Every household has different needs, incomes, assets, and preferences. All of these influence a household’s ability to pay, and how much is ‘too much.’ The most commonly applied standard is that a household shouldn’t spend more than 30% of their income on housing, leaving the rest of their income for food, transportation, health care, savings, and entertainment, among other things. Households that pay above 30% of their income on housing are considered cost burdened and those paying above 50% are considered severely cost burdened. The high cost of housing means that many MA residents are cost burdened or even severely cost burdened.
Cost burden has been increasing over the past few decades, not just for low-income households but middle-income households as well. Approximately 26% of households between 80 to 100% area median income are now experiencing cost burden which is comparable to cost burden rates for low -income households 10-15 years ago.
Housing cost burden is pronounced amongst Low-income households, renter households, and people of color--specifically Black and Latino-led households. Approximately 76% of very low-income households are cost burdened with 36% of these households being severely cost burdened. To no surprise, this is much higher for ELI households, of which 80% are cost burdened and 64% experience severe cost burden.
Why is cost burden an issue? Cost burdened households forgo other necessary household expenses such as food, childcare, and transportation. Furthermore, they are unable to save money for opportunities that could provide a pathway to higher income as well as wealth-building—such as education, job training, or homeownership. Instead, these households are often one emergency expense from falling into housing instability, facing eviction, or relying on emergency systems such as shelter.
Households with a disability also are more likely to be cost burdened than all households statewide. More than half (56%) of renter households with a disability are cost burdened (including 31% that have severe cost burden). Similarly, 31% of household owners with a disability are cost burdened.