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Chart Book: Federal Housing Spending Is Poorly Matched to Need

Tilt Toward Well-Off Homeowners Leaves Struggling Low-Income Renters Without Help

December 18, 2013

The federal government spent $270 billion in 2012 to help Americans buy or rent homes, but little of that spending went to the families who struggle the most to afford housing.  As the charts below show, federal housing expenditures are unbalanced in two respects:  they target a disproportionate share of subsidies on higher-income households and they favor homeownership over renting.  Low-income renters are far more likely than homeowners or higher-income renters to pay very high shares of their income for housing and to experience problems such as homelessness, housing instability, and overcrowding. 

Federal rental assistance programs help these highly vulnerable families, but they are deeply underfunded and as a result reach only about one in four eligible households.  Moreover, recent budget cuts are forcing reductions in the number of families that rental assistance can serve.  If policymakers do not provide additional funding, unmet needs among poor renters will grow substantially and the imbalance in federal housing policy will become even more severe. 

  1. Federal Housing Spending Disproportionately Targets Higher-Income Households
  2. Federal Housing Policy Favors Owning over Renting
  3. Poor Renters Have Greatest Need for Housing Assistance
  4. Rental Affordability Problems Have Worsened Since 2000
  5. Federal Rental Assistance Helps the Neediest Low-Income People
  6. Funding Limitations Prevent Rental Assistance from Reaching Most Families in Need

This chart book complements our more detailed analyses of federal housing policy, which are available at


Part I:  Federal Housing Spending Disproportionately Targets Higher-Income Households

Federal housing expenditures favor higher-income households.  The bulk of homeownership expenditures go to the top fifth of households by income, who typically could afford to purchase a home without subsidies.  According to estimates by the congressional Joint Committee on Taxation, more than three-fourths of the value of the mortgage interest and property tax deductions goes to households with incomes of more than $100,000, and close to a third goes to families with incomes above $200,000.

Overall, more than half of federal housing spending for which income data are available benefits households with incomes above $100,000.  The 5 million households with incomes of $200,000 or more receive a larger share of such spending than the more than 20 million households with incomes of $20,000 or less, even though lower-income families are far more likely to struggle to afford housing.


In 2010, the most recent year for which complete data are available, households with incomes of $200,000 or more received an average benefit of $7,014 — more than four times the average benefit of $1,471 received by households with incomes below $20,000.  It is difficult to see the policy purpose served by providing such large benefits to higher-income households, who in most cases could afford to purchase a home without subsidies.



Part II:  Federal Housing Policy Favors Owning Over Renting

Federal housing expenditures are heavily targeted on homeowners, even though a large share of Americans rent their homes.  Today, 35 percent of the nation’s households are renters.  That figure has not varied by more than 4 percentage points — up or down — in the last 45 years, despite strong efforts by the Clinton and George W. Bush administrations to increase homeownership.


However, more than three-quarters of federal housing spending in 2012 (counting both federal outlays and the costs of tax expenditures) went to homeowners.  Renters received less than one-fourth of federal housing subsidies despite making up more than a third of households.


Moreover these data understate the number of households who would rent if they had the means to do so, as they do not count doubled up and homeless families and individuals.  Demographic and economic trends make it unlikely than the renter share of the population will decline over the next several decades, and it may increase significantly.


Part III:  Poor Renters Have Greatest Need for Housing Assistance

While federal housing spending disproportionately targets high-income homeowners, low-income households are for more likely to struggle to afford housing.  The share of both owners and renters facing severe burdens grew over the last decade, but the increase was larger among renters. 

Renters are more than twice as likely as owners to pay more than half their income for housing, the threshold for being considered “severely cost burdened.”  Even among the lowest-income households — those with incomes below $15,000 — a larger share of renters than owners are severely cost burdened.


Among renters, high housing cost burdens are heavily concentrated on the lowest-income families.  A large majority of renter households that pay more than half their income for housing costs have incomes at or below 30 percent of the local median income (nationally roughly equivalent to the poverty line on average), and only 3 percent of renters with severe burdens have incomes above 60 percent of median.  The lowest-income households are also more likely to experience other serious housing problems, including severely inadequate housing, overcrowding, homelessness, and frequent moves from one home to another.



Part IV:  Rental Affordability Problems Have Worsened Since 2000

The large number of renters struggling to afford housing reflects a long-run increase in rental affordability problems.  Income stagnation at the bottom of the income scale has resulted in declining real incomes for renters, even while real median household income has risen modestly overall.  At the same time, rents have increased at a faster pace than overall inflation.  Rents stagnated briefly during the recent housing downturn, but began to grow again in 2012, as the graph below shows.  This growth continued during 2013 and most parts of the country are now experiencing tightening rental markets and rising rents.



Part V:  Federal Rental Assistance Targets the Neediest Low-Income People

Federal rental assistance programs such as “Section 8” Housing Choice Vouchers and public housing help about 5 million of the neediest low-income households afford housing.  Seventy percent of these households have incomes below 30 percent of median income, and the bulk are elderly people, people with disabilities, and working poor families with children.



Rental assistance is also an important source of support for the nation’s veterans.  Rental assistance helped 339,000 veterans afford decent homes in March 2013, the most recent period for which data are available.  Some 52 percent of assisted veterans were elderly and 21 percent were non-elderly veterans with disabilities.



Part VI:  Funding Limitations Prevent Rental Assistance from Reaching Most Families in Need

Due to funding limitations, however, rental assistance programs reach only a fraction of needy renters.  Only about one in four low-income families eligible for rental assistance receives it, and waiting lists for assistance are long in most parts of the country.  Families with children and non-elderly households without children or a disabled member face particularly severe shortages.


The shortfall in rental assistance has increased significantly over the last decade, as the number of families struggling to afford rental costs has grown, but the number of families receiving rental assistance has not kept pace.  In 2013, budget cuts due to sequestration under the 2011 Budget Control Act have begun to reduce the number of low-income households receiving rental assistance.   This will cause even more vulnerable families to be left without help and tilt the overall balance of federal housing expenditures further toward higher-income homeowners.