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.