Magazine article Mortgage Banking

Wage/rent Gap Widens despite Housing Glut

Magazine article Mortgage Banking

Wage/rent Gap Widens despite Housing Glut

Article excerpt

Rents continued to rise over the past 10 years despite increased housing supply and higher vacancy rates, according to the National Low Income Housing Coalition (NLIHC), Washington, D.C.

NLIHC's Out of Reach 2010 report said "housing wages" increased 45 percent in the past 10 years on a national basis, up to $18.44 this year from $17.84 last year. Housing wage means a renter household needs one full-time job paying a certain amount per hour in order to afford a two-bedroom rental unit at the fair market rent, calculated by the Department of Housing and Urban Development (HUD) to be $959 in 2010.

"'Housing wages' is a new way to talk about the cost of housing, but if we really want to understand some of the affordability problems in different communities we have to look at the prevailing wages in the communities and compare them to the local housing costs," said Megan DeCrappeo, NLIHC research analyst and principal author of Out of Reach.

DeCrappeo said nearly three-quarters of metropolitan renters do not make enough money for rent, even with two full-time jobs at minimum wage.

Stamford, Connecticut; San Francisco; Honolulu; Santa Cruz, California; and Westchester County, New York, ranked as the top five most-expensive markets based on NLIHC's housing wage statistic. Stamford's housing wage was at $34.62. Meanwhile, 10 states had housing wages above $20.

NLIHC's policies include additional funds for production and preservation of affordable rental housing through the National Housing Trust Fund; HUD 202 senior housing program reform to stabilize and expand affordable-housing stock and customize rents for low-income people to afford housing with 2 million vouchers within the next two years; and preservation of existing affordable-housing stock.

"Rents continue to go up despite the fact we have a lot of excess housing on the market, but we don't have it available to people with low income," said Sheila Crowley, president of NLIHC.

Dean Baker, co-director of the Center for Economic and Policy Research (CEPR), Washington, D.C, said the wage-to-rent ratio during this downturn is going from bad to worse. Nearly 13 percent of housing remains vacant, which could be used as affordable housing if "we had housing policies in that direction," said Baker.

"We have the housing, we have the labor, we have the workers who can make affordable housing," Baker said. …

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