NLIHC Report: Rental Homes Remain Out of Reach

The gap between income and rent continues to widen, and “high unemployment, falling wages, and low rental vacancy rates driven by a post-recession return to renting have combined to put housing stability beyond the grasp of low income households across the country,” according to a new report issue by the National Low Income Housing Coalition.

NLIHC released Out of Reach 2011 yesterday as part of its Out of Reach reports, an annual series launched in 1999 that calculates the amount a person working full-time must earn to afford the Fair Market Rent (FMR) on a two-bedroom unit, otherwise known as the Housing Wage.

This year, while foreclosure crisis-related attention has often focused on the unemployed, Out of Reach places an emphasis on the effect of the housing crisis on low-income people. According to the report, a household must earn $38,400/year to afford the national two-bedroom FMR of $960/month. Widening the availability of affordable units and creating overall housing stability for low-income Americans, “won’t be accomplished without dramatic increase in housing stock that’s affordable for people in those income groups,” said NLIHC President and CEO Sheila Crowley, yesterday on a press call that also included Raphael Bostic, HUD assistant secretary for Policy Development & Research.

Bostic pointed to HUD’s Worst Case Housing Needs 2009, released earlier this year, that shows that the 20 percent increase in worst-case housing over the last two years represents the largest two-year increase in history. “Worst case housing” is defined as “as very low-income renters with incomes below 50 percent of the Area Median
Income who do not receive government housing assistance and who either paid more than one-half of their income for rent or lived in severely inadequate conditions, or who faced both of these challenges.”

NLIHC’s Out of Reach reports that the estimated average wage for renters in the United States is $13.52 — 92 cents down from the 2010 average of $14.44, and $1.17 down from the 2009 average. The report goes on to note that at the federal minimum wage of $7.25, a household would have to work 102 hours each week to afford the nation’s average FMR for a two-bedroom home.

NLIHC offers up data for every state, metropolitan area, and county in the country. For example, in New Jersey, with a “housing wage” of $24.54, an average renter earning $15.82 per hour would have to earn $8.72 more per hour to afford a modest unit or work 62 hours per week, 52 weeks per year. According to NLIHC data, roughly 61 percent of New Jersey renters do not earn enough to afford a two-bedroom unit at FMR.

New Jersey has the fourth-highest FMR in the nation, behind Hawaii, California, and Maryland.

Out of Reach 2011 provides highly useful material for communities, local governments, and organizations. It also provides data that can be used to place pressure on state and local legislators to encourage more equitable wages and to promote the availability of safe, decent, affordable housing that is priced in line with what renters earn.

For more information and for data in other parts of the country, visit http://www.nlihc.org/oor/oor2011/

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