Vallejo Area Experiencing Some Gentrification, Study Finds

Wednesday, November 8, 2017
Rachel Raskin-Zrihen

A new study suggests lower-income renters in Vallejo are being replaced by higher-income ones.

The Apartment List study finds that more than half of Vallejo renters spend more than 30 percent of their income on housing. This is significantly fewer than just a few years ago, indicating that the area’s economic demographics may be changing.

“As the U.S. renter population nears 44 million households — or 37 percent of U.S. households — and rents increase nationwide, rental affordability remains an important concern,” according to the latest Apartment List report.

Analysts there looked at Census data on renter incomes and rents and found that nearly half of U.S. renters are “cost burdened” — meaning they spend 30 percent or more of their income on rent. They analyzed U.S. Census data from 2005 to 2016 on the share of income renters spend on housing.

“We divided renters into three groups: Not cost burdened, Moderately cost burdened, Severely cost burdened,” they said. “A staggering one-quarter of renters are ‘severely cost-burdened,’ spending 50 percent or more of their income on rent. The share of cost-burdened renters has doubled since 1960 when just 24 percent of renters were cost burdened.”

The report reveals that 51.4 percent of Vallejo renters were cost-burdened in 2016 and that nearly 28 percent were severely cost burdened. It further found that from 2005-2016, rents in Vallejo increased 6 percent, while renter incomes fell more than 3 percent.

Despite this, Vallejo has seen a significant drop in cost burden since 2005 and the recession, said Sydney Bennett of Apartment List.

“Part of this is due to improvements in the job market in Vallejo, but part is also due to an increase in higher-income renters pushed out of the Bay Area,” she said.

Similar trends are evident in other metros on the outskirts of pricey ones, like in Sacramento, and Riverside, she said.

“Inflation-adjusted renter median incomes have increased from $44,052 in 2005 to $52,025 in 2016 — but wages for lower-wage workers have grown slowly over this period,” Bennett said. “This indicates higher income renters are moving to the Vallejo metro, and some wealthier renters are renting longer, rather than become home owners.”

This apparently is a nationwide trend. Last year, nationally, nearly half of renters were cost-burdened, the lowest level since 2008, the report shows.

“The decrease in the share of cost-burdened renters is due to growth in renter incomes, which outpaced increases in rent prices,” it says. “Unfortunately, this is largely the result of a change in the composition of the renter population, with an increase in high-income renters who are delaying home ownership, and a decrease in low-income renters, who may be living with family or pushed into cheaper markets.”

Solano Association of Realtors President Linda Daraskavich said she’s seen rents here climbing, and the report found that despite this, the percentage of cost burdened renters is falling here.

“Yeah, that’s what I see in the market,” she said. “The rents are cheaper here than they are across the bridge and people are moving here and lower-income people are getting moved out further.”

Data from 2005 to 2016 for more than 450 metro areas and 800 counties across the U.S. can be found at Coming as a surprise to few, California and Florida are home to some of the most unaffordable metros for renters, the report says.

“The share of cost-burdened renters is nearly 50 percent nationwide, but this figure varies significantly across metros,” it says. “Of the largest 100 metros in the U.S., Miami has the highest share of cost-burdened renters at 62.8 percent, while Ogden, Utah, has the lowest, at 37.9 percent.”

Five of the top 10 most cost burdened large metros — Fresno, Oxnard, Riverside, Los Angeles and San Diego — are in California. But, despite high rents in the San Jose and San Francisco metros, these cities have lower shares of cost burdened renters, 48.3 percent and 46.8 percent respectively, due to the large share of high-income renters, the report’s authors said.

This has far-reaching implications, they say.

“Nearly one in five renters were unable to pay their rent in full in the past three months,” they said. “Households that struggle to pay rent often cut back spending on other basic necessities and may ultimately face eviction, with lasting consequences.”

The inability to pay rent in full is more common with low-income renters because unexpected expenses, like medical bills or car repairs, often leave them with little money left to pay rent, they said. Cost burden increased in areas where rent increases outpaced income growth, like in Los Angeles, Washington, D.C., and New York, the authors said.

The trend, driven both by high-income renters delaying home ownership and by low-income renters being priced out of the rental market, means many poor renters moving to cheaper areas, doubling up with family members or other low-income renters or ending up homeless, they said.

The good news is that rental affordability is improving, as 2016 marks the fifth consecutive year in which renter incomes increased faster than rents, reducing the share of cost burdened renters, the authors conclude.

“Unfortunately, the decrease in cost-burdened renters is due mostly to an increase in high-income renters,” they said. “So, despite the decrease in the share of cost-burdened renters, affordability continues to be a challenge for millions of renters. With cost-burdened rates of over 45 percent in most large metros, and over 10 million severely cost burdened renters nationwide, the lack of affordable housing remains a major challenge for renters.”

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