Rent’s Way Too High for Low-Income DC Residents

March 27, 2014

The National Low Income Housing Coalition celebrates the 25th anniversary of Out of Reach — its annual report on rental housing (un)affordability for low-income households.

As in the past, it provides figures for the U.S. as a whole, each state and the District of Columbia, along with rankings of highest and lowest-cost jurisdictions.

The Big Picture

The big-picture story is well-known, though the figures give it new punch.

There’s a growing shortage of units that are both affordable and available to extremely low-income renter households, i.e. those whose gross incomes are at or below 30% of the median for the area they live in.

There are 10.2 million of them — about one in four of all renter households. Three-quarters of them spend at least half their income on housing, leaving them little for other expenses — and at high risk of homelessness.

Their so-called severe housing burdens are partly the result of the growing shortage — a 7 million unit deficit in 2012. They also reflect inadequate funding for housing assistance programs, which now help only about a quarter of eligible households.

Rental housing in the District is more expensive than in all but one state — Hawaii — according to NLIHC’s measures (of which more below).

A modest two-bedroom apartment, plus basic utilities would be out of reach even for workers who earn the local average for renters — and way out of reach for minimum wage workers.

How NLIHC Measures Housing Affordability

As I’ve written before, NLIHC uses several major measures:

  • The fair market rent for a two-bedroom apartment, as set for the jurisdiction by the U.S. Department of Housing and Urban Development.
  • The housing wage, i.e., how much a full-time worker would have to earn per hour for the apartment to be affordable at the customary 30% of gross income.
  • The estimated average wage for renters, based on several federal sources.

We’re cautioned against comparing this year’s figures to those NLIHC has previously reported because, it says, the FMR methodology HUD now uses introduces more year-to-year variability. Frustrating for those of us who want to track trends. And who doesn’t?

Be that as it may, here’s what we learn about how affordable rents are out of reach for several, mostly overlapping groups of low-income households in the District.

Perspectives on Rental Housing Costs in DC

The FMR for a two-bedroom apartment in the District is $1,469 a month. It would thus be affordable for a household earning $58,760 a year. This translates into a housing wage of $28.25 an hour — $20 more than the current minimum wage.

A minimum wage worker would have to put in 137 hours a week, every week to afford the apartment. Looked at another way, a household would have to include 3.4 full-time, year round minimum wage workers.

And in another way, the gap between the full-time minimum wage and earnings that would make the apartment affordable is nearly as large as the FMR — $1,049 a month.

The apartment is unaffordable, though far less so for District residents earning the local average for renters — $1,327. The gap in this case is $142. The renter would have to work 44 hours a week, year round to close it.

The gap reported for ELI households is $667 a month, but it’s surely larger for many. For one thing, the gap is based on the maximum 30% of AMI, though many households have to get along on less. For another, the AMI itself is misleadingly high because it’s inflated by incomes in nearby suburbs.

Last and worst off are households that rely solely on one member’s SSI (Supplemental Security Income) benefits. For them, the gap is a jaw-dropping $1,253.

Notwithstanding the caution, I’ll note that the gaps are all bigger than those NLIHC reported last year. This is not only because rental costs are rising — and low-cost rental units vanishing. It’s also because incomes aren’t keeping up — at least, for households in the bottom 40%.

The average hourly wage for renters is only 32 cents higher than what NLIHC estimated for 2013, while the housing wage is $1.10 higher. And though the District’s minimum wage will rise to $11.50 in 2016, it will still be less than half this year’s housing wage.

Do we need more local funding for affordable rental housing programs? Oh yes, we do.

 


DC Rapid Re-Housing Program Not Rapidly Re-Housing Homeless Families

September 30, 2013

Aaron Wiener at Washington City Paper reports on a big problem in the DC Department of Human Services rapid re-housing program.

As you may recall, DHS earlier gave us to understand that the program would largely solve the problems it’s faced providing shelter for homeless families when it’s legally required to. (Providing shelter for those who’ve got no safe place to stay when it isn’t was abandoned a couple of years ago.)

Well, rapid re-housing didn’t rapidly re-house as many families as DHS projected. The agency had “a terrible time getting people to accept” a housing subsidy they could count on for, at most, a year, said Director David Berns.

This, however, doesn’t fully explain why DC General, the main shelter for homeless families, is nearly full — or why DHS also has 94 families in hotel rooms.

The larger reason its plans have come a cropper is that there’s a vast gap between housing costs and the near-term income prospects of these families, most of whom are so poor as to be eligible for the Temporary Assistance for Needy Families Program.

A total of 150 families — some at DC General and some in the hotels — have been deemed suitable candidates for rapid re-housing. But DHS can’t find apartments for them — and they apparently can’t find apartments for themselves either — because the rent’s too damn high.

That, at any rate, seems to be the main problem. We should also, however, factor in landlords’ understandable reluctance to rent to families with spotty credit records — a reflection of the financial problems that made them homeless to begin with — and with no assurance that DHS will pay any part of the rent after the first four months.

You’d think that DHS would have foreseen at least the rental cost problem. It’s not as if rents suddenly spiked in the last year or so. Units affordable for low-income households have been vanishing for a long time.

Yet the agency initially figured it could move a large number of homeless families into housing swiftly if it only had the authority to coerce them into accepting whatever unit it identified. Or so one infers from the largely abortive effort to amend the Homeless Services Reform Act.

In this respect, it’s refreshing that Berns now acknowledges an inherent problem in the program itself — one closely related to the problems that have driven so many families to seek help from his agency.

He understands that it would be irresponsible to place them in apartments costing thousands of dollars a month — even if, as he’s now suggesting, the rent might be subsidized for as long as two years.

Sooner or later, they’d have to pay that rent — relatively soon, no matter what. How would the mother Wiener interviewed manage that when she and her children now rely on TANF benefits?

In the meantime, how will she find the multi-bedroom apartment they need — let alone one that isn’t in poor shape and an unsafe neighborhood, as another interviewee says units she was offered were — when DHS caseworkers have decided that $1,400-$1,600 a month is too high?

Not an unreasonable decision. An apartment at the low end of this range would be affordable only if she had an income of about $4,667 a month. This is more than three times what she’d earn as a full-time minimum-wage worker.

So you see what DHS is up against.

Berns nevertheless stands by his program. Wiener reports (no direct quote, alas) that he termed “indefinite subsidies … unsustainable.” The reference here presumably is to housing assistance families may have for as long as they’re income-eligible.

But, for Berns, it’s not just a budgetary issue. The short-term vouchers “keep that sense of urgency,” he says. In other words, parents will get off their proverbials and find jobs that pay enough to cover the rent if they know their families will otherwise become homeless again.

Ah, yes. The efficacy of time limits, which have done such wonders for poor families since TANF replaced an indefinite-term cash benefit.

There surely is a sense of urgency among the parents in hotel rooms — and at DC General, as we know from a hearing Councilmember Jim Graham held there in March.

Enough are apparently willing to risk the imminent end of a housing subsidy to have created such a big backlog that DHS has closed its rapid re-housing waiting list.

Now we’re only a month away from the official opening of the winter season. When freezing cold weather kicks in again, DHS will have to shelter families who’d otherwise be exposed to the elements.

It’s already got so many in the low-cost hotels it uses that Berns worries there won’t be enough additional rooms there. He reportedly thinks he may have to put newly-homeless families up in hotels outside the District.

An allusion, presumably his, to the extra cost. Much greater costs to the families, who’d be far from their networks, any job training or other programs they’re enrolled in, their kids’ schools, etc.

“D.C. has failed to adapt its rapid rehousing program to the realities of an expensive housing market and a highly competitive population of renters,” Amber Harding at the Washington Legal Clinic for the Homeless says.

Hard to argue with that. Harder for me to see a rapid solution to the District’s homeless family crisis.


DC Rents Way Out of Reach for Low-Income Households

March 20, 2013

We’ll learn next week what Mayor Gray plans to do about the affordable housing shortage in the District of Columbia.

We know he’s promised a one-time $100 million investment, but we’ll need his budget proposals to learn where the money would go — and if that’s all he’ll commit to.

The latest annual rental housing (un)affordability report from the National Low Income Housing Coalition provides a useful set of figures indicating needs in the District, as well as in each state and the nation as a whole.

If they don’t create a sense of urgency, I don’t know what will.

As I explained last year, NLIHC uses several set of figures — most of them drawn from federal sources — to arrive at what it calls a housing wage. This is the amount a renter would have to earn to afford a modest two-bedroom apartment, plus basic utilities in each jurisdiction.

The cost of the apartment is the U.S. Housing and Urban Development’s fair market rent estimate. The standard for affordability is the usual 30% of gross income.

NLIHC also does some calculations based on the applicable minimum wage — $8.25 in the District — and the average wage of renters in each jurisdiction.

Not surprisingly, the two-bedroom apartment is way out of reach for low-wage workers in the District — considerably further out of reach than for low-wage workers nationwide.

The same is apparently true for many other D.C. renters, since their average wage falls shorter as well.

Here first are the big picture numbers.

  • A household would have to have earnings totaling $4,707 a month — $56,480 a year — to afford the two-bedroom apartment in the District.
  • Assuming full-time, year round work, this translates into a housing wage of $27.15 an hour — a higher housing wage than for any state except Hawaii, though somewhat lower than for any of the top 10 metro areas, according to dcist .
  • The average renter wage here is $102 less per month than what would make the apartment affordable — an annual shortfall of $1,224.

And now the truly bad news figures for low-income District residents.

  • The two-bedroom apartment costs $607 a month more than would be affordable for an extremely low-income household, i.e., one whose income is at or below 30% of the median for the area.*
  • The apartment costs $983 a month more than a full-time minimum wage worker can afford.
  • So s/he would have to work 132 hours a week, every week to afford it — or live with three other full-time minimum wage workers and another working part-time.
  • This is 28 hours a week more than what NLIHC calculates for minimum wage workers nationwide, though it uses the lower federal minimum for them.
  • For residents who depend on Supplemental Security Income, the apartment costs a mind-blowing $1,199 more than would be affordable.

The story in the District is in many ways like the story NLIHC tells for the nation as a whole. The number of renter households has increased. Vacant apartments are scarce, creating the usual supply-demand pressure on costs.

But the supply side is also affected by the upscaling of once-affordable rental housing — and the fact that most new construction is also for fairly well-off households that, at least for now, prefer renting to owning.

This is how the free market works. It’s why we need public investments to create and preserve housing that’s affordable for low-income households.

And why we need vouchers that will enable others to live in market-rate units without spending more than half their income for rent, as nearly two-thirds of extremely low-income households in the District do.

The District has the revenues to make living in this high-cost city affordable for residents who haven’t shared in the prosperity those revenues indicate — that’s in fact made rents even less affordable for them.

It will have to choose to make ongoing commitments — and to target a very significant portion to its lowest-income residents who are homeless now or at high risk because they really can’t afford the rent they’re paying.

The Mayor says he’s worried that his One City will become “a city of only ‘haves’.” Let’s see what he does to make it more genuinely “inclusive” of the have-nots.

* According to the estimate NLIHC uses, this would be a maximum of $32,190.


DC Fails Homelessness Test

May 2, 2012

Speak for We blogger Michael Dahl recaps a bit of his experience as a long-time advocate for better homelessness and affordable housing policies in Minnesota.

Over the years, he says, homelessness advocates have given top priority to diverse strategies — prevention, supportive housing, rapid re-housing, etc.

He sees a consistent thread in three elements. They aren’t actually common elements in the strategies, however. They’re questions that policymakers and other stakeholders should ask when they decide what their community needs by way of a homelessness system.

They’re painfully apt here in the District of Columbia as the DC Council considers the Mayor’s proposed Fiscal Year 2013 budget.

So here they are (with some minor edits):

  • Do we have enough affordable housing?
  • Do we have jobs in the community that pay for housing here?
  • Do the supports that we rely on when we fall on hard times, e.g., a job loss, poor health, work for our lowest income residents?

These components, Dahl says, “provide stability and a pretty sturdy safety net.” If they’re all in place, the number of homeless people will be small, and the time they spend homeless will usually be short.

If they’re not in place, then “you need a homeless system to pick up the slack.”

Well, the District surely doesn’t have enough affordable housing.

The DC Fiscal Policy Institute took a close look at the situation two years ago. It found that the market had lost 23,700 low-cost rental units between 2000 and 2007 — more than a third of the stock.

Two in every five households were spending more for housing than they could afford, based on the standard 30% of income. Nearly three in five of poor and near-poor households paid at least half their income for a roof over their heads.

We’ve good reasons to believe that the situation has gotten worse. Rental costs have risen. More affordable units have been converted to upscale rentals or condos. More may have fallen into such disrepair as to be uninhabitable — victims of a combination of forces, including the recession.

The Housing Production Trust Fund — the District’s main tool for supporting affordable housing development and preservation — suffered losses when property sales slowed and prices dropped.

Then the Fund was raided to shore up the Local Rent Supplement Program — the District’s locally-funded voucher program. And now the Mayor proposes another raid, leaving the Fund with enough to support only 170 new units next year.

This second fund shift to LRSP would cover the projected costs of all existing vouchers, but no additional vouchers for people who are homeless — or may become homeless in months to come.

Whether the District will be able to renew all federally-funded vouchers is anybody’s guess.

The District does have jobs that pay for local housing, but not nearly all residents have them.

The local unemployment rate seems stuck at 9.8% — and that’s only residents who are actively looking for work. The latest rates for Wards 7 and 8 are 16.3% and 24.3%.

The average income of the poorest fifth of D.C. households was just $9,100 in 2010 — about $4,770 less than the annual rental cost of a modest efficiency unit then.

Even if the District prepares more residents for living wage jobs — and cracks down on enforcement of its living wage law — housing will remain unaffordable for a substantial number of workers.

At the current living wage rate, they’d have to pay more than half their income for rent on that efficiency, assuming they work full-time, year round.

Our safety net is far from sturdy for our lowest income residents.

They can get health care through Medicaid or the DC HealthCare Alliance, though those in the latter might lose essential services if the Council goes along with the Mayor’s savings plan.

Unemployment benefits are available for some, though far from all residents who lose their jobs. But they’ll be cut off sooner due to changes in federal law.

For families with children, we have the Temporary Assistance for Needy Families Program. But cash benefits are way too low to cover the cost of unsubsidized housing. The maximum cash benefit for a family of three — currently $428 a month — is less than 37% of what the efficiency unit costs.

This is true, however, only for a family that’s been in the program for less than 60 months. For a family that’s been in longer, the benefit is only $257 a month. And the Mayor’s proposed budget would reinstate further cuts that the Council wisely deferred last year.

So it would seem that we truly do need a robust homeless services program. Under the Mayor’s budget, it would have $7 million less than last year.

And it already lacks funds to provide homeless families with shelter or other housing now that the winter season is officially over.

In short, the District fails Dahl’s test on both counts. Not enough stability or safety net support. Not enough in homeless services to pick up the slack either.


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