NLIHC: Cost of Affordable Rental Housing Rises Again

(To read more on the multifamily market, click here.)

WASHINGTON, DC—For the eighth year in a row, the National Low Income Housing Coalition has found that the cost of affordable rental housing has risen, outpacing even further the earnings of low income residents. The metric NLIHC uses – the hourly wage a full time worker must earn to rent a two-bedroom home — rose to $16.31 this year, up from $15.78 in 2005.

“There is a disconnect in the housing markets between what low income earners typically make and what housing costs are,” NLIHC President Sheila Crowley told listeners on a conference call. Increasing the federal minimum wage will help, she said, but it is not enough. Policy prescriptions supported by NLIHC and Congressman Barney Frank (D-MA), the incoming Chair of the House Financial Services Committee, include the establishment of a National Housing Trust Fund, to be funded in part with a portion of the profits from Fannie Mae and Freddie Mac, as well as other measures. “The biggest single difference (in the changeover in Congressional leadership) will be in the housing sector,” Frank told conference call listeners.

According to NLIHC data the median hourly wage for workers is $14; the estimated average renter earns $12.64. Even if the federal minimum wage, currently $5.15, is raised it will likely still fall short of the current housing wage of $16.31. Crowley said data was adjusted for those states that have raised the minimum wage and even in those scenarios it is difficult for minimum wage earners to find affordable housing. In some high growth markets, she said, even families with duel incomes find it difficult.

The most expensive jurisdictions, according to a NLIHC report, are Stamford-Norwalk, CT, with a housing wage for a two bedroom fair market rate house of $30.62; San Francisco and surrounding areas at $29.83; Orange County, CA at $28.56; Oxnard-Thousand Oaks-Ventura, CA at $28.29; Westchester County, NY at $26.83; Boston-Cambridge-Quincy area in Massachusetts and New Hampshire at $26.27; Santa Cruz-Watsonville, CA at $26.13; Nassau-Suffolk, NY at $26.08; Easton-Raynham, MA at $25.94; and Washington-Arlington-Alexandria, in the DC area at $24.73.

Frank told listeners that one of the first moves his committee will make is to divert some of the profits from Fannie Mae and Freddie Mac into affordable housing. The first year, he said, all of this funding will go to the Gulf Coast area, where a severe affordable housing shortage still exists in the wake of Hurricanes Katrina, Rita and Wilma last year.

Frank scoffed at the suggestion that lobbying efforts on behalf of the agencies might derail these plans. “Freddie Mac and Fannie Mae have accepted the fact that we will do this.” It’s the lesser to two evils to them, he said, given the numerous suggestions made during the previous Congressional administration that they should be downsized. “We will get this in place by the first half of next year,” he said.

Another low income affordable housing measure Frank is advocating is the streamlining of the Low Income Tax Credit program so it works better with other federal assistance programs. He added that he wants to continue to support the Section 8 voucher program. “We also want to encourage supply as well.”

Streamlining the Low Income Tax Credit could take place by next Spring, he predicted. Beyond that any further Congressional measures to bolster affordable housing programs will have to wait for the next federal fiscal year, which starts in October 2007.