Housing Cost Burden, Material Hardship, and Well-Being

ABSTRACT

Millions of households face housing affordability problems as house prices and rents rise faster than incomes. Yet little is known about how high housing expenditures affect well-being. Using data from the Survey of Income and Program Participation, we examine the relationship between housing cost burden, material hardship, and residential satisfaction after the Great Recession. We find that households with higher housing cost burdens were more likely to experience some form of material hardship, controlling for other variables. The probability of material hardship increased with cost burden for households spending up to 50% of their income on housing. However, households that spend more than half of their income on housing are no more likely to experience material hardship than households who spend around 50%. We find some evidence that families with children trade high housing costs for improvements in housing conditions. The findings provide empirical support for using housing cost burden as a measure of affordability and suggest higher housing cost burdens may contribute to decreased well-being through multiple forms of material hardship but also may have threshold effects.

KEYWORDS:

• housing affordability
• material hardship
• well-being
• residential satisfaction
• neighborhood conditions
• Great Recession

Acknowledgments

The authors thank the editor and three anonymous reviewers for helpful comments. We gratefully acknowledge the University of Wisconsin-Madison Institute for Research on Poverty for support. We also thank Sharon Wolf for helpful discussions. Campbell benefitted from attending a workshop on the use of the SIPP at the University of Michigan as part of the NSF-Census Research Network (NCRN, NSF SES-1131500).

Disclosure Statement

No potential conflict of interest was reported by the authors.

Notes

1. Previous studies used material hardship measures in a variety of ways, including focusing on a specific hardship type, examining hardship domains, and creating an index of hardships; there is no one consistent approach (Beverly, 2001; Heflin, 2006; Pilkauskas et al., 2012).

2. Further, food insecurity is associated with negative health outcomes for adults and children (Gundersen & Ziliak, 2015).

3. In the 2008 SIPP panel, respondents were asked about monthly income at each wave. We used the average of incomes across waves to account for potential month-to-month fluctuations in household income leading up to the housing cost measure. If a point-in-time measure of income is used, the proportion of housing cost burdened households in the data is higher: 25% are moderately cost burdened and 14% are severely cost burdened.

4. The results are similar to the original model if we conduct the analysis by (a) splitting the sample between renters and homeowners, or (b) including an interaction term between homeownership and housing cost burden.

Additional information

Notes on contributors

Shomon Shamsuddin

Shomon Shamsuddin is Assistant Professor of Social Policy at Tufts University.

Colin Campbell

Colin Campbell is Assistant Professor of Sociology at East Carolina University.