Tag Archives: renters

Renters’ agenda

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The Center for American Progress has put out a report that nicely ties together, in summary fashion, the current status of fair housing and unaffordable housing. These are the mainstay, overlapping concerns of the “Thriving Communities” campaign. If you’re looking for a fairly brief (33 pages) treatment of where things stand, complete with an array of federal policy recommendations, “An Opportunity Agenda for Renters” is worth a look. rent2

The report touches on many of the topics we’ve mentioned in this blog — the persistence of racial and socioeconomic segregation, the barriers to mobility from impoverished to high-opportunity areas, the growing financial burdens on the growing class of renters in the face of woefully insufficient public subsidies.

One of the policy recommendations, naturally, is that the primary federal vehicle for creating or preserving affordable housing be expanded. That’s the Low Income Housing Tax Credit, which accounts for about 110,000 residential units a year, according to the report. But even if that program were increased by 50 percent, as called for by the Bipartisan Policy Center’s Housing Commission, the total number of units created or preserved would still be way too few, considering “the current shortage of 4.5 million units that are affordable to extremely low-income households.”

As things stand, the federal tax code benefits homeowners in several ways, and disproportionately the wealthier ones. The mortgage-interest tax deduction alone costs the government about $70 billion a year. By contrast, increasing funding of the Section 8 program to cover 3 million eligible low-income renters who are shut out of the program now would cost just $22 billion.

Here’s another proposal in renters’ favor: creating a federal renters’ tax credit. A modest tax credit benefiting the lowest income renters could cost a mere $5 billion.

Vermont’s renter rebate is better than nothing, but it still doesn’t go very far. In 2012, according to a 2014 report to the Legislature, 13,541 claimants (about one-fifth of the state’s renting households) received a total of $8.7 million in rebates, for an average of $641. That $641 was not enough to unburden the typical claimant.

“On average,” the report stated, “Vermont’s renter rebate program reduces gross rent as a percent of household income from 36.7 percent to 33.6 percent.” rent1

In other words, the average renter was living in an unaffordable place even after the rebate.

 

Renters arise!

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 Since 2005, the number of renters in this country has gone up 9 million, to 41 million, the biggest surge of any decade on record. That brings the share of renting households to 37 percent, the highest in half a century. Meanwhile, their rents are up and their incomes are down: From 2001 to 2014, rents rose 7 percent (above inflation) and incomes dropped by 9 percent.

The biggest increase in renter households, surprisingly, came from the Baby Boomer cohort – people in their 50s and 60s. In fact households 40 and older make up the majority of renters.apartment

These are among the findings in “America’s Rental Housing,” a 44-page study out this week from Harvard’s Joint Center for Housing Studies.

Not only are there many more renters, but many more of those renters can’t comfortably afford to live where they do. In 2014, 49 percent of renters were “burdened” (meaning they paid more than 30 percent of their incomes for rent and utilities) and 26 percent were “severely burdened” (more than 50 percent). According to Vermont Housing Data, Vermont’s current rates are a tad higher: 52.5 percent and 26.4 percent.

Yes, the housing burden falls most heavily on low-income people, but it’s growing among the middle-income stratum as well:

“(T)he sharpest growth in cost-burdened shares has been among middle-income households. The share of burdened households with incomes in the $30,000–44,999 range increased from 37 percent in 2001 to 48 percent in 2014, while that of households with incomes of $45,000–74,999 nearly doubled from 12 percent to 21 percent. Regardless of income level, though, the shares of cost-burdened households reached new peaks in 2014 among all but the highest-income renters.”

Meanwhile, only about one-fourth of eligible lower-income households receive housing assistance (Section 8 vouchers are not an entitlement!); funding for HUD’s three biggest rental assistance programs is about the same (corrected for inflation) as it was seven years ago, when the economy crashed; and the HOME program, a major source of federal funding for housing programs, has been cut way back. Private developers continue to add to the multi-family housing supply, but most of the recent additions “serve the higher end of the market,” according to the report. As it happens, high-income households (annual $100,000 or more) represent a small but fast-growing share of the rental market.

The report asserts:

“The challenge now facing the country is to ensure that a sufficient and appropriate supply of rental housing is available for a diversity of households and in a diversity of locations. While the private market has proven capable of expanding the higher-end rental stock, developers have only limited opportunities to meet the needs of lowest income households without subsidies that close the large gap between construction costs and what these renters can afford to pay. In many high-cost markets, moderate-income households face affordability challenges as well.”rental1

“Diversity of locations” is an invocation of AFFH (affirmatively furthering fair housing) and the goal of ensuring that a good share of affordable housing is in “high-opportunity” neighborhoods,” as in what follows:

“Policymakers urgently need to consider the extent and form of housing assistance that can stem the rapid growth in cost burdened households. Beyond affordability, they also need to promote development of a wider range of housing options so that more renter households can find homes that suit their needs and in communities offering good schools and access to jobs. It will take concerted efforts by all levels of government to capitalize on the capabilities of the private and not-for-profit sectors to reach this goal.”

Dare we suggest that concerted efforts have yet to be mounted, or even contemplated, by government at many levels?

The renter minority

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Yesterday’s post took note of the housing burden borne by Burlington’s renters (they pay 44 percent of their income, on average, on rent/utilities). Demographically, that’s a significant burden, because renters in this city are the majority.

In a state where the home ownership rate is over 70 percent, about 9 points above the national average, not many other municipalities can make that claim. Only one other can, in fact: Winooski.

According to the Vermont Housing Data website, 62.2 percent of Winooski’s residents who live in occupied units are renters. In Burlington, the figure is 57 percent.

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These are the only communities in the state where the renter population outnumbers homeowners. The renter-occupant figure for Vermont as a whole is 25.9 percent.

Conscientious readers may recall that Winooski scored No. 1 on the workforce housing index we introduced last month. In case you missed it, that index showed the number of subsidized housing units for every 100 in Vermont’s major employment centers. (We defined major employment centers as municipalities with 2,000 jobs or more in 2014.) Burlington came in at No. 5.

As it happens, several other employment centers that do a relatively good job of providing affordable housing also have big renter populations.

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Barre City’s renter population is 48.5 percent; Rutland City’s, 42.7 percent; Brattleboro’s, 43.2 percent; St. Albans City’s, 46.9 percent; and St. Johnsbury’s, 40 percent.

Of the big suburbs surrounding Burlington/Winooski, South Burlington has the highest renter proportion (30.8 percent). The others are all below the state average: Colchester, 25.8 percent; Essex, 20.6 percent; Shelburne, 17.3 percent; and Williston, 14.9 percent. (All of these communities are “major employment centers,” by the way.)

When people talk about the need for affordable housing in Vermont, they’re talking mostly about multi-family housing for renters (although, yes, efforts to promote accessory rental units, as well as single-family homes/condos for purchase, are important). So, here are a few things to keep in mind about renters in Vermont generally, as compared to homeowners:

  • The median household income for a Vermont renter household ($30,943) is less than half that for the homeowner household ( $64,771).
  • The housing cost burden falls more heavily on renters. Among renters:

— 52.5 percent pay more than 30 percent of their household income on housing, as compared to 32 percent of owners;

–26.4 percent pay more than half their household income on housing, as compared 12 percent of homeowners.