Southern California, Florida Have Higher Concentrations of Cost-Burdened Households

Metros showing higher than average housing cost shares of household income are also home to higher concentrations of severely cost-burdened households.

Cost Burden Concentrations Differ Across U.S. Metros

In our recent blog, we reported that across the 20 largest U.S. metros, the share of income apportioned to housing costs in small asset multifamily has a 10-percentage point spread, ranging between 35.6% and 45.3%. Miami, Los Angeles and other Southern California locations, and New York registered as the least affordable urban centers, while cities like Dallas and Minneapolis end up favorably on this metric.

Taken alone, these averages fail to express the severity of a metro’s rental cost burden, as high-earning households distort the overall reading. Many of these locations include the highest concentrations of the most severely affected households across the largest U.S. metros.

In this deep dive, household shares are classified using the HUD definition of cost-burden, where households spending between 30% and 50% of their household income on housing costs are classified as ‘Moderately Burdened’, and those spending over 50% are categorized as ‘Severely Burdened’.

As shown below, the largest concentrations of Severely Burdened households were found in Miami (35.2%), Los Angeles (33.2%) and New York (31.6%)₁.

Taken together, these Southern California and Florida metros had the highest concentrations of housing-cost burdened households in the United States. Dallas and Minneapolis, on the other end, had the highest shares of Non-Burdened households.

Few Expanding Urban Pockets of Affordability

Further underscoring the national dimensions of the affordability issue, only seven of the twenty largest metros experienced a shift towards Non-Burdened households greater than the national average shift of 1.8 percentage points from 2014 to 2016, as shown below.

Discouragingly, New York, Los Angeles and Miami are lagging behind the U.S. average in the addition of new households in the Non-Burdened cost category.

A combination of supply-side bottlenecks and slower wage increases in the largest U.S. metros outside the booming technology centers implies a slower rate of adjustment in affordability going forward.

₁All data is sourced from the American Community Survey (ACS), unless otherwise stated. ACS statistics are sample-based estimates of the compositional profile of the total population in the given year of data collection and include a margin of error.