An “affordable” home, as defined by the U.S. government, is one that costs less than 30% of a household’s annual income. Households who spend more than that are cost burdened. Those that spend over 50% of their annual income on housing costs are severely cost burdened. For example, a household with an annual income of $80,000 is cost-burdened if it spends over $24,000 each year on housing costs, and severely cost-burdened if housing costs exceed $40,000.

About a quarter of DC renters are cost burdened, and an additional quarter of DC renters are severely cost burdened. This means half of DC renters are, by definition, paying more than they should be for housing.

Within extremely low-income renters (annual income at or below $38,700 for a family of 4 in 2021), 62% are severely cost-burdened and an additional 15% are cost-burdened — a full 77% of households in poverty are living in unaffordable homes.

This means that almost 29,000 households in DC spend over half their income on housing costs alone. These are households at or below the poverty line, with little if any disposable income. With housing costs taking up the vast majority of their already low incomes, what is left for clothing, transportation, healthcare, and other necessities, let alone savings or luxuries?

Low-income households in DC, especially extremely low-income households, are made up almost exclusively of people of color. In fact, 88% of extremely low-income renter households in the District are headed by a person of color. So the particularly high rate of cost burden among ELI households disproportionately affects already marginalized populations. There is a clear and pressing racial component to the lack of housing affordability in DC.

When households face cost burden, they are substantially more vulnerable to shocks that can leave them homeless. With little to no income buffer, an unexpected cost or small emergency like a flat tire, new prescription, or broken phone can be the difference between making rent or not in a given month. And once a tenant gets behind on rent, it becomes increasingly difficult to catch up. What may seem an inconvenience to someone with more flexible income can turn into eviction or homelessness for someone experiencing cost burden.

Cost-burden can be a challenging concept to grasp, so let’s look at housing costs a slightly different way: What kind of income does a DC resident need to earn in order to afford housing in the city?

Fair Market Rent (FMR) is a figure established by HUD to reflect the cost of rent and utilities for units of different sizes. FMR for a one-bedroom unit in DC is $1,548, and FMR for a two-bedroom is $1,765. In order to rent a studio apartment at FMR and spend no more than 30% of their income, a renter must earn $29.10 per hour. An hourly wage of $29.77 is needed to afford a one-bedroom unit, and an hourly wage of $33.94 is needed to afford a two-bedroom.

Clearly, housing costs in DC are high, but aren’t wages are also relatively high? Not quite. The average renter in DC earns just $30.13 per hour (or $62,670 annually), barely enough to rent a studio or one-bedroom, and not enough for a two-bedroom or larger unit. This leaves little to no budgetary margin.

The bottom line is: the average worker cannot afford to rent a home in the District.

What do these housing costs mean for minimum wage workers? As of July 1, 2021, minimum wage in the District is $15.20/hour for non-tipped workers; relatively high, compared to other cities and states. Yet this still doesn’t come close to being enough to afford housing locally. A worker earning minimum wage must work 77 hours per week to afford a studio apartment, 78 hours per week to afford a one bedroom, and a staggering 89 hours per week to afford a two bedroom unit.

Imagine a family headed by a single parent (around half of families in DC). That parent would have to work over two full time minimum wage jobs to afford a 2-bedroom unit. That may not even be big enough for their family.

It is clear that housing costs are out of reach for low-income renters in DC.

Next, let’s explore housing supply.