| Affordability of Rental Housing ... Alarming! |
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| Written by Hanh Brown | |||
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News about millions of homeowners losing their homes to foreclosure have been all over the news lately, but the outlook for renters is also alarming. According to a study by the National Low Income Housing Coalition, even rental housing is too expensive for the vast majority of working Americans.
The Department of Housing and Urban Development estimates 30 percent of income to be the "fair market rent" (FMR) for an apartment a given area, and a worker making the median wage for most areas is paying a lot more than a third of his or her income. More than 9 million renter households paid 50 percent or more of their income for housing in 2006. That leaves less money to be used on insurance, food, and other necessities for these folks, who are mostly (98 percent) classified as low-income. The study asked how much a family in a given community would have to earn to be able to afford a modest apartment. The answer was determined by comparing the "Housing Wage" in each area with the local wage and income for the residents of those communities. The Housing Wage is defined as the full-time hourly wage one would need to earn in order to pay that fair market rent for an apartment in each area. The coalition reported that a full-time worker would have to work 52 weeks a year with no unpaid days off at $17.32 a year to afford a $900 two-bedroom apartment in the average housing market. With the current national minimum wage set at $5.85, it's obvious that a household containing even two full-time workers making minimum wage will struggle to pay the rent. The minimum wage will rise to $7.25 next July, but even with the increase, the report shows that there is no county in the entire nation where a single person can work 40 hours per week at minimum wage and afford a one-bedroom apartment at the going rate. The picture is a little less grim for the many workers who are making a higher wage, with the average hourly wage across the nation coming in around $16.00. However, the average hourly income of renters is only $13.94, and that typical renter would have to work 50 hours a week with no unpaid time off to afford the average rental unit. Of course, these are just averages. The "Housing Wage" differs from area to area, ranging from $11.88 in Iowa to more than $23 an hour in California and New York. The affordability of housing varies not just by average income from state to state but also depends on the interplay between wages and rental rates. For instance, a renter in Alabama may only be making the minimum wage of $5.85 an hour, but his salary will still cover more of the cost of housing than a renter in the highest-priced market, Stamford-Norwalk, Connecticut. A worker in that area of Connecticut making $7.65 will be spending more of his or her income on housing than the minimum wage worker in Alabama because the price of housing in Stamford-Norwalk is so much higher than the per-unit price of housing in Alabama. Though low cost and subsidized rental housing is available in some areas, the units are often falling apart and unsafe. In addition, the units that are in decent shape are sometimes unavailable to the lower income workers, because the apartments are being occupied by households whose income is significantly higher. Additionally, each year, a percentage of the subsidized housing disappears when the units are converted to condominiums or become uninhabitable because of neglect. The bottom line? No minimum wage earner in the U.S. today with a full-time job can expect to find a decent rental unit he or she can afford, and even workers making significantly more than the minimum are struggling to make the rent and still afford food and other necessities. For a complete list of state Housing Wages can be found at http://www.nlihc.org/orr/orr2008/housingwagemap.pdf.
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The problem isn't just affecting high-priced urban markets but is happening around the country, but virtually everywhere in the country. The conventional wisdom says housing in rural areas is more affordable than in metro areas, but the coalition's report found otherwise. The coalition's study, called "Out of Reach 2007-2008", found that no state could assure a full-time minimum wage earner access to affordable rental housing even in non-metro areas. Further, the report says that no minimum wage worker could afford rental housing and even workers making significantly more than the minimum are paying more than half of their wages toward rent.