Louisville’s Cost-Burdened Households

November 25, 2019

It’s Time to Pay Attention to Louisville’s Cost-Burdened Households

Louisville currently ranks 3rd among its peers in rates of severe housing burden with 27.2% of its residents spending 30% or more of their household income on rent or mortgage expenses.

On this metric, Louisville ranks among the top tier of its peers according to a natural breaks algorithm. Cities in green are those that outperform their peers, cities in yellow represent the middle cluster, and those in red are a group that lags behind its peers on this indicator.

But wait…there’s more.

Most people think of Louisville as an affordable city, and relative to most of our peers, that’s true. However, within many Louisville neighborhoods, severe housing burden is carried by some more than others. For example, 55% of California-neighborhood families live in unaffordable housing. What’s more, there are more than 150,000 people throughout Louisville burdened with unaffordable housing.

Households that spend more than 30% of their income on housing are considered cost-burdened and may not have money for necessary expenses such as food, clothing, or transportation. Cost-burdened households have a lower quality of life and are less equipped to navigate unexpected financial crises.

Stable housing contributes to many factors affecting individuals and families: improved education attainment, a steady income, and improved health—just to name a few.

Think this is simply a housing issue? Think again.

“Researchers at Johns Hopkins University explored the impacts of affordable housing on child enrichment and cognitive development. They found that when families spent more than half of their incomes on housing (severely housing cost-burdened), their children’s reading and math ability tended to suffer.

“The study furthers our understanding that affordable housing has a strong connection to childhood development, and it also provides empirical support for the long-standing rule that ‘affordable’ housing is 30% of household income.” – National Low Income Housing Coalition: Study Shows Affordable Housing Is Linked with Stronger Child Enrichment and Cognitive Development (Aug 12, 2019)

“Individuals making less than $50,000 a year in Louisville/Jefferson County are more likely to have excessive shelter costs than others who make more than $50,000 a year. Excessive shelter costs impact one’s ability to obtain and afford adequate food, healthcare, transportation, and childcare, as well as impede the ability to build and grow wealth.” – 2018 State of Metropolitan Housing Report: Involuntary Displacement (Nov 16, 2018)

“Research shows that increasing access to affordable housing is the most cost-effective strategy for reducing childhood poverty in the United States. According to the Harvard Joint Center for Housing Studies, families in affordable housing can spend nearly five times as much on healthcare, a third more on food, and twice as much on retirement savings. They can pay down debt, save to pay for college, or buy a home when they are not struggling to pay housing costs.” – A Place to Call Home: The Case for Increased Federal Investments in Affordable Housing (Mar 6, 2017)

As you can see, although this statistic seems on the surface to be a housing issue, it is interconnected with so many other areas that affect an individual’s ability to thrive. And when our community is made of thriving individuals, we all benefit.

Our data in your hands can make a difference.

Twenty-first-century cities leverage data to improve the quality of life of their residents. The GLP is making that possible in Louisville by releasing annual Competitive City Reports which catalyze change and mobilize key players from across sectors to focus on Louisville’s areas of highest potential impact.

With your help, we can change these stats. And when we do, we can change the story for all Louisville citizens.

  • If you would like to be informed when we have new or updated data connected to housing, please click here.
  • If you are interested in a deep dive into cost-burdened household data, click here. If you would like to see the full range of housing and built environment-related data currently available through the Greater Louisville Project, click here.
  • Still don’t see the data you need? Fill out this form so we can serve you better.

With the Greater Louisville Project, we are GREATER IN NUMBERS.

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Natural Breaks Algorithm

For each indicator, Greater Louisville Project assigns cities into one of three groups (high-performing, middle-of-the-pack, and low-performing) based on how they compare to other cities. The assignment is based on how cities naturally cluster on that indicator. Sometimes, the differences between cities are very small, and the difference between a city ranked 5th and 6th could simply be a matter of the sampling error that arises from using survey data. Thus, rather than always make a division that declares the top 5 to be the top tier, we use a natural breaks algorithm to look for a cluster of cities that is outperforming the rest, a cluster that is about average, and a cluster that is lagging. This clustering gives us a better indication of where Louisville is thriving and where Louisville has room to learn from cities that are doing better.

Z-Scores

Z-scores (or standardization) is a way to combine data with different units of measurement into a single index. The z-score is a measure of how far away a city (or census tract, etc.) is from the average city. In order to be comparable across different units of measurement, the z-score is the distance from the mean measured in standard deviations (e.g. if Louisville has a z-score of 1 it means Louisville is 1 standard deviation above the mean of its peer cities).

Data from the Robert Wood Johnson Foundation's County Health Rankings use z-scores and all z-scores are relative to the mean of Louisville's peer cities. (On the County Health Rankings site z-scores are relative to all the counties in each state - thus z-scores reported by GLP will be different, because we are using a different reference group). The Greater Louisville Project also uses z-scores in our multidimensional poverty index, which compares each census tract to the mean of all census tracts in Louisville.