While home construction and home buying have been center stage in the public's view, rental costs are rising behind the scenes and hobbling the poor and middle class.
The situation is "the worst rental affordability crisis this country has ever known," said Housing Secretary Shaun Donovan in December 2013.
For example, the Washington, D.C., Housing Authority in 2013 closed the door on those seeking low-income units because the average wait time was 28 years for a one-bedroom apartment, according to the report Out of Reach 2014 by the National Low Income Housing Coalition.
But it's not just the low income who are suffering. It's the middle class, also.
According to Out of Reach, not only are market rate units unaffordable to minimum wage workers, they are beyond the means of a median paid employee. The mean renter wage in the United States is $14.64, but it would need to be $4 more to afford a two-bedroom unit.
The worker would have to make $24.08 in he or she lived in Massachusetts, ranked eighth in terms of high costs for a two-bedroom unit. It would take three minimum wage workers employed 40 hours a week to pay the rent.
"In the Springfield metropolitan area you need to make $30,000 a year for a one-bedroom apartment," said Mary Clare Higgins, former mayor of Northampton and now executive director of Community Action of the Franklin Hampshire and the North Quabbin Region. "If you're a janitor, you don't make enough to afford that. If you make minimum wage, there's almost no way you can afford your own place."
In agreement is Paul Bailey, executive director of Springfield Partners for Community Action Inc., an anti-poverty agency.
"Things before were relative," Bailey said. "You made $4 an hour but the rents were comparable. Now you can't get a rent for less than $1,000" a month.
"If you can't get into the public housing, which stays full ... you're going to pay to that big dollar amount for rent."
Rent and utilities are supposed to take up no more than 30 percent of a household's income to be considered affordable, according to the U.S. Department of Housing and Urban Development. However, according to Harvard University's 2013 study America's Rental Housing, nationally half of the renters spend more than 30 percent on housing, up from 38 percent in 2000.
The lack of affordable housing was one of the three main reasons for homelessness cited by William J. Miller, executive director of the Friends of the Homeless in Springfield, which operates shelters and transitional housing in Springfield.
Pay has not kept up with costs. Meanwhile the demand for rental housing has grown with the Great Recession that saw many lose their jobs and homes, the unwillingness now for people to be tied to a home mortgage, and the inability of others to purchase. At the same time, the housing stock has declined as many aged units are closed or demolished.
Between 2007 and 2013 the United States added, on net, about 6.2 million tenants compared with 208,000 homeowners, the New York Times states, quoting Stan Humphries, the chief economist of Zillow.
"Only a sliver of the rental market remains affordable and available to the lowest income households," according to Out of Reach. While 28 percent of the renters are below the poverty level, most new construction is for high end income, and only 34 percent was for median income in 2011. Meanwhile, 10,000 units of public housing are being lost annually.
The government does spend money on housing but it's mostly for homeowners. A 2013 report by the Bipartisan Policy Center stated, the country spent roughly $180 billion per year through "tax subsidies and direct appropriations to support housing. But only about $48 billion of this is directed to low income renters." Most of the rest went to homeowners in the form of tax deductions for mortgage interest and property taxes.
In a related matter, a December report by the Massachusetts Housing Partnership discusses the problem of the lack of affordable housing for rent or purchase, especially in rural areas such as south Berkshire County, Franklin County and Cape Cod.
Hitting again on minimum wage, the report says an $8 an hour worker earns $320 a week and $16,640 annually, but would only be able to pay $416 a month from rent without being overburdened according to HUD standards. The planned increases in the state's minimum wage to $9 in 2015, $10 in 2016 and $11 in 2017 will not be enough to make housing affordable, says the report, entitled White Paper on Rural Housing Issues in Massachusetts: Findings of the Rural Initiative and Recommendations.
The problem is particularly acute in tourism areas such as Cape Cod and south Berkshire County. "In areas where tourism is a strong factor in the local economy, the value of real estate for second homes and seasonal rentals has inflated the price of housing to the point where is is not affordable for many year-round residents," the report says. On the Cape the problem can lead to residents becoming homeless in the summer when rents rise, a phenomenon called the "Island Shuffle."
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