Looking for an affordable rental market? Study says you're out of luck
March Rental Advice: The gap between tenant wages and housing costs is widening precipitously, forcing millions of Americans to make tough choices. Here's a look at what's happening with rent across the country, and some advice on what you can do if you're having trouble paying your rent.
© Kelly Redinger/Jupiter images
For middle- and low-income tenants, things just keep getting worse.
Tenants know this: The rent keeps going up. Housing counselors know this: More working families are struggling to pay rent and are coming in to seek help, afraid they'll end up homeless. Now, here come the numbers.
First was the report in February from the federal Center for Housing Policy, which revealed that an astonishing 1 in 4 working households in America — around 10.6 million families — spend more than half of their pre-tax income on housing, a level that experts say is unhealthy, if not impossible, to sustain.
Then on Tuesday came the latest exhaustive and dismal data crunch from the National Low Income Housing Coalition: "Out of Reach 2012," which finds that in no community in America is it possible to reasonably make the rent on minimum wage. In 86% of counties surveyed, even the average pay of tenants, which is about twice the minimum wage, won't cut it.
"There's a very serious gap between what rents cost and the amount of money that low-wage workers and elderly and disabled people or those on SSI (Supplemental Security Income) can afford," says Sheila Crowley, the president and CEO of the coalition. "It's obviously worse in some places than in others, but no place is rent-affordable."
The coalition study uses fair-market rent, the 40th percentile of area rent, and actual wage levels from U.S. labor surveys. It defines "affordable" housing as costing no more than 30% of gross income, the widely recommended standard. Nationally, the average fair-market rent for a two-bedroom home in 2012 is $949, meaning a full-time worker would need to make $18.25 an hour to pay rent without unduly straining the family budget, $4.10 more than the average tenant wage of $14.15 and 2.5 times the federal minimum wage of $7.25. You can use this tool to calculate your own housing wage.
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"It isn't just fixed-income seniors or the unemployed. It's also a big challenge for working people," says Sean Caron, director of public policy for the Citizens' Housing and Planning Association, a Massachusetts advocacy group. "This is really a problem that isn't reserved to a small amount of vulnerable people."
Working overtime to pay the rent
The Center for Housing Policy study looks at the housing budgets of working families, defined as those employed at least 20 hours a week and earning no more than 120% of area median household income.
Of the 22.5 million working families who rent, 26% give more than half their pre-tax income to the landlord. That's an increase of 12% since 2008, or an additional 630,000 families. In California, Florida and New Jersey, fully 1 in 3 households join the "severely housing-cost burdened."
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"Retail, firefighter, teacher, postal clerk – those are all pretty good jobs," says Laura Williams, the report's author. "They're essential community workers, and they're not making enough to rent a two-bedroom apartment in a lot of communities."
Those in the increasingly busy business of helping tenants aren't surprised by the findings. Take the counselors at the Metropolitan Boston Housing Partnership. They typically get about 9,000 requests for assistance a year. Lately that number has ballooned to 15,000, many from struggling tenants with jobs.
"We used to see the more chronically homeless folks, and there still is a great need there, but we're also seeing the increase of the moderate-income family," says Kate Fulton, who helps direct client services for the agency.
One single mother working full-time in the medical field was spending more than 80% of her $2,300 monthly pay for a moderately priced three-bedroom home, leaving only $400 for other expenses.
"She's not behind on rent. She manages," says Kate Jordan, coordinator of the consumer education center for the housing partnership. "I don't have a good answer for how she does it, but she's doing it."
The woman knew it was unsustainable, however, and counselors were able to help her find a cheaper apartment. She's also working to boost her earnings.
"That's a really high percentage of income to go toward housing and be sustainable, and you've got to ask how long people can keep that up and what choices they're being forced to make," Caron says. "Making the math work is really tough."
How did it happen?
So how did the squeeze on average workers get so incredibly tight? Several forces are at work:
- An improved economy. People are getting jobs and moving out on their own. Young professionals soak up the pool of moderately priced apartments.
- Buying jitters. Would-be buyers continue to be unable or unwilling to finance a home purchase. So they rent, adding 2 million more tenants to the market since before the housing bust.
- Not enough rentals. It takes time to approve and build rental housing. We have not had an increase in units to match the rise in renters.
- A long-term shortage of affordable rentals. Motivating investors to incorporate affordable rentals into developments is a chronic struggle, although creative solutions exist.
Combined, this makes for intense demand, and national vacancy rates are at their lowest level in more than a decade. With prices spiking as a result, it can be near impossible in many areas to find an open unit at the fair-market rent cited by the study.
Even high-income tenants are feeling the pinch. In New York City and San Francisco, both markets that traditionally favor tenants, high rents have sent would-be tenants on the buying path for the first time, ironically, to save money.
Now add to the mix stagnating wages for those in the middle, and declining wages for those at the bottom. While the national median monthly rent for working households rose 4% from 2008 to 2010, the median household income of tenants dropped 4%, the Center for Housing Policy found.
The increase in severely housing-burdened Americans from 2007 to 2009, the most recent years surveyed, was dramatic, according to the Department of Housing and Urban Development, with 7.1 million poor households either spending more than half their income on rent, living in substandard conditions, or both.
Please don't move to Florida...this is one of the worst States for unemployment, high rentals, foreclosures and the toughest, yes, rated the toughest on unemployment benefits. While some of the other hard nose States re unemployment at least give you a time period of denial ( after an appeal, denied, then so many weeks have to go by before you can apply again) Florida's denial is for the duration of unemployment after appeal denial. So when they brag about unemployment rates going down..it's because there are so many people that either gave up on job hunting or were denied benefits. There is no applying in person any more..it's all via internet here...then the companies can weed you out and not tell you why. And, yes, they can figure out your age.
I was terminated in January for an error in judegment that the corporation deemed to be a violation of company policy...after 15 stellar years of being an excellent employee. It never even went to my supervisor..a co-worker wrote a statement and it went straight to Quality and Assurance, the big brother of big business. My Union did not give me my 3rd step hearing that I'm promised..didn't even return my calls...because they do what the execs say to do. I have sent out 62 resumes and filled out as many applications..not even one interview!
So, I am living on what I sell on ebay and charity from family members By the way, I'm a middle aged widow living alone. I stopped paying my student loan which has ruined my credit...already did the deferment thing a couple of years ago when overtime hours ran out. I live as cheaply as I can...sometimes eating crackers and peanut butter for a week. I do receive a pittance for groceries...for which I'm thankful. I have an old phone, an older vehicle, and no frills...go nowhere to socialize. Did the roomate thing and they stole from me. Never again. The home I'm in is in foreclosure and going to be sold in July. Never saw any of this coming...have worked my entire life and again, went back to college...never could get promoted at work because one person high up blocked my chances...she didn't like me because I tried to change things for the better. Not making any excuses...it is what it is. Oh, and the charities that I gave to out of my check every week won't help me because I dont have small children..and one is out of money! As for buying my own home...when I was divorced many years ago I was denied because I was a risk...single mother. Then when I tried again the interest rates were so high I couldn't afford the payments ( Florida's low wages-Right to Work State), then when my credit was good again and I was getting better pay the down payment went sky high to make up for the low interest rates..but no one talks about that. If they lowered the down payments at these low interest rates you would see the housing market rebound and many would be able to experience the American Dream of owning a home. The the economy would do better because people would be spending money on their homes....but again, no one talks about that! I will never critisize anyone for what they have to do to survive..whatever job they have to do to feed their kids is okay by me It's always the people that are comfortable and have a home that speak against those that don't. Be careful...sometimes it's only one paycheck away.
After filtering through this posts I have say that I am shocked by what I have read . First, to those who say get a higher paying job. I would love to if nepotism wasn't at play. Or, the whole I know somebody who knows somebody. Also, I like the fact that some of you went on to say that getting a degree will help; to get out there and work, work! Well to let you all know I did get my degree; currently working on my bachelors. However, unless a relative of mine owns a company or a great friend has a position I can walk into FYI it's not going to happen.
So where does that leave me in job market???? Find anything that includes min wage PERIOD! So this is to the masses. When one of you say get a higher paying job or look for a higher paying job why don't one of you reach out to someone you DON'T know ; offer them a job since you are so PROUD and LOUD about making a lot of money. Give someone like myself who is in school; trying to make a dream happen only to see my dream handed to the person behind me because, he/she has an inside person to get them through the door.
I am sick and tired of people saying everyone wants a hand-out! That might apply to those on the street corner not for the rest us. Please keep that in mind when those of you feel the need to say, "All you want is a handout". As for my husband and myself we have cleaned and fixed up three properties since we have lived in Utah. Two landlords were slum lords; the third one at least paid for the supplies. I have the pictures to prove it. So not all renters destroy property either. Judging someone without knowing them is the worse. Shame on you that do~
Agreed with Rose. But, there are many factors at work, not the least of which is a congress more interested in themselves than their constituents, the same as the current, and previous, residents of 1600 Pennsylvania Ave.
In the community my family and I live in, the town assessor comes around just about every year, and our taxes go up. The housing market has gone down, the home values the bank will lend on go down, yet the taxes continue to rise. And we are not alone in this mess. Where my offspring was living, taxes were going up, jobs were disappearing overseas, and one of the couple lost their job. In their case, they had a safety net - my wife and I own two houses, one we were renting out. We took it off the rental market so the kids could have a roof over their heads. They moved up here, and both had full time jobs within six months. Yet, they still could not afford the rent we were getting for the house they now live in.
They are earning more than "minimum wage," and son-in-law has even earned a couple of promotions since starting a year and a half ago, daughter, one promotion in the same time. But with three kids, was four, but one moved out with her fiance to a different part of the country, they still can't afford the rent in this economically depressed area of the country. Only consolation for us, with the irresponsible politicians running this country and state, we probably will be long gone by the time anyone gets around to straightening things out..
People, get smart: VOTE OUT EVERY SINGLE INCUMBENT, REGARDLESS OF POLITICAL AFFILIATION. Then, let the replacements know they no longer work for their own reelection, they work for US, the citizens of THE UNITED STATES OF AMERICA. They don't work for China, they don't work for Haiti, they don't work for Mexico, THEY WORK FOR US.
So we all need to feel sorry for the people in this world who settled for a minimum wage job?! It's not the tax payers problem that some teenage girl made a personal choice to have kids and have the unsporting farther leave shortly after. Let me guess....the working people are supposed to pick up the slack?!
It's real simple. Get on craigslist and find a roommate to help split the rent. Yes, its probably not an ideal situation but it is what you chose by not choosing to better yourself!
It's time for our government to finally pull it's head out of it's bum and stop working for their respective political parties and start working for our country. If it doesn't start to happen very soon then change will come... and blood will flow... because that's the nature and way significant change. Not always, but usually, and it won't be without just cause.
When jobs don't pay enough and basic needs (and there are few things more basic than ones home) can't be reasonably obtained people will only suffer those conditions for so long before they begin to take action. That action has already begun and it is a foolish person, rich or poor, left or right, black or white, that ignores or dismisses the current and rising level of discontent in our nation.
The time for placing blame is over. It's time to actually start doing something constructive.
I guess if the business you started had no workers you could have made it work all by your self? Just as important as you paying the bills at that business it was just as important to PAY THE WORKERS and you paid the utilities their fair price so why not PAY THE WORKERS THEIR FAIR PRICE. You sound like workers are slaves who accept what you want to give them. STOP THE HATE!!
I served 13.5 yrs in the Navspecwarcom and your post is full of holes!! Just get a good accountant and most of your expenses are business write offs!! Now that should burst your bubble VET!! Don't rely on 6 yrs. fool!! Rely on your brain!!