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Affordability

Why is the rent too damn high?  What can be done?  Ideas for coping while the rental housing market comes back to its senses.

What is Rent Burden?

Rent Burden is described as paying more than 30% of Household Income on shelter (rent/mortgage, utilities). 

For many Americans the cost of shelter is way above 30%.  According to a recent Pew Study:

  • Majorities of Americans believe that in their community, it is challenging to find affordable quality housing – whether renting (58% very/somewhat challenging) or buying (59% very/somewhat challenging.) 
  • The public demonstrates a clear understanding of the sacrifices that must be made by families struggling to maintain their housing. More than six in 10 adults believe it is at least fairly likely for a family that is struggling to keep their housing to have to take on an additional job or hours at work (82% very/fairly likely), stop saving for retirement (73%), accumulate credit card debt (72%), or cut back on health care (62%). A majority of adults (55%) believe it is at least fairly likely that such a family will have to cut back on healthy, nutritious food, and just fewer than 2 in 5 believe such a family will likely move to a neighborhood that is less safe or has worse schools. 
  • [O]ver half of all adults (52%) have had to make at least one such sacrifice in the past three years to ensure that they can cover their rent or mortgage. While half of all whites (49%) indicate they have made a sacrifice, nearly two-thirds of African Americans (63%) and Hispanics (64%) indicate they have done so. Among all adults, 47% report that either now or at some point in the past their housing situation was not “stable and secure,” and among current renters, that figure is 56%.  
Related story:  Why Americans Moved Last Year: Cheaper Housing, Shorter Commutes http://blogs.wsj.com/economics/2014/06/05/why-americans-moved-last-year-cheaper-housing-shorter-commutes/

Renters more likely to move because of affordability  http://nlihc.org/article/renters-more-likely-owners-move-housing-related-reasons

Americans Are On The Move, But In The Wrong Direction

"All around the country, the cost of housing is driving people out of places with the most economic opportunity, like L.A. They, like Jamika, are leaving cities with better job markets in search of a cheaper place to live."
Kinda funny that lower costs for housing could drive a migration away from job hot spots.  Read the whole article here
Related story:  High Rents Make Housing Unaffordable for Many in Ohio
In order to afford a modest, two bedroom apartment at Fair Market Rent in Ohio, renters need to earn $13.84 per hour. This is Ohio ’s 2014 Housing Wage, revealed in a report released today. Every year, the Out of Reach report calculates the Housing Wage, and other housing affordability data for every state and metropolitan area. An estimated 32% of renters in Ohio do not earn enough to afford a two bedroom unit at the Fair Market Rent. Fair market rent in this case means that rent & utility costs do not exceed 30% of income. The "Housing Wage" represents how much a household would need to earn to afford an average 2BR rent in Ohio which doesn't exceed 30% of income. What are the implications of "rent burden" (ie. paying more than 30% of income for rent)? Read more at: Is "home" eating you out of food and medicine?  Read the news from COHHIO here           

Housing 'cost' is not just rent
Too many in the US make a decision about housing based on the rent check.  What about the cost of transportation to work, shopping and family.  Jordan Weissman in Slate says:  "Americans tend to move in the direction of cheap housing. But my guess is that many families who go off to the Sun Belt in search of a moderately priced home with a yard end up underestimating the impact of commuting costs on their finances, since they're simply more difficult to predict. (Do you know where the price of gas will be in two years? Neither do I.) And while housing is the single biggest piece of most family budgets, transportation comes in second, eating up about 17 percent of all expenditures. As the New York's budget commission puts it: "The rent is too damn high! But the Metrocard is a pretty good deal." 
Read the whole story here
Related story here:
http://www.gobankingrates.com/personal-finance/surprise-savings-account-wont-cover-cost-renting-apartment/
More on affordability (and moving away from opportunity) here.






 




What's News?

November 12, 2016 Roots of Affordability Crisis
Richard Florida in CityLab writes about a new study of rents and renter income. "The period from 1940 to about 1960 was a golden era for renters. Over this three-decade period, as the study notes, renters’ incomes increased as the cost of rent fell. Part of this was due to rising incomes generally and part was due to increasing home-ownership and the shift of population to the suburbs, which helped to keep the price of rental housing in cities low. The combination of higher incomes and lower rents allowed renters to afford more for their dollar. But all that changed beginning around 1970. Since that time, rents have risen as renters’ incomes have declined. From 1970 to 2010, rents increased at more than twice the rate of income growth—28.7 percent versus 13.8 percent."

July 28, 2016 Zillow Trickle down not working, says Zillow & Marketplace
      Real estate website Zillow reports "Low-End Demand, High-End Supply." Even though there is high demand for affordable rental units, the developers continue to produce high end rentals for a shrinking market. Sooner or later this imbalance will cause middle market rental housing to cut their prices in order to fill their vacancies. This is called "trickle down" when it happens slowly and "bubble bursting" when property values collapse overnight. Stay tuned.
      Related is a story in PRI's Marketplace which offers stories from the cutting edge of rental--millennials trying to leave home. "Even in cheaper markets, like Kalamazoo, Michigan, paying for housing can be overwhelming. Kayla Bean took on three low-wage jobs when she turned 18 to share a house with her best friend. But the pressures of work and college were more than she expected.“

Even if you could build housing FOR FREE, it might not be affordable
     Emily Badger at the WonkBlog section of the Washington Post reminds us that affordable housing is not cheap. She writes: "Even if you could build an entire property for free, an apartment meant for extremely low-income renters (those making 30 percent of area median income or less) probably wouldn't work at the end of the day. Those apartments could still cost more to maintain over time than the families living in them would yield in rent. That's basically the story of what's broken with public housing today." 
     This is a good reminder that just expanding rent subsidies is not enough. Rent subsidies don't create housing, they just write down the cost for the renter. To create new rental housing there are two options.
1. Do nothing and wait for luxury housing force older rental housing to "trickle down" (usually in disrepair) or
2. Underwrite the cost of building affordable housing with subsidies and tax credits to developers.
     Also, as RHINO is fond of reminding tenants, controlling operating costs is critical. That means weatherization, energy conservation, avoiding hidden fees, making "self help" repairs, and accepting reduced services (like security guards roaming the hallways).
     RHINO is currently researching a proposal by Enterprise Foundation is looking at ways to reduce rental housing costs without government subsidies. 
     Update: check out the affordable housing developer tool described in this NextCity story.
June 23, 2016 Next City, 
Affordability worsens even as economy improves
     NextCity reports on Joint Center for Housing Studies "State of the Nation's Housing 2016" and it's not a pretty picture. Harvard’s National Housing Report Has Bad News for Renters" The story says: "The price of rentals is on the rise, increasing numbers of people are choosing to rent rather than buy, and more and more people are struggling to cover the costs of housing each month, even as the economy continues to climb out of the recession’s hole."
     Rent burden is not the only problem. Rising rents have led to increasing concentrations of poverty and with it, diminished opportunities for children in high poverty neighborhoods 
     The report says that local efforts like Pittsburgh's (see one story down) to address affordability are spotty and not scaled to address long term needs. "Governments at all levels must redouble their efforts to expand the affordable supply. And with growing recognition that children’s lifelong achievement rests on stable, safe, and healthy living conditions, policymakers must also ensure better access of minority and low-income households to higher opportunity communities  you can find the whole report here

June 21, 2016 Pittsburgh Post Gazette Pittsburgh housing advocates and local elected officials promoting more affordable housing in council and at the ballot box
      Pittsburgh Post Gazette reports on a new campaign to raise funds at the ballot box for more affordable housing. "A coalition of affordable housing advocates will announce this morning they plan to gather signatures for a November ballot initiative that would create a $10 million affordable housing trust fund for Pittsburgh. Revenue for the fund would come from a one time point-of-sale 1 percent realty-transfer tax. A $10 million annual affordable housing trust fund was recently recommended by a city task force convened to study how to best preserve and expand the city's supply of affordable housing. The task force, co-chaired by City Councilman R. Daniel Lavelle and city Planning Director Ray Gastil, noted a shortage of about 17,000 affordable rental units in the city."
      Meanwhile in Ohio...crickets

Why isn't affordability on some candidate's agenda?
     It is no secret that renters are suffering. Last week a new poll by the McArthur Foundation reported that Americans are more anxious about housing than even during the explosion of the housing bubble? 
     Today the AP publishes a feature story entitled "Decade after housing peaked: Owners richer, renters hurting." From the story: "it's a troublesome story playing out across America in the 10 years since the housing bubble peaked and then burst in a ruinous crash."
     BusinessWire joins the discussion with a story about how housing, anchor of the US economy is disappointing most Americans. "The survey finds that 16% of adults feel only somewhat stable and secure or unstable and insecure in their current housing situation – this represents more than 37 million Americans. Groups experiencing this housing vulnerability at especially high rates include 33% of renters, 42% of distressed renters (those who spend more than 30% of their income on rent), 30% of adults with income less than $40,000, 23% of adults with a high school degree or less education, 34% of African Americans, 24% of Hispanics, and 23% of city dwellers."
     Any wonder why voters are angry? Wage stagnation and housing inflation have robbed them of a stable household and forced them to choose where to cut to prevent eviction or foreclosure.
     But what are the politicans saying.SOS warmed over. More of this and less of that and, oh yeah, nothing right now while the campaigns are in full swing. Meanwhile low income households are being shuffled out of the way like cards in a poker deck as public institutions (Columbus Public Library and Columbus Metropolitan Housing, for examples) profit from the luxury market boom

      
Who's fault is it that pols can duck the affordability issue? Advocates need to be putting these stories front and center in their local community and then engage their representatives to respond. Congress will be on recess from July through the first week in November. Most will be at home in the district campaigning. Take them some good ideas to address housing needs and tell them the stories of what goes on back in the communities they were elected to represent. Tell them that renters need more vouchers and fewer silly work requirements
    
Rent stressed? You are one of many.
     CityLab reports on a new poll that reveals that in the last year 1 in 5 renters has scrimped on groceries, clothing, or even medical care in order to pay. "Even as Americans continue to recover from the hammer that hit them in the late 2000s, they face severe and rising rents and jobs that are geographically concentrated in just a handful of metro centers." 
 posted June 2, 2016

Glass 1/2 Full?
      Cincinnati Enquirer reports. "Report: Affordable housing a problem, but renters in Cincinnati fare better than most. In the annual report Out of Reach, released by the National Low Income Housing Coalition, an alarm is raised about the high cost of renting in America. However, tenants in Cincinnati and Ohio enjoy more affordable housing options than many, according to the data. In the report released Wednesday, the focus is the availability of affordable housing. By the coalition's definition, this is defined as housing and utilities that do not cost more than 30 percent of the renter's income."
      Some of the credit should go to housing advocates who, in the early 1990s recognized the threats to HUD housing across the country. Many organized to create preservation policies and worked diligently in their own communities to keep subsidized units from slipping into the hands of developers or the wrecking ball.

posted May 30, 2016

March 12, 2016, Toledo Blade Even Toledo's rentals are booming.
       The Blade reports: "Apartment market robust in Toledo area. Vacancy rose late in year, but so did rents". A lot of people will tell you that affordability is only an issue in the big metropolitan areas. Alas not so. Even Toledo is facing a rental boom. "Sales of apartment complexes in the Toledo area increased from midyear to year’s end, the Reichle Klein report said. The vacancy rate for the Toledo area’s apartment market rose to 5.2 percent in the last half of 2015, up from 4.2 percent midyear. But overall, the apartment market remains quite robust, according to a year-end assessment released recently by Toledo commercial real estate firm the Reichle Klein Group. The average rental rate was $652, up from $645 at midyear."

January 8, 2016 JCHS, Affordability worse than you thought    
Joint Center for Housing Studies (JCHS) has issued a new report on rental affordability. Here in Ohio we often console ourselves by saying it's not as bad here as on the coasts. Well...not much better. The new interactive map that comes along with the report shows, for example, over 50% of renters in Zanesville are rent burdened. IN ZANESVILLE! 
      So, here we are with a lame duck president and a do-nothing Congress and renters at their wits ends trying to cope with high. Who among the elected leaders or candidates is ready to say "here's what I'll do for renters."
       Who among the advocates will be asking these questions as the 2016 election cycle kicks into high gear? 


Fighting for rental affordability
WKSU reports: "Bill Faith is executive director of the Coalition on Homelessness and Housing in Ohio, also known as COHHIO. He says providing more affordable housing now can be a preemptive strike for people on the brink of getting kicked out of their homes. 'We have to face the reality that many people are going to work at low wage jobs and they’re going to need to have housing that matches their income.' Faith says creating more affordable housing is a good investment for the state since it can cut down on health care costs and lower the infant mortality rate.       12/1/15                  Here's how to get mobilized

Two stories make the connection between homelessness and affordability.
   Columbus Dispatch reports "Number of homeless families rising in Franklin County." Citing a report from the Community Shelter Board, the Dispatch writes: ""Waning welfare benefits, a more-competitive rental market and lingering economic instability from the recession all are contributing to the growing number of homeless families in Franklin County...".
    From Cincinnati, WCPO recounts the story of one family finding affordable housing after 2 years of scraping by.  "Shortage of affordable housing leaves thousands of Cincinnati area families on brink of homelessness".  The story says: "The demand for government-subsidized housing and vouchers is so much greater than the supply here that thousands of families in Hamilton County remain on waiting lists. The last time the Cincinnati Metropolitan Housing Authority's housing choice voucher – or Section 8 – wait list was opened in December, more than 17,000 people pre-applied over just four days. Those vouchers help poor people, the elderly and people with disabilities pay rent in a house or apartment of their choice that accepts the vouchers."  Thanks to JohnS for sharing this story.

"More bad news on rent
Two news stories are highlighting a new study by Enterprise Community Partners and the Joint Center for Housing Studies. The bad news is that rental affordability will continue to increase for households of all income levels. The study projects that 13 million households will be rent burdened by 2025. Next City reports: "The researchers estimate that the current rental crunch—the one where vacancies are around 7 percent, abouthalf of renters spend more than 30 percent of their salaries on housing, and one quarter spend 50 percent or more—is only going to get worse over the next decade. Even if housing prices and income rise as quickly as inflation (about 2 percent annually) the number of severely rent-burdened Americans (those paying 50 percent or more) would increase by 11 percent over the decade, to over 13 million people in 2025." In the Washington Post, Emily Badger writes: "In part, two longterm trends are colliding here. Rents have outpaced inflation for most of the last several decades. At the same time, incomes have been stagnating or falling."  If the report is right, affordability will become both a personal issue (how to pay), a social issue (where to live) and a political issue (rent control, affordable housing incentives, more subsidies) in the coming years. Think of this as the rental advocates full employment issue.

Affordable housing needs continue even after economy rebounds
    You have heard the favorable economic trends all over radio and TV: employment is coming back, stock market up and consumer confidence blossoms. Still, HUD's finding from the Worst Need Cases Study has a different message: "The number of renter households with worst case needs decreased to 7.7 million in 2013 from the record high of 8.5 million in 2011, ending a sustained period of large increases. The number of worst case needs in 2013 is 9 percent lower than in 2011, yet it remains 9 percent greater than in 2009 and 49 percent greater than in 2003."   In fact the study admits that government action had little to do with the slight improvement in Worst Case needs.
    In fact, argues the Center for Budget and Policy Priories (CBPP), government made the problem worse.  CBPP calculates that 100,000 households lost Housing Choice Vouchers due to sequestration
   To address these needs and restore some lost funding, President Obama's budget requests are offering some hope for rent burdened families by increasing voucher funding, guaranteeing full year funding for Project based assistance, increasing funding for PHA operating expenses, raising USDA Rental Assistance (RA) and expanding funding and authority for USDA vouchers which are used when USDA properties leave the program. The President's request is not the bonanza that housing advocates want. Doug Rice of CBPP points out that this year's request is still 6% below the 2010 funding level (adjusted for inflation)
    Historically, Federal housing assistance reaches only 1 in 3 eligible households.  Even so, the Children's Defense Fund estimates that increasing spending on Housing Choice Vouchers is one way to eliminate child poverty. "For the first time this report shows how we can shrink overall child poverty by 60 percent, Black child poverty by 72 percent, rural child poverty by 68 percent, and improve the economic circumstances of 97 percent of poor children simply by investing more in programs that work like the EITC, SNAP, housing subsidies, subsidized jobs, the Child Tax Credit, child care subsidies and others"  (emphasis added).  more here 
     The fact that expenditures for core housing needs are still below 2010 funding levels could be a good talking point with majority Democrats in Congress. But Congressional reps need to hear from advocates in their local communities about the need for affordable housing.

In a tight rental market, landlords have the upper hand
PRI's Marketplace program provides a course in supply and demand when it comes to rental housing. "Landlords have the upper hand in many rental markets". Charging more rent, not cutting some slack on late rent, and demanding higher standards are mentioned as issues. Not mentioned is the fact that tenants in a tight market are less likely to complain about conditions.
The Homeline counselor interviewed in the article says: “After two, three, four years they think the place is theirs forever as long as they don't mess up. But it's just not the case. It's a temporary, renewable, or nonrenewable agreement,” he says. “We give people bad news about that all the time. It's not just renewable just at your whim. The landlord is involved, too.” So true! The story notes that lack of "just cause" protections is one of the things that drives renters to purchase a home. More on supply and demand at here