Understanding “Housing-Cost-Burdened”

The true housing crisis in Eugene is the substantial number of low-income households who are “housing-cost-burdened.”

Low-Income Household” — A household with a household income (“HHI”) that is less than 80% of the Median Family Income (“MFI”) for an identified area (e.g., Eugene-Springfield’s Metropolitan Statistical Area).
Details on household income categories in Eugene.

Housing-cost-burdened” — A household’s financial situation when they may have difficulty affording necessities such as food, clothing, transportation, and medical care after they have paid for their housing costs.
U.S Department of Housing and Urban Development

The takeaway from this page: There is no “crisis” in Eugene for most households that make 80% or more of the Median Family Income.

Hot! Latest analysis of rental costs and affordability for Eugene -Springfield renters from the National Low-Income Housing Coalition.
Click to view or download PDF.

The “30% of Household Income” criterion is arbitrary and inaccurate.
Two very widely used criteria are that a household is “housing-cost-burdened” if they spend more than 30% of their household income (“HHI”) on housing and the household is “severely housing-cost-burdened” if they spend more than 50% of their household income on housing.

We’re somewhat stuck with the ubiquitous use of the “30% of HHI” criterion, so it’s important to understand that this criterion understates the number of lower-income households that are housing-cost-burdened and overstates the number of higher-income households that are housing-cost-burdened.

You can see why this is the case when you consider how much income remains after paying 40% for housing:

  • $30,000/year income is $2,500/month, and 60% available after housing costs is $1,500 for non-housing needs. — potentially not enough to cover all needs.
  • $120,000/year income is $10,000/month, and 60% available after housing costs is $6,000 or non-housing needs — clearly not “burdened” in Eugene.

Here’s an excellent short explanation of the issue:
Rental Burdens: Rethinking Affordability Measures

For a “deep dive,” read the following research paper that studied Cleveland, Phoenix and Los Angeles to compare the “30% of HHI” criterion and the “Residual Income” measure that they suggest:
Measuring Housing Affordability: Assessing the 30 Percent of Income Standard | Joint Center for Housing Studies (harvard.edu)

The “takeaway” is to be skeptical of gross statistics such as what Eugene Planning Division staff tosses out: “45% of households in Eugene are cost burdened.” The proportion of Eugene households that do not have enough left over after paying for housing to buy basic necessities is probably in the range of 35% to 40%.

The real housing crisis in Eugene is among low-income renters.
The following chart will need updating when the 2020 Census data is available, but the relative shortage of housing that’s “affordable” is likely to shift even more to the lower income households

Compare the “need” of an income category on the left with the “cumulative supply” of affordable housing on the right. Start at the lowest category of household income (dark blue). There’s a need for 21,250 dwellings, but only 7,750 dwelling units that would be “affordable,” which means a shortage of 13,500 units. This is where the true “housing crisis” exists.

Just up the next rung (yellow), 6,700 “affordable” units are needed, and there are 10,400 units in the “affordable” range for this category of household income, which means a surplus of 3,700 units. But note that the cumulative units that the 6,700 (yellow) households could afford is 18,150 units, the sum of 10,400 units (yellow) plus 7,750 units (dark blue).

For the approximately 9,150 households with income between $35,000 and $49,999 (green), the supply of “affordable housing” matching that income range is 13,950 units, for a surplus of 4,800. The cumulative supply of housing that would cost less than 30% of the household’s income is 32,000.

Once you hit the solid “middle income” range of $50,000 to $74,999 (light blue) and above, there are substantial surpluses of housing that are affordable for all the households in these categories.

Deceptive statistics alert! On the City’s website they state what appears to be an “alarming” statistic that “Over 42% of Eugene households can’t afford the cost of an average rental.” But look more closely. If roughly half the rental units have rents that are below the statistical average rent, then that’s roughly enough units with below average rents for the the roughly 44% of households that have incomes below what’s necessary to afford the average rent. In other words this “alarming” statistic is about as meaningless a statistic as saying that “about half of Eugene households make less than the average Eugene household income.”

Here is the latest analysis of rental costs and affordability for Eugene-Springfield renters from the National Low-Income Housing Coalition.
Click to view or download PDF.

Keep in mind that the table above doesn’t refletct the 2020 Census data, and the affordability categories are based on the “30% of HHI” criterion. However, the data is so strong that the conclusion is clear: Nearly all of the Eugene households that are truly housing-cost-burdened have household incomes less than $35,000. Most of them make much less.

FACT: There is no “crisis” in Eugene for most households that make 80% or more of the Median Family Income.

The National Low-Income Housing Coalition provides comprehensive, credible research and analysis on housing affordability at the national and state levels in the following publication. The GAP Report 2021

As explained under “Providing the needed housing supply,” relying on profit-focused investors and developers to decide what type and cost of market-rate housing to produce will not help the many housing-cost-burdened households at all.

“The [free] market consistently fails to provide adequate, affordable housing for these [low-income] renters.

NLIHC GAP Report, March 2021, page 17


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