Rising Rents are Squeezing Low-and-Moderate Income Families

New Orleans   The National Low Income Housing Coalition released its 2017 annual report, “Out of Reach,” looking closely at the impact of rising rent throughout the country and how it is pushing lower income and working families into untenable situations because the gap between rent and wages is widening. Millions of families are joining the great poet Langston Hughes by living his haiku: “I wish the rent were heaven sent.”

The gut punch of the report is plain and simple:

The 2017 national Housing Wage is $21.21 per hour for a two-bedroom rental home, or more than 2.9 times higher than the federal minimum wage of $7.25 per hour. The 2017 Housing Wage for a one-bedroom rental home is $17.14, or 2.4 times higher than the federal minimum wage.

State by the state, county by county, the story of this growing crisis is stark. The gap is the largest in a bunch of overwhelmingly “blue” states, which may be one of the reasons Congressional representatives are not running up the aisles and going from desk to desk with a Paul Revere warning call to “Help, the Landlord is Coming!” Those states with the largest gap between wages and what it cost to rent the average two-bedroom house are led by Hawaii, then Maryland, California, New Jersey, Vermont, Connecticut, Massachusetts, Maine, New Hampshire, and then Washington, D.C. I don’t need to tell you that this is aggregate data because you were already scratching your head when you didn’t hear New York, so yes, thanks to lower average rents upstate that offset the New York City metro area, they didn’t make the ten.

Sure enough when you look at the data even states with relatively lower rent still find that urban metropolitan areas like New Orleans, Houston, Miami, Salt Lake City, Dallas, Seattle, San Antonio, Anchorage, Chicago and elsewhere would require a minimum wage worker to labor 80 hours a week to find a one-bedroom place where they could live. And, yes, the Coalition’s point is not that everyone is working 80 hours to do so, but that if they were able to swing a place that is what it would take. The cold, bitter truth on the ground is that they cannot, which leads to overcrowding, homelessness, and embracing rent-to-own predatory contracts or whatever is available until the eviction notice comes.

Even the states where the average wage required to rent a two-bedroom house is relatively low, it’s still astronomical in terms of a family budget. Want a two-bedroom in Arkansas, then you need to make $13.72 per hour, the lowest wage to rent ratio in the country. Neighboring states are a good comparison with Mississippi at $14.84, Louisiana at $16.16, and Texas at 18.38. The lowest wage required after Arkansas is Kentucky at $13.95. The problem is obvious though. Wages are pretty much stuck at $7.25 in those states and too many of the big whoops in these states are fighting to keep wages that way.

As the report makes clear, it’s not for lack of working or lack of looking. Other “key findings” include:

Six of the seven occupations projected to add the greatest number of jobs by 2024 provide a median wage that is not sufficient to afford a modest one-bedroom rental home.

An extremely low income (ELI) household whose income is less than the poverty level or 30% of their area’s median cannot afford the average cost of a modest one-bedroom rental home in any state.

In no state, metropolitan area, or county can a full-time minimum-wage worker afford a two-bedroom rental home. In only 12 counties can a full-time minimum-wage worker afford a modest one-bedroom rental home.

It’s easy to see where this is going: bad to worse to crisis. I’m seems like we’re already there.

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Government at all Levels Needs to Act on Contract Purchase Predators – Now!

New Orleans   Advocates and lawyers are firing more and more bullets at contract purchase predators and the Home Savers Campaign has raised the ante on its demands to Fannie Mae (FNMA) in yet more signs that the offensive against these real estate robber barons is gaining increased traction.

Another front has opened with the filing of a lawsuit by Fair Housing Center of Central Indiana at the end of May. They went after local operator Empire Holding Company and its subsidiary Rainbow Realty, that has acquired over 1000 dilapidated houses in the Indianapolis area and is marketing them as contract purchase rent-to-own properties. The owner admits that virtually all of them are uninhabitable. The Fair Housing Center argues that they are breaking a pile of laws, but also makes the claim that a huge percentage of these houses are in African-American areas and that the contract sales push is directed at these same populations in a discriminatory manner.

Sarah Mancini and Margot Saunders, both of the National Consumer Law Center, and experts in this area, make a similar case in looking at the metro Atlanta area in an article pointedly entitled, “Land Installment Contracts: The Newest Wave of Predatory Home Lending Threatening Communities of Color,” in a recent issue of Communities & Banking. They call attention to the work of the Atlanta Legal Aid, saying,

Atlanta Legal Aid attorneys conducted a search of property tax records in six metro Atlanta counties and found 94 properties currently held by Harbour Portfolio in the Atlanta area; most of these homes were likely being sold through land installment contracts as that is Harbour’s business model.9 Nearly all those properties (approximately 93 percent) were located in census blocks that are at least 60 percent nonwhite, and a significant majority were in census blocks that are at least 90 percent nonwhite.

It’s hard to avoid underlining the obvious. First, the scale of this activity is huge, when you are talking about a local company in Indianapolis alone handling more than 1000 such houses. In an evil local market, they dominate any other national players. Secondly, these are not equal opportunity predators, but are de facto discriminators.

For these reasons and others, the Home Savers Campaign is also increasing the pressure by sending a letter to the head of Fannie Mae today, asking that the agency investigate and bar not only Vision Property Management, as they did recently, but also Harbour Portfolio. In addition the campaign named a number of companies using the same practices in the Detroit market and demanded that they also be barred, indicating as well they they wanted a meeting with FNMA in order to push for clearer standards to block access to government auctions in the future to any company that plans to sell them “as is” through land installment contracts. Home Savers Campaign also indicated that it intends to make similar demands city to city in other markets for FNMA bans, as they understand the FNMA criteria better.

It’s bad, and it’s on!

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