PAWTUCKET — As local apartment dwellers know all too well, the cost of renting these days is not in synch with the current job market, average wages and unemployment rate. According to a report released last week from the Low Income Housing Coalition, Rhode Island has the 17th highest rental costs in the U.S., which means that many renters, particularly those at the low end of the earning spectrum, are having difficulty finding affordable apartments.
According to the report, titled “Out of Reach,” Rhode Island's fair market rate for a two-bedroom apartment in fiscal year 2013 is $945. To afford this rent and utilities (according to a generally accepted standard of spending not more than 30 percent of income on housing), a worker would have to earn $18.18 an hour or $37,813 per year.
Yet, in Rhode Island, the average wage for a renter is estimated to be $12.10 per hour. Therefore, a worker earning the local minimum wage of $7.75 per hour (an increase from $7.40 in 2012) would have to work 94 hours a week, 52 weeks per year (or the household must include 2.3 minimum wage earners working 40 hours a week year-round) to afford that $945 rent, according to the Rhode Island Coalition for the Homeless. To put it another way, the monthly rent considered to be “affordable” at that wage should be $629.
According to the “Out of Reach” report, the rental housing market is booming, with renters making up 35 percent of all households nationwide in 2011. In a single year (2011) the number of renter households rose by one million, representing the single largest one-year increase since the early 1980s.
With demand for rental apartments accelerating, the national rental vacancy rate fell from 8 percent to 4.5 percent by the third quarter of 2012. Two-thirds of all large metro areas are experiencing a tight rental market, while at the same time, landlords also began to increase rents in 2012, raising prices an average of 3.8 percent from 2011.
The report found that in no state in the U.S. can a minimum wage worker afford a two-bedroom unit at fair market rents, working a standard 40-hour work week. Finding a decent, affordable apartment is a challenge for all renters, but the poorest households are the most likely to be locked out of the market entirely. For every 100 extremely low income renter households, there are just 30 affordable and available units. Only a sliver of the rental market remains affordable and available to the lowest income households, according to the report.
The report also states that the level of investment in new affordable housing units today is insufficient to meet the demand. Although nearly a third (29 percent) of renter households live below poverty, and a quarter of renters have extremely low incomes, most newly constructed units are for high income households, while older units are being swiftly upgraded to serve a higher income market.
The Out of Reach reached three key conclusions: extremely low income households continue to have the greatest housing need, stagnant wages remain insufficient to cover rents, and affordability is a national concern.
A snapshot of current two-bedroom apartments that are available on current on-line rental listings basically support the report's findings. A two-bedroom, 900-sq. ft. apartment in a multi-family at 26 Pine St. is listed at $800 a month, a two-bedroom 1,000 sq. ft. unit on Brook Court is $950 a month, a two-bedroom unit in a multi-family at 26 Pullen Avenue is $800 a month, a two-bedroom in a multi-family at 286 Glenwood Ave. is $850 a month, and a two-bedroom, 780 sq. ft. in an older two-family at 3 Broadway was $750 a month.
More modern or newly renovated apartments cost more, as listings show a two-bedroom, 992 sq. ft. unit at Blackstone Landing at 300 Front St. for $1,250 a month, two-bedroom units at the Blackstone Apartments at 331 Prospect St. going for $995-$1,020 a month and two-bedroom units at Slater Cotton Mill at 75 S. Union St. listed at $1,355-$1,450.
Local realtors such as Jerry Lupian see firsthand how people are struggling to pay their rents, particularly single parents and those who have lost full-time work and are resorting to part-time, low wage jobs. He said he sees a segment of workers in the 58 to early 60s age bracket who seem to be really having a difficult time making ends meet, having lost full-time employment but being too young to retire. “There are a lot of sad stories out there..people who are spending through their savings just to sustain the cost of their apartment,” he said.
Yet, Lupian also said that landlords have had to cope with the rising costs of water and sewer charges, fuel and insurance, and balance this with the current job market. He maintains that local rental prices have not risen as much as they could have, given the landlords' expenses.
Jim Ryczek, Executive Director for the Rhode Island Coalition for the Homeless stated, “This report verifies what we are seeing day to day here in our state, that more and more Rhode Island families struggle to remain in their home or find an adequate, safe and affordable place to live.” He said the Out of Reach report “reminds us why the state programs that support affordable housing and homeless prvention are so critical. Now, more than ever, we need out elected officials to act boldly to prevent more Rhode Island residents from slipping into homelessness.”
Ryczek further noted that the report highlights the need for policymakers to invest in strategies that will ensure a long-term supply of affordable housing in Rhode island. This year at the State House, affordable housing advocates are promoting companion pieces of legislation, H-5554 and S-494, that will provide $3.25 million for homeless prevention and affordable housing through rental vouchers.
Chris Hannifan, executive director of the Housing Network, the state's association of Community Development Corporations, also voiced support for this legislative effort. “Housing is the cornerstone to our state's economic growth and investing in affordable housing production will keep our state on the path to economic recovery,” she stated. “The Housing Network, and its 20 affordable housing developers, look forward to working with the General Assembly to make sure the pieces of the affordable housing puzzle are in place and fully funded.”
Locally, Nancy Whit, executive director of the Pawtucket Citizens Development Corporation (PCDC), is also keenly aware of the growing gap between incomes and rents. She noted that PCDC develops rental housing for households making between 50 to 60 percent of the median income. Its two-bedroom apartments typically rent from $700 to $750 per month without any utilities included. This compares to the average two bedroom rental in Pawtucket which (according to 2011 data from HousingWorks RI), rented for $990 per month.
Whit also said that a small percentage of the PCDC rental units are eligible for an operating subsidy called the Neighborhood Opportunities Program (NOP) which enables households making 30 percent or less of the median income to pay only 30 percent of their gross income for rent and utilities. PCDC receives assistance from the Rhode Island Housing Resource Commission to pay the operating expenses of a property with NOP units. She added that PCDC currently has over 250 applications for their rental housing and many of these are from households with incomes at or below 30 percent of median income.
Seeing the extreme end of the unaffordability spectrum are the folks at ACCESS-RI, a statewide program of the Mental health Association of Rhode Island designed to serve people experiencing chronic homelessness who have a diagnosis of mental illness and/or substance abuse.
Sheryl Marshall, program director for ACCESS-RI, also spoke to the difficulty of the state's unemployment rate being so high along with its housing costs so that “it just doesn't mix.” She noted that for many of her clients, even when they find a job, or receive Social Security benefits, it's difficult to locate even a one-bedroom apartment for $500 to $600 a month, and then they have little left over to live on—perhaps $100--after paying for utilities. She said this is what drives people to homeless shelters.
Marshall finds that with single parents, most have difficulty finding a one-bedroom apartment they can afford with their income situation, never mind a two-bedroom. “The subsidized housing lists are years long,” she stated. “And in the shelters, we have people who are capable of leaving except that they can't find housing that's affordable.”
Marshall also noted the importance of the legislative bills that have been proposed in the General Assembly, the one that would create a rental voucher system and the other, S-412 known as the “Just Cause” bill that would enable tenants who have paid their rent all along to keep living in properties that have been foreclosed on.