The National Low Income Housing Coalition released its annual Out of Reach report on March 13.
Out of Reach 2012: America’s Forgotten Housing Crisis finds that low and moderate income renters do not earn enough in wages to cover the cost of a decent apartment. This year, a household needs to earn at least $37,960 to afford a two-bedroom unit at Fair Market Rent (FMR). This translates into an hourly Housing Wage of $18.25. The Housing Wage is the hourly wage one must earn, working a standard 40 hours a week, in order to afford a decent two-bedroom apartment at the FMR while spending no more than 30% of income on housing costs.
Unfortunately, renters continue to earn far less than the Housing Wage. According to Out of Reach, renters are earning just $14.15 an hour, on average, nationwide. This means that the two-bedroom Housing Wage exceeds the wage of renters by over four dollars. The wage a renter must earn to afford a one-bedroom unit ($15.33) also exceeds the national renter wage this year. Overall, more rental units are needed to meet the growing demand for affordable housing spurred by increasing numbers of renter households.
Extremely low income (ELI) households and minimum wage workers face the most acute housing affordability crisis. ELI households, with incomes of 30% of the area median income (AMI) or less, compose one out of every four renter households in our country. And ELI renter households can afford to spend no more than $505 on rent, on average, nationwide. This falls significantly short of both the national two-bedroom FMR ($949) and one-bedroom FMR ($797).
Minimum wage households, earning just $7.25 an hour in many parts of the country, can only afford $377 a month in rent. At minimum wage, a worker must work 2.5 jobs, or 101 hours a week, to afford the fair market rent on a two-bedroom unit. There are no counties in the United States where a minimum wage earner can afford the two-bedroom FMR.
The report was released in a press conference that featured NLIHC President and CEO Sheila Crowley, NLIHC Senior Research Analyst Megan Bolton and HUD Assistant Secretary for Policy Development and Research Raphael Bostic. In Ms. Bolton’s introduction of the report, she described a tightening rental market, with rapid renter household growth leading to sharply increasing rents. These trends are contributing to deteriorating circumstances for low income renters, who increasingly face a severe housing cost burden and a decreasing supply of affordable and available housing.
Mr. Bostic noted that the current housing stock should be repurposed to better serve the needs of renter households in need of affordable units. Mr. Bostic also highlighted the value of Out of Reach as a report used for local advocacy efforts. Out of Reach data cover the entire country, and provide local advocates with a tool to describe the need for affordable housing in their area.
Ms. Crowley, in her closing comments, noted that affordable housing resources should be better targeted to serve the populations most in need, namely the extremely low income households that earn far below the wages necessary to afford housing across the United States. The National Housing Trust Fund was cited as one mechanism that would target resources directly at extremely low income renters that need housing the most.
Out of Reach 2012 can be found at: http://nlihc.org/oor/2012
To view the press release on the report, see: http://nlihc.org/press/releases/3-13-12