Rents Rising

Milwaukee       Before dawn a chart ran on the TV screen at the airport hotel’s breakfast room that listed cities where rent was rising the fastest across the country.  I was in Milwaukee huddled with airline personnel grabbing something for early flights to Detroit and Chicago.  The news readers were huffing about Milwaukee supposedly leading the list with the highest percentage increase in the country over the last year.  I could see that New Orleans was second on the screen.

Once back on the internet I tried to track down the chart, but was unsuccessful.  I did find some support for the local Milwaukee news.  The area had recorded increases in recent years of up to 8% which some data ranked as the 3rd highest market increase in the country.  Other data sets indicated over five years Milwaukee’s rent had risen about 15%, but only 1.5% in 2018.  New Orleans was in fact close behind at 14.5% over 5 years with a median rent of $1400 to Milwaukee’s $1350.

Of course, as painful as those figures are for local residents, Oakland’s median rent has soared over 50% in 5 years, Seattle’s almost 40% in the same period, Tacoma and Anaheim more than 33%, Nassau County 36%, Boston 23%, Memphis 21%, Little Rock almost 18%, Nashville over 25%, and so forth.  You get the picture.  I’m not even talking about New York City or some other places where rents are simply moving from absurd to ridiculous.

Once you start crawling down the figures in some of these websites, it’s a rat hole with no way out, although that’s not necessarily the picture many of the promoters are pushing.  Some will argue that house prices are rising more quickly, so you should buy now.  Others are arguing over whether or not apartment rents are going up faster or slower than inflation. Yet again, a few will argue that new construction will make a difference.

Regardless, any way you shuffle the deck median rents have increased across the country about 20% since 2012, and that’s higher than inflation.  Home prices have risen from a low median sales price of $154,600 in 2012 to a post-bubble high of $264,800, and that is higher than inflation and the rental increases.  The reason all of this feels somewhere between atmospheric and catastrophic to the average family and especially low-and-moderate income families, is that wages haven’t grown anywhere near either of those figures.  According to the Social Security Administration’s Average Wage Index the percentage rise in wages over the same period of 2012 through 2017 is only 13.5%.

I probably don’t even need to note that most low-and-moderate income families are on the under side of averages, so the crisis in rising rents hurts them the worst, and housing prices are now marketing to families who are way above average wage levels.  Minimum wages are not going up fast enough and are frozen in many areas, welfare and other payments are frozen or decreasing, inflation is predicted to begin rising aside from gas prices, and new construction doesn’t define affordability anywhere near what could provide lower income families safe and decent housing.

Where’s the good news in any of this?

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Please enjoy Hard Case from the Tedeschi Trucks Band.

Thanks to KABF.

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Low and Moderate Income Housing Policies Remain Confused and Contentious

Ouro600New Orleans     It’s hard to read about tax breaks for hedge fund gazillionaires, drug companies redomiciling in other countries to lower their taxes, and declining income tax revenues in this era of super profits for corporations and super wealth for individuals and notice at the same time that as part of the budget balancing shenanigans during the government shutdown a new regulation from the Department of Housing and Urban Development or HUD, as it’s known, will raise rents on public housing tenants starting June 1st.

For many tenants, most of whom are lower waged workers with families, reports indicate this will amount to a 35% increase in rents.  The problem this is supposedly trying to fix is the policy suspicion that the tenants are paying below market rents to live in public housing.  Oh, no!  The new choice for tenants on June 1st will be a fixed rate of 30% of income or 80% of whatever is set as fair market value for the rent.  The painful irony is that the very poor are already paying 30% of income, so it is the working poor that are trying in many cases to get up and out of the projects that is going to feel the burn from the 80% standard, all being done at the same time as HUD projects in city after city are reducing public housing units and going with mixed developments with units ranging from market rent to the 30% standard.  It boggles the imagination to believe this will work out well.

Meanwhile another report indicates that a huge problem in city after city, project after project, is the restriction barring anyone, including family members with criminal convictions from tenancy.  Even as the Justice Department moves to decriminalize and parole thousands of prisoners with 10 years in time served for minor offenses with mandatory sentences, where are they and tens of thousands of others supposed to go, if even their families are barred from taking them back home if they happen to live in a housing project?  A sometimes controversial New Orleans developer, Pres Kabacoff, told the Wall Street Journal that he thought he was close to a reconciliation in that city, but also didn’t fail to point out that allowing convicted, though released and paroled, people in the mixed-use projects he has built would make it hard to get some of the units rented at market rates on the higher end.   Makes me doubtful what kind of solution is in the offing?

In what looked like good news, former Congressman Mel Watt now acting as the conservator of Fannie Mae and Freddie Mac as head of the Federal Housing and Finance Agency, encouragingly announced a number of initiatives that might once again expand the housing market, maintain credit standards, and, can you finally believe this, even allow loan balance reductions to market prices to save families from foreclosures.  Now, we’re talking!  Oh, but wait, the predicable right wing chorus that opposes all things governmental has already denounced Watt’s program, so God knows what it will take to make it happen or how long it might last.  The good news on this score is that the White House seems to have vetted and endorsed his proposals, and there are some people who seem to understand the housing market is still in shambles in the aftermath of the Great Recession, so families wanting to buy or stay in their homes may for a change find that their interests align with builders and communities trying to get back on their feet.

Hard to ignore the fact this whole mish-mash adds up to housing policies that impact on the real life circumstances of low-and-moderate income families are still confused and contentious, which means more heartbreak than hope for the future is still in store for millions.

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