Banks have long expected that you should spend a third of your income on housing. Now humanities academics say that would help low-income families get optimal brain power for their children also. 

But don't overspend to try and get into a better neighborhood, they write, and we saw the disaster that 1960s subsidies brought to neighborhoods.

So what to do?  Sandra J. Newman, a Johns Hopkins professor of policy studies, and researcher C. Scott Holupka, say that how much a family spends on housing has no impact on a child's physical or social health, but when it comes to cognitive ability, it is a game changer. When a family spent more than half its income on housing, its children's reading and math scores tended to suffer, but test scores also took a hit when families spent less than 20 percent of income on housing.

"Families spending about 30 percent of their income on housing had children with the best cognitive outcomes," said Newman, who is director of the university's Center on Housing, Neighborhoods and Communities. "It's worse when you pay too little and worse when you pay too much."

More than 88 percent of renters with the lowest incomes spent more than 30 percent of their income on rent, according to the 2009 American Community Survey. The U.S. Department of Housing and Urban Development's latest report on affordable housing states household incomes must be at least 105 percent of the area median for a family to find decent, affordable housing units.

Families in the study that spent most of their money on housing spent less on things like books, computers and educational outings needed for healthy child development, Newman and Holupka found. Families that didn't invest enough in housing likely ended up in the sort of distressed neighborhoods and inadequate dwellings that can also take a toll on children.

"The markedly poorer performance of children in families with extremely low housing cost burdens undercuts the housing policy assumption that a lower housing cost burden is always best," Newman said. "Rather than finding a bargain in a good neighborhood, they're living in low-quality housing with spillover effects on their children's development."

Newman and Holupka found families that had obtained truly affordable housing, spending roughly 30 percent of their income on it, did indeed spend more money on enrichment for their kids.

When a family moved from spending more than half of its income on housing to the 30 percent ideal, it invested an average of $98 more on the children, the researchers found. Not a lot of money, but enough to make a difference. Even when families increased the amount spent on housing — from spending 10 percent of their income to 30 percent — they spent about $170 more on child enrichment.

"People are making trade-offs," Holupka said, "and those trade-offs have implications for their children."

 Articles: "Housing Affordability and Investments in Children" in the Journal of Housing Economics, "Housing Affordability and Child Well-being" in Housing Policy Debate.
Source: Johns Hopkins University