Housing consumption and residential crowding in U.S. Housing Markets

HOUSING CONSUMPTION AND RESIDENTIALCROWDING IN U.S. HOUSING MARKETS

WILLIAM A.V. CLARKUniversity of California, Los Angeles

MARINUS C. DEURLOOUniversity of Amsterdam

FRANS M. DIELEMANUniversity of Utrecht

ABSTRACT: As families progress through the life cycle they generate different needs for housingspace. The ability to satisfy these needs is clearly dependent on income, but at the same time it isaffected by changes in household composition. The aggregate outcomes of the individual ability toadjust housing needs can be seen as a measure of the success of the housing market. This articleexamines changes in housing space consumption in the United States in the last two and a halfdecades at both the individual level and in aggregate outcomes. The research uses the data from thePanel Study of Income Dynamics to explore the relationship of housing consumption to income,and the overall success of the adjustment process. Despite the concerns about housing affordabilityand income polarization in large metropolitan housing markets, the US housing market as a whole,as measured by crowding and roomstress, is continuing to provide a wide range of paths to in-creased consumption. At the same time the research shows that there is greater pressure on housingconsumption in markets with substantial recent immigration.

The progression of households through the life cycle and the changes that occur within householdsgenerate different needs for housing space at different times. Housing consumption at critical pointsin a family’s life cycle is related to the complex interaction of internal characteristics of the house-hold, the household member’s ability to acquire new housing, and to a set of contextual effects, in-cluding the supply and cost of housing in particular locations.

There is a large body of literature that relates patterns of residential mobility and housing con-sumption to changes in demographic and income characteristics of households, and to changes inthese characteristics over time. The desire for space is a critical factor in housing decisions. The needand desire for additional space, as households increase in size through marriage and the addition ofchildren, are important factors that generate moves to larger houses. In addition, as household mem-

Direct all correspondence to: William A.V. Clark, Department of Geography, University of California, Los Angeles, 1255Bunche Hall, 405 Hilgard Avenue, Los Angeles, California 90095-1524.

JOURNAL OF URBAN AFFAIRS, Volume 22, Number 1, pages 49–63.Copyright © 2000 Urban Affairs AssociationAll rights of reproduction in any form reserved.ISSN: 0735-2166.

bers progress in their careers and earn more money, they tend to purchase more luxurious and spa-cious houses. There is also a relationship between housing consumption and the general increase inaffluent households (especially in the United States). Affluent households demand better quality andlarger housing, and so increase their consumption of space. The historical decrease in household sizehas increased the average amount of space consumed generally. At the same time, increased incomeinequality leads to affordability and crowding problems for very low-income households. As a result,in housing markets with large recent immigration of predominantly low income households, theremay be affordability problems and crowding is likely to increase rather than decrease.

To examine these issues, we will look at three inter-related questions. First, what is the relationshipbetween income and housing consumption and how does it change over time? Second, what is hap-pening to housing consumption and crowding in the rapidly changing metropolitan counties that areexperiencing major impacts of international migration and the growth of large foreign born popula-tions. Are the circumstances in these housing markets different from those in housing markets that areless impacted by immigration? Are households in these markets, especially households at the lowerincome deciles, experiencing housing stress? Third, the article examines the propensity of low-income households in crowded housing conditions to seek larger housing. Some researchers contendthat there are links between crowded housing conditions and urban pathologies. Are many house-holds permanently locked into under-consumption of housing space, or are households generally ableto move into larger dwellings independent of household income?

PREVIOUS RESEARCH ON HOUSEHOLD CROWDINGAND HOUSING CONSUMPTION

Basic research on mobility and housing has established thatspace consumption, the amount ofspace available to a household, is a fundamental element of the mobility process, and an essentialcomponent of household mobility (Clark & Dieleman, 1996; Clark, Dieleman, & Deurloo, 1984). Ashortage of space is strongly associated with the probability of moving (Clark 1992; Pickles & Davies,1985). For example, families who are expecting a child or who have had a child recently, have agreater probability of moving around the time of the child’s birth. The desire or need for a largerdwelling is an importanttrigger in a family’s housing career. Almost universally in Western coun-tries, household members occupy a larger dwelling after a residential move (Clark, et al. 1984).

Housing choices however, do not occur in a contextual vacuum. Housing choices are not onlydriven by household circumstances and changes in household size and composition, but also differ indifferently structured national and local housing markets, and over time. Over the past three decadesrising incomes for a large segment of US society (Figure 1) allowed these families to move to thesuburbs and to relatively low-density ownership. Moreover, the rising affluence of the US society hasled to significant increases in the overall quality of housing in the US in the last decades. The averagesize of housing has increased, quite markedly, in the past four decades. In the 1950s, after the secondWorld War, the typical newly constructed house was less than a thousand square feet, but by the1990s, the average was more than twice that size (Simmons, 1997). While the size of housing in-creased in general, with consequent implications for quality and average space per person, householdsize has decreased. Average household size in 1995 was approximately 2.6 persons per housing unitin contrast to more than three persons in 1970 (Figure 1).

All this is important because there is evidence that through the mobility process, large segments ofUS society have been able to improve both housing quality and space. Studies of the trickle downeffects in the housing stock suggests that the majority of households eventually improve their hous-ing quality (Myers, 1983). At the same time there is work suggesting that while there is a generalimprovement in housing quality in the market as a whole, it is quite variable for poor and femaleheaded households (Spain, 1990). Income differences between rich and poor have increased in theUS since 1970 as the risinggini index for income differences indicates (Simmons, 1997). This meansthat households at the lower end of the income scale find it difficult to locate affordable qualityhousing. Thirty five percent of low-income renters have a rent burden of greater than 50% of their

50 6 JOURNAL OF URBAN AFFAIRS 6 Vol. 22/No. 1/2000

income. Households of Hispanic origin are especially affected by crowding problems; 10% lived inovercrowded circumstances in 1993 (Simmons, 1997).

As middle class households leave inner cities and the older suburbs for ever more distant commu-nities, the inner cities of several large US metropolitan areas are becoming immigrant enclaves ofincreased density and housing shortages (Clark, 1998). This rapid increase in population in innercities, especially where there are large numbers of migrants, is likely to increase crowding. The ev-idence from a recent study of Southern California reveals that immigrant Hispanic households whoarrived in the 1970s became more crowded over time (Myers & Lee, 1996). The coefficients showedthat these immigrants were two and half times more likely to reside in overcrowded housing thaneither early Hispanic arrivals or white immigrants. In addition, Myers (1999) shows that in the mostrecent census decade there has been an increase in overcrowding in general, especially in California,which may be attributed to high levels of immigration of Hispanics. While cultural norms may playsome role in the greater densities of Hispanic households (Pader, 1994), increased crowding overtime is an indication of the need for more detailed studies of crowding.

Some research suggests that the competition for housing in immigrant cities increases the cost ofhousing and can lead to ahousing squeeze(Krivo & Mutchler, 1986). Some studies have suggestedthat households in general are likely to add additional family members (who may have been rentingindependently), or combine families, as a solution to the strains of a housing shortage (Krivo &Mutchler, 1986). The state of the housing market becomes a critical dimension in the ability of poorerfamilies to maintain separate households. This may be especially true in areas of high in-migrationwhere the new residents occupy housing at different rates from the aging population that is beingreplaced. Masnick, Pitkin, & Brennan (1990) note that the elderly out-migrants from Orange Countyare being replaced by new migrant families with much larger average family sizes. In addition, asownership becomes more difficult for these groups, it in turn increases the competition for rentalhousing (Morrow-Jones, 1986).

FIGURE 1

Changing Incomes (Constant 1996 Dollars) and Household Size in the United StatesSource: Current Population Survey, Historical Income Tables

6 Housing Consumption and Residential Crowding 6 51

Growing up in crowded housing may influence long term trajectories of success in the life course.However, studies of residential crowding have yielded contradictory results (Ellen & Turner, 1997).The studies of neighborhood density do not show any strong links between neighborhood conditionsand urban pathologies (Baldassare, 1979, 1988). While there is some research that shows householdcrowding, measured as the number of persons per room, tends to be associated with self reports ofincreased physical health, mental health and family problems (Gove, Hughes, & Galle, 1983); otherstudies were not able to find social, psychological or physical health reactions to residential crowdingeither in the neighborhood or the residence (Booth, 1976). At some point crowding and inadequatehousing are likely to have affects on the quality of residential life, but on average it appears that thegains in quality thus far, have mitigated any negative effects from crowding.

Because crowding is often associated with lower income groups and with households in poverty,any discussion of crowding and its impacts can be set within a larger context of the nature and effectsof poverty. There is substantial literature that examines the persistence of poverty and its impacts(Duncan & Brooks-Gunn, 1997; Ducan, Brooks-Gunn, & Klebnanov, 1994). Several important find-ings from the research are relevant for the discussions of the persistence of crowding over time.Themost critically important finding of recent research on poverty is that growing up in a low income orpoverty household has long term consequences for the children of those households. Growing up inpoverty appears to have long term negative effects on later success in the workforce and on income.To the extent that poverty and crowding are related, the analysis of crowding is potentially relevantto the study of future successes in the housing market. Living in persistent crowding may be associ-ated with living in persistent poverty. A second important finding from the Duncan and Brooks-Gunnwork, is that many who are poor one year, are not poor in the succeeding year (Duncan 1984). Thusthere is a need to distinguish between persistent poverty and those who experience poverty for shortperiods of time. A similar conceptualization of moving in and out of crowding will be useful for theanalysis presented in this article.

The intersection of housing quality and individual outcomes is complex. Those researchers whohave used persons per room as a crowding measure do show that there are affects in areas of recentimmigration (Myers & Lee, 1996). An extensive review of the literature (Myers, Bauer, & Choi,1996) reiterates that crowding can generate local negative outcomes in particular markets. While themarket has provided advances in overall housing quality, there are still problems in specific contexts.Housing consumption does seem to be influenced most by demographic changes that occur in regionsthat are undergoing rapid demographic change, especially regions with heavy rates of immigration.We will address these themes empirically in the following sections.

DATA

The data for the analysis were abstracted from the Panel Study of Income Dynamics (PSID), alarge panel study initiated in the US in 1968 (Hills, 1992). We used the 25 yearly waves (or succes-sive panels) covering the period 1968–1992. The PSID makes it possible to relate the consumption ofhousing space to other variables, including income, for each year (wave) in the panel. We used theweighted core sample of the PSID to determine the development of housing space consumption ofhouseholds over the 1968–1992 period, and to relate space consumption to household income andother characteristics. In 1968, there were 4,802 heads of households in the sample and 9,829 in 1992.One should be aware that this could sometimes be a fairly small number of cases when extensivesubdivisions are used in the analyses.

The PSID has a geographical specification at the county level that was made available to us onspecial request. In the second part of this article we use this specification to link data from the PSIDto the geography of recent immigration to the US. The Center for Immigration (1996) has calculatedand mapped an index of counties that are severely or moderately severely impacted by recent immi-gration to the US. We linked the PSID coding at county level to a four-way categorization of countiesimpacted by immigration. In the analysis where we use this categorization of counties by the immi-grant impact we assume that the differences in overcrowding observed in the data, are due to presence


of immigrants. Of course, other characteristics of the housing markets in these regions, which we donot observe, may also play a role. But the literature reviewed in the previous section makes it plau-sible that immigration impacts are the major cause of differences in overcrowding, an argument whichis consistent with the findings of Myers (1999).

The PSID is a longitudinal file, the same households are interviewed in the subsequent yearlywaves. The longitudinal aspect of the file is used in the third part of our analysis where we examinethe propensity of low-income households to escape from under-consumption of housing space inrelationship to changes in household size, household income and residential shifts. Under- and over-consumption of housing space were defined as measures of room-stress or room shortage. Room-stress is the difference between the actual number of rooms available and the required number ofrooms. The required number of rooms is defined by formula in the PSID as 2 rooms for each head(including spouse if present), one room for each additional couple or single person 18 years or older,one room for every two boys under 18 years of age, and one room for every two girls under 18 yearsof age. There are further standards for odd numbers of children and combinations of boys and girls.In the text we will use room shortage and room-stress interchangeably.

ANALYSIS AND RESULTS

Income and Housing Consumption

The first finding is that households seem to be doing reasonably well, at least in terms of theirhousing consumption. The data for the period 1968–1992 show that the large majority of US house-holds have at least one more room than the required number as calculated by the PSID formula. Interms of the definition of housing space consumption in the PSID, 84% of all households were al-ready over-consuming housing space in 1968; this percentage had risen to 89% by 1992. Thus, onaverage, US households live in spacious homes, and the percentage of people housed this way hasincreased over the 25 years before 1992; an expected result as a function of the growing size ofdwellings and the decrease in average household size.

The data on the percent of households with room shortage is consistent with the overall argumentthat housing quality, at least as measured by space, has improved in the United States over the pastthirty years. A plot of households by level of over or under-consumption confirms our findings in aslightly different manner (Figure 2). In 1968, only a small proportion of all households had a largesurplus of rooms (four or more rooms than needed). A surplus of at least four rooms was true for over30% of all households by 1992. The results reflect both the increase in affluence and decreasingfamily size. The improvement in housing consumption is particularly true for African American house-holds who improved from a position of almost 20% with room shortages in 1968 to approximately8% with room shortage in 1992 (Figure 3). The increase in crowded white households in the last fewyears is probably related to the growth of Hispanic households in various metropolitan regions in theUS. These are the households, often with larger families, who are likely to occupy less spacious,older, centrally located housing. They are also likely to be households with lower incomes, which isclearly related to the level of under-consumption.

The second finding is that the overall outcome is closely related to income. The amount of spaceused by households reflects varying income levels. Even if on average US households consume morehousing space over time, those in low-income deciles may still experience room-stress in significantnumbers. We recognize that varying concentrations of the elderly across the income groupings couldbias the results, but in fact the elderly are not disproportionately concentrated in the low-incomedeciles. It does not appear that elderly households with low levels of crowding are influencing theresults. Figure 4 shows the distribution of room-stress or room shortage by income decile. For eachyear the percentage of households in room-stress was calculated for each income decile for that year.The figure shows the averages over a period of 25 years. It shows the expected distribution of rela-tively high levels of room-stress in the lowest income deciles. Almost 12% of all households in the


lowest income decile had a room shortage of one or more rooms over the 1968–1992 period. Incontrast very few households in the highest income groups revealed room-stress. About 95% of themiddle income deciles and almost all the high income deciles had the correct number of rooms ormore rooms than they needed according to the PSID criterion.

The data also allowed us to analyze how room shortage by income category has changed over time(Figure 5). The middle and highest income deciles have slightly declining rates of room shortage

Over Consumption Under Consumption

FIGURE 2

Distribution of Over and Under Consumption (Actual-Required Rooms), 1968–1992

White Black

FIGURE 3

Percent of Households with Room Shortage by Race


over time; and the levels are almost negligible for the highest income groups and moderate for themiddle income groups. For the lowest income deciles, the rates remained substantial over time andshowed a significant increase in room-stress in the last few years. The levels of room shortage in1992 are higher than in 1968–69.

As we have demonstrated, room shortage is related to income, but the figures also indicated thatthis relationship was variable over time. For each year we calculated the correlation between room

Income Decile

FIGURE 4

Percent of Households by Income with Room Shortage

FIGURE 5

Percent of Households with Room Shortage by Income Class


shortage and income (Figure 6). While the relationship is negative, the correlation has increasedstrongly over time. Kendall’stau is twice as large in 1992 as it was twenty-five years ago, and quitesubstantial in 1992. The role of income in avoiding housing shortage has clearly increased over time.The strengthening relationship, especially for owners (Figure 7), emphasizes the increased impor-tance of income in allowing households to buy more spacious housing. The correlation between in-come and rental occupancy is relatively constant over time. The relationship is also stronger for whitehouseholds (Figure 8). The results suggest that while white households are able to translate theirincreasing income into better housing and so strengthen the relationship between income and lowerroom-stress, black households are less able to use their income to make gains in the housing market.

FIGURE 6

Correlation of Room Shortage with Income Decile

FIGURE 7

Correlation of Room Shortage with Income Decile by Tenure


However, there is a slight increase in the strength of the relationship in the 1980s, but the overallpattern is much more stable than for white households.

Increasing income inequality in the US is certainly one reason for a stronger relationship betweenincome and room-stress. But we also expect that immigration plays a significant role in the persis-tence of under-consumption of housing space among the lower income households in the UnitedStates.

Immigration and Residential Crowding

There is no question that there are significant impacts of large-scale immigration in selected re-gions of the United States. Of particular relevance for this study are the large numbers of relativelylow-income migrants entering metropolitan regions along the Mexico–United States border. Thesemigrants come with families or join other families already in the United States (Martin & Midgely,1994; McCarthy & Venez, 1997). In addition, these new immigrants have higher fertility and largerfamily sizes in general. A study of “immigration hotspots” by the Center for Immigration (1996)calculated and mapped an index of counties that were severely or intensely impacted by immigrationin contrast to counties which were less affected by large-scale immigration (Figure 9). Counties inCalifornia and in the border states of Texas, Arizona, and Florida were particularly impacted. Coun-ties in the middle west, especially outside of the large metropolitan areas had much lower indices ofimmigrant affects.

Households from the PSID were grouped by their location in one of the four county categories ofimmigration status as defined in Figure 9. Because we expect that counties which are severely, ormoderately severely, impacted by high immigration are more likely to have households in room-stress than other regions of the United States, we focused on housing consumption in those counties.For the low, middle and high-income households we calculated the average percentage of householdswith room shortage for the period 1986–1992, for counties with high to low immigration impacts in1990.

The proportion of households with room shortage is remarkably different across the immigrantcounties especially for low-income groups, those groups that are most likely to be at the low end of

All households

FIGURE 8

Correlation of Room Shortage with Income Decile by Race


FIGURE 9

County Immigration Impacts in 1990Redrawn by permission from U.S. Immigration Hot Spots, Center for Immigration Studies, Washington, D.C.

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the housing market (Table 1). Low-income households in high immigrant impact counties are almostfour percent more likely to experience room shortage than the same income level households in lowimmigrant impact counties. Similar findings, but at lower levels, are true for middle income house-holds, while high-income households are unaffected. Lower income households, including immi-grants and other ethnic groups, are affected by relative housing shortages in regions experiencinghigh rates of immigration. This pattern extends to a significant segment of middle income groups aswell. Only the very highest income groups were completely unaffected. Our hypothesis of greatercompetition for housing space in counties with large numbers of new low-income immigrant house-holds is indirectly confirmed with the findings in Table 1. We may see increased room shortage andmore crowding as some counties continue to receive large numbers of new immigrants. In addition,these county level impacts may be much greater within smaller geographical units than counties, asimmigrant households cluster in the inner city areas of large metropolitan areas, or in the large citiesof rural counties.

Mobility and Residential Crowding

Finally, we examined the propensity of low-income households in situations of under-consumption,to move “up” the consumption market and thereby escape from housing crowding. It is critical toestablish whether a crowded situation is permanent or whether this state is only temporary. For theperiod of 1986–1992, we analyzed the housing situation of low income households (the three lowestdeciles) at two points in time, to evaluate which households escaped from crowding and which house-holds remained in this condition (Figures 10 and 11). We examined all households in the three lowestincome deciles and in crowded housing for the US as a whole, and for those living in counties withsevere immigration impacts.

Two events in the circumstances of the household are important mechanisms in the move out of thestate of overcrowding, (1) a reduction of household size, through decreased household size, and (2)a residential move to a larger dwelling. It was further hypothesized these events would be facilitatedby, or at least coincide with a substantial growth of household income. A substantial growth of house-hold income was defined as moving from the category of the three lowest income deciles to themiddle or high-income category in any one year. Although this is a relatively severe criterion forincome growth, it does ensure that we are capturing income effects.

The focus of the analysis was on the occurrence of combinations of residential mobility, incomechange, and leaving crowded housing. For many lower income households living in overcrowdedhousing is not permanent, but a transitory situation. Of all low income households under-consuming

TABLE 1

Percent of Households with Room Shortage by Income and CountyImmigration Status 1986–1992

Impact

INCOME Severe Moderate/Severe Moderate Low

Low Income(Lowest three deciles) 11.0 10.6 8.2 7.1

Middle Income(Middle four deciles) 5.8 2.9 1.9 2.2

High Income(Highest three deciles) 1.2 0.7 0.7 0.9

Source: PSID Calculations. County immigration impact is defined by a composite index, whichmeasures the size and composition of the immigration flows. The index and a grouping into fourcategories were published as part of the Immigration Hot Spots Map by the Center for Immigra-tion Studies, Washington, D.C.


housing space, almost 50% leave that state in any one year over the 1986–1992 period (Figures 10and 11). This is not only true for all low income households in crowded conditions in the whole US,but also for those living in severely impacted immigration counties. The high propensity of low in-come households to escape from crowded housing situations in highly immigration impacted coun-ties may be related to the high turnover in the housing stock (DiPasquale & Wheaton, 1996; Moore& Clark, 1990), allowing for greater flexibility in relocation behavior. It is notable that even in themost impacted counties, half of the households are able to decrease their crowding levels. In sum,residing in a county with high recent immigration does not reduce the propensity and opportunities tomove out of overcrowding.

The dominant mechanism through which households leave crowding and room-stress is clear. Anaverage of 30 to 50% of all lower income households, solve the room-stress problem by moving to alarger dwelling. This occurs largely independent of income growth or changes in household size. Theimportance of room-stress as a trigger in the process of residential mobility is affirmed by the resultsof Figures 10 and 11. Of all the lower income households that moved in any one year, the largestmajority moved and thereby escaped from the situation of overcrowding. Only 6.6% (United States)and 7.3% (counties with intense immigration impact) of all households in room-stress moved, with-out changing their levels of consumption.

Other variables play a relatively minor role in the process of low-income households moving tomore spacious dwellings. In the United States a move out of room-stress is accompanied by a majorincrease in income in only 5.5% of all households observed in room-stress the previous year. But incounties with intense recent immigration impact this coincidence is much higher, at 13.0%. Evidentlyin these housing markets it is not as easy to leave a state of under-consumption of housing spacewithout a substantial increase in income. This is also evident if one looks at the percentage of house-holds having income growth, but not being able to reduce room-stress in these counties with highimmigration impact (6.9%). The selection of households in the three lowest income deciles only, and

FIGURE 10

The Propensity of Lower Income Households in Underconsumption to Move Out of Crowding, 1986–1992


the fourfold division of counties by immigration impacts, leads to fairly small numbers of observa-tions. The results in figures 10 and 11 should be treated with some caution. In sum, even though thereare relatively more low-income households that are under-consuming in the high immigration im-pacted counties, large numbers of these households are able to move up the consumption market.

CONCLUSIONS AND OBSERVATIONS

The results of this investigation of crowding and housing in the past two and half decades are atonce salutary and cautionary. The results tell an upbeat story of increasing housing quality, at least asmeasured by housing room-stress, and they reaffirm the role of mobility in changing housing out-comes. The US housing market measured in these terms is providing larger and better quality housingto an increasing proportion of the US population. Those gains are true for African American house-holds as well as for white households, therefore this is a positive finding.

Housing consumption is related not only to the changing life course, but also to the general pro-cesses of change that take place in Western societies. As affluence increases, the size of new housingincreases, and as the birth rate goes down and large cohorts of the population age and reach an emptynest stage, average household size is reduced. This general process underlies the overall changes inthe US housing market. Now, close to 90% of all households do not experience room-stress and manylive in dwellings where the number of rooms far exceeds the number of persons in the household.

As expected, lower income households have not benefited to the same degree or in the same wayas middle and high-income households. The percentage of low-income households that experienceroom-stress is not high, but did not decrease during the period of 1968–1992. The correlation be-tween overcrowding and income rose substantially over this period, indicating a widening gap be-tween the housing consumption of lower and upper income levels. These findings are given an additionalcontext when we examine them in the light of the recent large-scale immigration to the United States.

FIGURE 11

The Propensity of Lower Income Households in Underconsumption Living in Counties with SevereImmigration Impact to Move Out of Crowding, 1986–1992


The process of immigration has a clear and discernible impact on the consumption of housingspace. In housing markets with high levels of recent immigration overcrowding is higher than innon-immigrant metropolitan areas. Even so, in the regions with the greatest immigration impacts,overcrowding is not permanent for the majority of lower income households. Many move out ofcrowded housing to larger dwellings. But, in high immigration housing markets there is a closerassociation between moving out of crowded housing and substantial income growth. The implica-tions for poor, new immigrant households are the most problematic. It is these households who ex-perience the most crowded conditions and continue to have the most difficulty in moving up theconsumption ladder as it is their incomes which are stagnant or increasing quite slowly.

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Housing consumption and residential crowding in U.S. Housing Markets

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