Prices are down, but so is affordability
The report card on affordable housing is in. Affordable housing has failed in 2011. As you go about your celebrations this December, consider that a full time income is not enough to rent a two-bedroom apartment for many people. For some, one full time job does not cover a median-priced one-bedroom apartment.
Researchers at the Center for Housing Policy took a look at this question: have falling home prices brought housing within reach of the retail workers who are critical to the success of the gift-giving supply chain?
Nationally, the answer is “no.”
“Despite years of falling home prices, many of the workers most visible during the holiday season are unable to afford a place of their own,” said Center researcher and report co-author Laura Williams. “And the problem is not limited to homeownership. In many cities, rentals are also beyond the reach of workers in the jobs we examined.”
None of the 210 metro areas studied in Paycheck to Paycheck offered a fair-market rent on a two-bedroom apartment affordable on a retail salesperson’s salary, and in only 2 out of 210 markets could a janitor afford the mortgage on a median-priced home. In the most expensive markets covered, even relatively high-earning mail carriers could not afford the typical rent on a two-bedroom apartment.
In the Boston area it is even worse. Cambridge and Boston both appear in the top fifteen most expensive purchase markets. They are tied for sixteenth place on the rental list.
Elementary school teachers, police officers, and nurses join janitors in not being able to buy a house here. Nurses can’t afford to rent a median two-bedroom apartment on their salary alone. You can look up some other occupations here.
The picture is bleak when the income needed to rent a two-bedroom apartment is almost $54,000 a year. No wonder so many young people are packing in with their parents until they can get ahead a bit.
Key Findings
• Of the five retail-season jobs highlighted in the report—delivery truck drivers, mail carriers, retail salespeople, retail assistant managers and stock clerks—only mail carriers earn enough on average to afford mortgage payments at typical prices nationwide, and only mail carriers and retail assistant managers can afford typical rents on a two-bedroom apartment. However, even a mail carrier’s salary will not cover rent on a typical two-bedroom apartment or the mortgage payment on a median home in the most expensive housing markets.
• For nearly half of the metro areas studied, the income needed to buy a median-priced home dropped by at least three percent, due to a combination of lower home prices and falling mortgage interest rates. However, many workers face additional obstacles to ownership, including access to credit and saving for a down payment. Other workers might prefer renting for reasons as varied as concerns about home price volatility, uncertainty about affording the costs of major repairs, or a desire for mobility to access job opportunities elsewhere.
• Many markets run counter to the trend of homeownership becoming less expensive. In 24 percent of the metro areas studied a median-priced home became more expensive for buyers between the 3rd quarter of 2011 and the 4th quarter of 2009.
• Over the past year, fair market rents rose just slightly, on average. Among the markets studied, the fair market rent for a two-bedroom apartment rose by a median of 1.1 percent, and very few areas had rents either increase or decrease by more than 5 percent. With rent increases generally being moderate, housing affordability changes for renters tend to reflect changes in income rather than in housing costs.
Affordable housing continues to be a central economic problem for people who are fully employed, not just people who are underemployed or unemployed. Count it as one of this year’s disappointments. Prices are coming down, but not enough to make a dent in this problem.
