Ratio of Shelter Expenditures to Income: Definitional Issues, Typical Patterns, and Historical Trends

摘要

The second of a two - part series, this study explores the relationships among housing costs, housing expenditures, and family income for homeowners and home renters. The study analyzes actual price and cost trends measured by the Consumer Price Index and the Bureau of Labor Statistics family budgets, and compares them to the growth in family income from 1960 to 1975. Alternative definitions of shelter cost and income ratios are also considered. The results indicate that lower income households spend a substantially higher percentage of their income on shelter than do higher income groups. Except in the very lowest income category, elderly owners and renters had higher ratios of shelter costs to income than households with heads under 65. Minority households typically spend a smaller proportion of income for shelter than others. Over the period 1960 to 1973, the ratio of housing expenditure to income for all renters (in constant dollars) remained about the same, approximately 24 to 25 percent. During this time, the average shelter expenditures made by renters increased considerably due to rises in housing prices and to increases in the quantity consumed. Over the 15 - year period, incomes have increased enough to make it possible for renters to buy more housing at higher prices without changing significantly the relative proportion of their income allocated to shelter. During the same period, the shelter costs for homeowners have been larger than those for renters. In addition, the growth in homeowner income was not enough to balance the costs of increased shelter prices and increased quantities of housing consumed. While in 1960 the average ratio of shelter costs to income for all owners was below that of renters, it rose to an average of 30 percent for all owners between 1960 and 1973 -- a level higher than the renter average of 25 percent. Copious supplementary information regarding economic issues, required data, homeowner operating costs, and cash flow is appended.