Foreclosures Drive Rental Scarcity

The National Low Income Housing Coalition (NLIHC) is sounding a warning on rising jobless rates as a deflating housing bubble may be pushing many homeowners out of “previously affordable homes” and into a recently competitive rental market where pickings are slim and increasingly unaffordable. The NLIHC bases this claim on the fact that the average median hourly wage for U.S. workers, $16.03, falls short of the $17.84 hourly “housing wage” needed by full-time workers to afford standard two-bedroom rental housing at the nation’s average fair market rent (FMR), according to the coalition’s newly released annual “Out of Reach” report. Households with wages near the federal minimum wage of $6.55 per hour must work a combined 109 weekly hours to afford the national FMR. On a localized level, in no U.S. county can a full-time minimum wage worker afford a one-bedroom apartment at the local FMR, according to the report. “The statistics in Out of Reach show the disconnect between what it costs to afford decent rental housing in the U.S. and what low-wage employment actually pays,” researchers wrote in a press statement on the report, “with more families turning to the rental market and job losses numbering in the millions, the struggle to find affordable housing has become even more acute.” The volume of renting households expanded by 2.2m during the last two years, while the volume of home owning households contracted. The unemployment rate jumped to 8.1% during the last 12 months from 4.8%, and holds at 12.6% for the segment of the population without a high school degree, according to the report. An estimated 70% of renting households with “extremely low income” spent more than half of their income on rent, even before the current crisis. This segment of the population faces a shortage of 2.8m affordable units, with only 38 affordable units available for every 100 households before the start of the crisis, the report found. As of the current crisis, 40% of foreclosures displace renting households, increasing the pressure on available units. “The unemployment and foreclosure crisis have only exacerbated the difficulties that low income households have historically encountered in their search for decent, affordable rental housing,” NLIHC researchers said in the report. Read the report. Write to Diana Golobay at diana.golobay@housingwire.com.