crisis arises.

In focus groups recently conducted by PSRC, residents emphasized the tradeoffs they have to make in choosing to pay for housing over other needs.

There are real consequences when people have to spend most of their income on housing. It limits their ability to pay for transportation to get to jobs or school and the ability to pay for medical costs.

Without the ability to save for a rainy day, one health care bill, car repair need, or employment gap could force a household into losing shelter. While lack of affordable housing is not the only cause of being unhoused, affordable housing and being housed are inextricably linked.

What does it mean when housing is affordable?

Households are expected to pay about 30% of their income on housing costs, including rent or mortgage payments and all utilities. This leaves about 70% of the rest of income to go towards all other costs, such as transportation, food, childcare, savings, and discretionary purchases.

Stable housing is critical to quality of life. PSRC convened a focus group of residents living in subsidized housing. They said they now spend less time worrying about how to pay the rent, which means more time for family, schoolwork, looking for better paying jobs, and community connections.

How will the Regional Housing Strategy address this?

The Regional Housing Needs Assessment is a key component of the forthcoming Regional Housing Strategy. The Needs Assessment summarizes the challenges for the region and will inform decisions about how to address current and projected gaps through coordinated action. For example, how should the region address these challenges? What are the opportunities and priorities for local governments, PSRC, and other stakeholders?

The Regional Housing Strategy will evaluate potential tools and actions to help local jurisdictions better understand their roles in local and regional housing work.

It will describe the types of intervention needed, where, and at what scale to address gaps identified in the needs assessment. Tools and actions will be needed to address centers and areas served by high-capacity transit where the majority of growth is anticipated, and various other types of markets and places across the region.

This is part one of a three-part series. In the next post, we’ll look at the missing middle housing. Watch for it next week.

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