A Shortage of Affordable Homes 2023
Introduction
A Shortage of Affordable Homes is the defining crisis for low-income renters in the United States, as detailed in the National Low Income Housing Coalition’s (NLIHC) March 2023 report.
This comprehensive analysis reveals that the gap between housing supply and demand has widened significantly, driven by pandemic-era economic shifts, inflation, and long-standing structural inequities.For researchers, policymakers, and housing advocates, understanding the nuances of this shortage is essential for developing effective solutions. This article provides a deep-dive summary of the key findings, demographics, and policy recommendations outlined in the official document.
The Scale of a Shortage of Affordable Homes
The central finding of the report is stark: there is a national shortage of 7.3 million affordable and available rental homes for extremely low-income (ELI) renters. This figure represents an 8% increase in the shortage between 2019 and 2021, adding more than 500,000 units to the deficit. To put this in perspective, there are only 33 affordable and available rental homes for every 100 ELI renter households.
The report defines "affordable" housing as units where rent and utilities do not exceed 30% of a household’s income. "Available" units are those that are either vacant or occupied by households with similar or lower incomes.
When higher-income households occupy units that would otherwise be affordable to ELI renters, those units become unavailable to the people who need them most.
Consequently, 3.3 million affordable units are occupied by higher-income renters, leaving only 3.7 million units truly available for the 11 million ELI households nationwide.
This disparity highlights that A Shortage of Affordable Homes is not merely a problem of total housing stock, but a mismatch of affordability and access. While there is a surplus of housing for middle- and high-income earners, the lowest-income renters face an absolute deficit.
No other income group experiences an absolute shortage of affordable units; for all other brackets, there are enough affordable rental homes to accommodate every household.
Defining Extremely Low-Income Renters
To understand A Shortage of Affordable Homes, one must first define the population most affected. The NLIHC categorizes "extremely low-income" households as those with incomes at or below the federal poverty guideline or 30% of the Area Median Income (AMI), whichever is greater. These households account for one-quarter, or 11 million, of the nation’s 44.1 million renter households.
Contrary to common stereotypes, many ELI renters are employed. Thirty-five percent of ELI renter householders are in the labor force. Among those working, 39% work at least 40 hours per week, and 30% work between 20 and 39 hours per week.
However, low-wage employment often fails to provide sufficient income for housing. The national average wage required to afford a modest two-bedroom apartment is $25.82 per hour, far exceeding the median wages of common occupations such as home health aides, janitors, and food servers.
Other significant portions of the ELI population include seniors (30%), individuals with disabilities (18%), and students or single-adult caregivers (7%). These groups face unique vulnerabilities, including fixed incomes and high healthcare or childcare costs, which exacerbate the impact of A Shortage of Affordable Homes on their financial stability.
Racial Disparities in A Shortage of Affordable Homes
The burden of A Shortage of Affordable Homes is not distributed equally across racial and ethnic lines. Black, Latino, and Indigenous households are disproportionately represented among ELI renters due to historical and ongoing systemic injustices, including discriminatory housing policies, redlining, and labor market disparities.
Nineteen percent of Black non-Latino households, 17% of American Indian or Alaska Native households, and 14% of Latino households are ELI renters. In contrast, only 6% of white non-Latino households fall into this category.
Black and Latino households are more than twice as likely as white households to be ELI renters. These disparities are rooted in decades of exclusion from homeownership opportunities, which have limited wealth accumulation for communities of color.
Furthermore, renters of color experience higher rates of housing cost burdens. Fifty-five percent of Black renters and 52% of Latino renters are housing cost-burdened (spending more than 30% of income on housing), compared to 44% of white renters.
When examining severe cost burdens (spending more than 50% of income on housing), nearly one-third of Black renters are affected, compared to 23% of white renters. Addressing A Shortage of Affordable Homes, therefore, requires a racially equitable approach that acknowledges these structural inequities.
Geographic Variations in A Shortage of Affordable Homes
The crisis of A Shortage of Affordable Homes is nationwide, affecting every state and the District of Columbia. However, the severity varies significantly by geography. Nevada faces the most severe relative shortage, with only 17 affordable and available homes for every 100 ELI renter households. Oregon and Florida follow closely, with 23 homes per 100 households. California, Arizona, and Texas also exhibit critical shortages.
Even states with the "best" relative supply, such as South Dakota (58 homes per 100 households), Rhode Island (53), and Mississippi (51), still lack an adequate supply to meet demand.
In absolute terms, California has the largest shortage, with a deficit of nearly 1 million affordable and available units. Wyoming has the smallest absolute shortage, with a deficit of 10,215 units.
Metropolitan areas reflect similar trends. Among the 50 largest metro areas, Las Vegas, NV, has the most severe shortage, with only 14 affordable and available homes per 100 ELI households. Orlando, FL, Dallas, TX, and Austin, TX, also face extreme deficits.
Conversely, Providence, RI, and Pittsburgh, PA, have the least severe shortages, with 48 homes per 100 households. Despite being the "least severe," these areas still fall far short of meeting the needs of their lowest-income residents. Thus, A Shortage of Affordable Homes remains a universal challenge, regardless of location.
The Impact of Housing Cost Burdens
The direct consequence of A Shortage of Affordable Homes is a severe housing cost burden. Seventy-two percent of ELI renter households—approximately 8.1 million families—are severely cost-burdened, spending more than half of their incomes on rent and utilities. This rate is more than double that of any other income group. ELI renters account for 72% of all severely cost-burdened renters in the U.S.
For an ELI family of four earning the federal poverty guideline ($2,312 per month in 2022), paying the average fair market rent for a two-bedroom unit ($1,342) leaves only $970 for all other expenses.
After accounting for the USDA’s thrifty food budget ($967 per month), merely $3 remains for transportation, healthcare, childcare, and other necessities. This residual income approach demonstrates that even when housing is technically "affordable" by the 30% standard, ELI renters often cannot meet basic needs.
Inflation has further exacerbated this precarity. Between January 2021 and December 2022, rental prices increased by 22% nationally. While inflation has cooled slightly, the cumulative effect of rising rents and stagnant wages continues to drive housing instability. The link between A Shortage of Affordable Homes and financial hardship is direct and devastating, pushing millions of families toward eviction and homelessness.
Local and Federal Solutions to A Shortage of Affordable Homes
Addressing A Shortage of Affordable Homes requires a multi-faceted approach involving local, state, and federal interventions. Local governments play a crucial role in zoning reform.
Exclusionary zoning laws, which mandate single-family housing and restrict density, limit the supply of affordable multifamily units. Research indicates that renters in exclusionary zones pay an additional $122 per month in rent.
Reforming these regulations to allow higher-density development by right can help increase supply, though local efforts alone are insufficient to solve the crisis.
Federal policy solutions are essential for scaling affordable housing development and providing direct assistance. The report recommends several key actions:
- Expand Housing Trust Fund investments to build and preserve deeply affordable units.
- Establish a universal voucher program to ensure all eligible ELI households receive rental assistance.
- Create a permanent housing stabilization fund to provide emergency assistance during financial shocks.
- Enact federal renter protections, including source-of-income discrimination bans and just-cause eviction standards.
The report highlights that reductions in federal appropriations for housing programs exacerbate A Shortage of Affordable Homes. Between FY2011 and FY2017, HUD experienced seven consecutive years of real budget cuts, resulting in a cumulative loss of $27 billion compared to FY2010 levels. Restoring and expanding these resources is critical to reversing the trend.
Conclusion: The Urgency of Addressing a Shortage of Affordable Homes
The NLIHC’s 2023 Gap Report underscores that A Shortage of Affordable Homes is not a temporary fluctuation but a structural failure of the U.S. housing market. With a deficit of 7.3 million units for extremely low-income renters, the current system leaves millions of families financially precarious and housing insecure.
The disproportionate impact on communities of color, seniors, and workers in low-wage jobs highlights the need for equitable policy solutions.
While local zoning reforms and private market filtering offer some relief, they cannot address the scale of the crisis without significant federal investment. Expanding rental assistance, preserving existing affordable stock, and incentivizing new construction are necessary steps to close the gap.
As inflation and economic volatility continue to affect low-income households, the urgency of addressing the shortage of Affordable Homes has never been greater. Policymakers, advocates, and researchers must prioritize these solutions to ensure housing stability for the nation’s most vulnerable renters.