Housing Affordability and Saving Capability Among Low-Income Renters

For low-income renters, rising rent costs constrain already tight household budgets, making it increasingly challenging to accumulate savings. While this logic is intuitive, few empirical studies have explored the relationships between rent, rent burden, and savings behavior for low-income households. This study uses a pooled probit model with two-way fixed effects and Survey of Income and Program Participation data to assess how rent growth and changes in rent burden affect low-income households’ ability to save. Between 2013 and 2023, the share of low-income renters with any savings increased, as did the median amount that low-income renters have saved. However, both rent and rent burden reduce the likelihood that a household will have adequate emergency savings. On average, a $100 increase in rent reduces the likelihood that a household will have adequate emergency savings by 1.8 percent, while spending an additional 5 percent of income on rent reduces the likelihood by 2.3 percent. In addition to validating the inverse relationship between rent costs and ability to save, these findings emphasize the importance of prioritizing affordability in the rental market as part of a comprehensive housing policy. Growing affordable rental opportunities will help preserve the financial stability of low-income households.