The gap between the cost of housing and the number of Americans able to afford it continues to grow every year. And, not surprisingly, the recession only made matters worse, according to an annual report released in March by the National Low Income Housing Coalition (NLIHC). According to the study, Out of Reach, one out of four renter households is now classified as extremely low income, but the supply of low-cost rental units is actually shrinking. And that’s as the number of hours that a minimum-wage worker, now earning $7.25 an hour, must work to afford an apartment at a fair market rent (FMR) skyrockets to unrealistic numbers.
Conditions are worse in certain markets, Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development (HUD), says in the report. “We all know the devastating effect this crisis has had on our most vulnerable families and communities,” he notes. “In rural areas and other places with high rates of unemployment, depressed incomes have widened the affordability gap. Conversely, regions with stronger economies are also feeling the pinch, as foreclosures throw more families into the rental market and drive up rates in communities that traditionally have less rental housing.”
That’s especially the case in states like Hawaii and Delaware. In Hawaii, the most expensive rental market in the country, a minimum-wage worker would have to work 175 hours a week, 52 weeks a year, to afford a two-bedroom apartment at the area’s FMR of $1,647. Furthermore, in Hawaii, the “housing wage” is now $31.68. The housing wage is defined by the NLIHC as the estimated full-time hourly wage a household would have to earn to afford a decent rental unit at HUD-estimated FMR while spending no more than 30 percent of its income on housing.
A similar situation exists in Delaware. Even though the cost of living in the First State is lower than in the Aloha State, Delaware is still experiencing a large affordability gap. In order to afford the FMR for a two-bedroom unit, minimum-wage workers in the state would have to work 103 hours a week, 52 weeks a year. That brings the housing wage in Delaware to $18.65, high enough to make the top 10 among the country’s costliest states for minimum-wage workers seeking rental housing.
“This perfect storm of growing need and rising costs is why it is more important than ever that we provide a supply of affordable rental homes at the scale that families require and in the places that need them,” Donovan asserts in the report, which is available at http://nlihc.org/oor/2012.