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Decomposing Housing Unaffordability

Summary:
A US household is considered ‘rent burdened’ when its rent exceeds 30% of its income. This simple ratio can be decomposed to better understand the sources of unaffordability across space. To demonstrate this new approach, I rewrite the equation for rent burden as a sum of four factors: rent gap, income gap, excess size cost, and demographic baseline, and show that US rental unaffordability is mostly the result of low incomes. Focusing on the New England region, however, I show that high rent is the primary cause of unaffordability in high-cost, high-wage metro areas. This decomposition can help affordability advocates prioritise strategies appropriately across space. Please, login first to add a comment. Author: Salim Furth Document Type: article ISSN: 2336-2839 Volume: 8 Issue:

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A US household is considered ‘rent burdened’ when its rent exceeds 30% of its income. This simple ratio can be decomposed to better understand the sources of unaffordability across space. To demonstrate this new approach, I rewrite the equation for rent burden as a sum of four factors: rent gap, income gap, excess size cost, and demographic baseline, and show that US rental unaffordability is mostly the result of low incomes. Focusing on the New England region, however, I show that high rent is the primary cause of unaffordability in high-cost, high-wage metro areas. This decomposition can help affordability advocates prioritise strategies appropriately across space.

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Author: Salim Furth

Document Type: article

ISSN: 2336-2839

Volume: 8

Issue: 1

Pages: 62-71

DOI code: 10.13060/23362839.2021.8.1.523

Date of publication: 6.5.2021



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