Report Shows Severe Shortages in Rental Housing for Lowest Income Americans
The National Low Income Housing Coalition (NLIHC) just released its annual report on housing availability in every jurisdiction in the United States — “Out of Reach: 2010.” The online report includes an interactive tool kit which allows the user to configure side-by-side comparisons of wages and rents by county, metropolitan area, state and any combination of the above. For each jurisdiction, the report calculates the amount of money a household must earn in order to afford a rental unit in a range of sizes at the area’s Fair Market Rent (FMR), based on the generally accepted affordability standard of paying no more than 30% of income for housing costs.
Extremely Low Income (ELI) renter households (those earning 30% or less of their area’s median family income) continue to be the primary income group facing an absolute shortage of affordable housing units with only 6.1 million units affordable to 9.2 million people, with many paying more than half their income in rent.
State-Level Findings on Wages and Rents
- In no state can an individual working full-time at the minimum wage afford a two-bedroom apartment for his or her family. With the exception of parts of Puerto Rico, there is no county in the U.S. where a one-bedroom unit at the FMR is affordable to someone working full-time at the minimum wage.
- In 28 states (including DC), more than two full-time minimum wage jobs are required to afford the two bedroom FMR.
- In 20 states, a household must work at least 50 hours at the average renter wage to afford the two bedroom FMR.
- In 29 states, an ELI household cannot afford to spend more than $500 per month on rent and utilities.
- In 16 states, the FMR for a studio apartment exceeds the entire monthly SSI payment.
- In 13 states, a household must work at least two full-time jobs at the minimum wage to afford the two bedroom FMR.
“Lending Disparities by Congressional District,” a new study by Maurice Jourdain-Earl, commissioned by the National Community Reinvestment Coalition, shows that Blacks and Hispanics have a higher incidence of subprime rate loans not explained by underwriting criteria.
Foreclosure in the Nation’s Capital: How Unfair and Reckless Lending Undermines Home Ownership (from the National Community Reinvestment Coalition, April 2010)
Subprime lending and subsequent resulting foreclosures were led by the private market and contained a clear racial component not explained by objective underwriting criteria.
- Even controlling for other factors, Latinos were 70 percent more likely and African Americans 80 percent more likely than their white counterparts to receive a subprime loan. This finding suggests that race, in and of itself, alters the likelihood of receiving a subprime loan.
- African Americans were almost 20 percent more likely and Latinos were 90 percent more likely than their similarly situated white counterparts to go into foreclosure even after controlling for borrower, loan, and neighborhood characteristics.
- Loans purchased by the Government Sponsored Enterprises (GSEs) are going into foreclosure at roughly half the rate of both portfolio loans and privately securitized loans. This suggests that the standards imposed by the GSEs have encouraged the origination of safe and sustainable loans.
- Loan characteristics, especially payment-to-income ratios, adjustable rates, high-costs (subprime) and balloon payments were found to have a significant effect on loan performance. The study breaks down the influence of each of these factors in a regression model.