Affordability Not Improving For Renters Nationwide

Jeffrey Myers can’t make the rent – by himself. He works part-time at UPS and as a freelance photographer, but the $2,200 he pulls in a month isn’t enough to afford an apartment in Orange County, Calif., without a roommate.

“It’s hard to meet people who live by themselves. Most people have roommates,” said Myers, 31.

For homebuyers, affordability is the best it’s been for decades, but for millions of renters, coast-to-coast affordability is still getting worse, according to a study released Tuesday.

As the recession forces more Americans out of work, working-class tenants are bearing the brunt of the cuts. Record foreclosures, at the same time, mean more people are competing for low-cost rentals. And rents in many expensive cities still haven’t budged because so few apartments were built in recent years.

A renter earning the nation’s minimum wage of $6.55 could not afford a one-bedroom apartment in any county in the nation.

“It’s a very dire situation,” said Dean Baker, co-director for the Center for Economic and Policy Research. “And it’s likely to get worse in the two years ahead,” as unemployment climbs and businesses cut worker hours and pay.

A renter needs to earn $17.84 an hour to cover the monthly rent on the average $928 two-bedroom apartment, if they don’t want to spend more than 30 percent of their income on housing. But the median hourly wage for an American renter is $14.69, more than $3 short of what’s needed, according to the study by the National Low Income Housing Coalition.

“So what’s going to happen is a lot, unfortunately, will be out on the streets,” said Edward Wolff, an economist at New York University.

The lowest-income renters stand to get hit hardest. The unemployment rate is at a 25-year high of 8.5 percent, but that percentage was even higher – 12.6 percent – for those without a high school degree. Some of the worst layoffs have come from industries that employ low-income workers like construction, retail and manufacturing.

Families displaced by foreclosures are also flooding the apartment market, increasing competition for affordable rentals.

“It’s likely they’re income-constrained or don’t have credit or savings” for costlier apartments, said Rachel Drew, a research analyst at Harvard University’s Joint Center for Housing Studies.

And while rents are falling in some individual markets, many cities are showing little signs of softness because demand for apartments remains high. Renters in Seattle, Los Angeles, San Francisco and Portland, Ore., all traditionally strong markets, won’t see many rent cuts.

Even renters in beleaguered apartment markets like Phoenix, Atlanta, Las Vegas and Florida likely won’t enjoy the deals in their areas because the local economies are reeling.

“Even when rents are dipping slightly, it’s because more people are out of work,” in that area, Baker said. “Affordability only improves when wages increase in proportion with rent.”

The most expensive metropolitan area, according to the report, is Stamford, Conn. A renter must earn $32.75 an hour to afford a two-bedroom apartment there. San Francisco ranked second at $31.88 per hour, followed by Honolulu at $31.37, Westchester County, N.Y., at $30.96 and Santa Cruz, Calif., at $30.58 per hour.

Florida Association of Realtors