September 3, 2013

What Do The Numbers Really Mean?

A recent article from the Center for Housing Policy’s Housing Landscape 2013 entitled, “More than a quarter of working renter households spend at least half of income on housing,” prompted a discussion with colleagues about data and definitions. When you sit down to read an article of this nature, you must keep in mind the author’s intention of the article, whether the sources of data are reliable, what the definitions of the variables are and how the data is interpreted (calculated) and presented.

When it comes to affordable housing and how much of our income we spend on housing, there are many definitions and many interpretations.  At the Department of Housing and Urban Development (HUD), the generally accepted definition of affordability is for a household to pay no more than 30 percent of its annual income on housing.

The Census collects data on rents and incomes, and defines gross rent as a percentage of household income that is a ratio of monthly gross rent to monthly household income (total household income divided by 12). If you dig deeper into the Census’ American Community Survey (ACS) Subject Definition publication, monthly housing cost is listed as owners and renters providing information on the cost of their monthly housing expenses. The definition further indicates that when the data is used in conjunction with income data, the information offers an excellent measure of housing affordability and excessive shelter costs.

Contract rent - another definition that is useful in interpreting cost burden - is the monthly rent agreed to or contracted for, regardless of any furnishings, utilities, fees, meals, or services that may be included. If a renter receives payments from lodgers or roomers who are listed as members of the household, the rent without deduction for any payments received from the lodgers or roomers is to be reported by the person completing the Census survey. The respondent reports the rent agreed to or contracted for, even if paid by someone else such as friends or relatives living elsewhere, a church or welfare agency, or the government through subsidies or vouchers. The definition also includes that contract rent provides information on the monthly housing cost expenses for renters. When the data is used in conjunction with utility costs and income data, the information offers an excellent measure of housing affordability and excessive shelter costs.

In the Census data that can be downloaded from the American Fact Finder on the Census webpage, this variable is presented as “Gross Rent as a percentage of Income.”  Unless you were familiar with, and really looked at what was being captured in the ACS data, you might miss that this particular data point is not measuring what a tenant actually spends for rent.
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