Twenty-five years after Out of Reach was first published, the housing crisis continues…

A week ago, NLIHC released its annual report, Out of Reach. Out of Reach 2014 provides extensive data on housing costs and wages for every state, county, and metropolitan area in the United States. Over the years, NLIHC has expanded and improved the Out of Reach report; however, the methodology remains the same. Here’s a review of some key definitions and figures used by Out of Reach:

AFFORDABILITY
What it means: The federally accepted standard of “affordable” housing is that which requires no more than 30% of the household income be spent on rent and utilities. Out of Reach uses this standard of affordability to determine the wages renters must earn to afford their local rent.

How to explain it:
Many Americans spend more than 30% of their income on housing costs. For some, this may be considered a short-term situation. However, for millions of low income Americans, spending more than 30% of their income on housing costs means serious housing instability as these households often live paycheck to paycheck.

When a household has to spend more than 30% of their income on rent and utilities, they are considered cost burdened. When a household has to spend more than 50% of their income on rent and utilities, they are considered severely cost burdened. Three out of every four extremely low income families are severely cost burdened, forcing them to make tough decisions on how to spend the little leftover income they have on food, transportation, medical costs, child care, and other important expenses.

FAIR MARKET RENT (FMR)
What it means: Simply put, Fair Market Rents (FMRs) are a standard measure of current housing costs across the country, using a consistent methodology. HUD estimates FMRs annually. They represent HUD’s best estimate of what a household seeking a modest rental unit in a short amount of time can expect to pay for rent and utilities in the current market. When calculating what incomes renters need to earn to afford rent, Out of Reach uses the Fair Market Rents.

HOUSING WAGE
What it means: How much must an individual earn hourly in order to afford a rental unit at FMR. The standard Housing Wage refers to a two-bedroom rental unit; however, Out of Reach also provides the Housing Wage for efficiencies up to 4-bedroom units in the state excel files. This figure is an average, available at the national level, state level, county level, and metropolitan area level.

How to use it: The 2014 two-bedroom national Housing Wage is $18.92. This figure varies considerably at state and local levels, so it is most effective to look up your county, metropolitan area, or state Housing Wage. You can compare this piece of data with what the average renter in that area actually earns, and what minimum wage workers earn.

While the Housing Wage can help your elected official understand the disparity between what renters in your community need to earn to afford rent and what they actually make, it is important to note that raising wages is an insufficient response to the problem. In every state, the Housing Wage is higher than the proposed raised federal minimum wage of $10.10. This disparity points to the extreme shortage of rental housing that is both affordable and available to low income renters. The strongest solution to the affordable housing crisis is an increased federal investment in affordable housing, which can be best achieved through the National Housing Trust Fund.

RENTER WAGE
What it means: How much does the average renter earn on an hourly basis. This wage is a mean calculation.

How to use it: Compare your state or local renter wage with your Housing Wage to demonstrate that the average renter cannot afford rent. It is important to note that because the renter wage is an average, many families face an even greater wage disparity.

HOURS AT MINIMUM WAGE NEEDED TO AFFORD RENT
ImageWhat it means: This one is pretty self-explanatory, which is why it has become one of the most popular data points from Out of Reach. This analysis is most widely recognized in its map form, which provides how many hours a minimum wage worker must work every week to afford a two-bedroom rental unit at Fair Market Rent. The calculations use the prevailing minimum wage (whichever is higher between the federal or state minimum wage).

How to use it: This Out of Reach analysis has been used by many to argue for increasing the federal minimum wage. In every state, this figure is greater than 40 hours per week, even when using the prevailing state minimum wage. This reveals that nowhere in America, can a full-time minimum wage worker afford a two-bedroom rental unit.

Learn more, and read the full Out of Reach 2014 report, at www.nlihc.org/oor/2014. Use the “View State Data” dropdown to access your state’s Out of Reach page. Click on the attached State Report (PDF) and State Data (Excel) to view and compare these and other data.

NEXT POST:
Barbara Stallone, Director of Policy and Public Relations for the Utah Housing Coalition, guest blog posts on how our state partner used Out of Reach data to advocate for an increased state minimum wage.

On the Road & Busting Myths

The United for Homes campaign is pretty straightforward:

We want to reform the mortgage interest deduction, which would create almost $200 billion in revenue over ten years. And then, we want to use this new revenue to finally fund the National Housing Trust Fund!

What may seem more complicated is the actual proposal to reform the mortgage interest deduction, but that too, can easily be broken down. There are two main points to our proposal:

  1. Reduce the size of a mortgage eligible for the tax break to $500,000, and
  2. Convert the deduction to a 15% non-refundable tax credit.

Under current law, taxpayers can deduct the interest paid in that tax year on a home mortgage of up to $1 million. United for Homes proposes lowering the cap from $1 million to $500,000.

Now here comes a big myth: This will hurt many homeowners in my community.

The reality is just 4% of all mortgages in the U.S. are over $500,000, according to an analysis of Home Mortgage Disclosure Act data from 2007-2011.

As Sheila and Joe prepared to set out on the Michigan road trip, we took a deeper look at the mortgages in the state. Thanks to our savvy NLIHC Research team, we were able to prepare this map that reveals the percentages of mortgages over $500,000 in each county.

United for Homes

We have the opportunity to finally end homelessness! “Ah, but 0.1% of the mortgages in my county are over $500,000, so we cannot reform that tax break,” said no one ever.

The Michigan map has been very useful for Sheila and Joe as they present the United for Homes campaign, and we have state and county data available to help YOU educate others!

Yesterday in Flint, Amy Hoyer from Representative Dan Kildee’s office attended the community meeting. Amy spoke about the importance of advocates connecting with federal elected officials through calls and letters. She said it was critical that elected officials hear from their constituents on any proposal that may seem controversial.

United for Homes

Sue Hart puts a UFH bumper sticker on her car following the Flint community meeting. Endorse UFH in the next 2 minutes, and you will receive not 1, but 2 UFH bumper stickers! http://www.unitedforhomes.org/support

TAKE ACTION! We encourage you to contact your elected officials about the United for Homes proposal, and to use your state and county data to inform them on the actual percentage of mortgages over $500,000. After all, who doesn’t love bustin’ myths.

Click here to look up the percentages of mortgages in your state that are over $500,000.
For county data, email althea@nlihc.org.

Our Favorite Accomplishments of 2012

We emailed our supporters last week to do a little bragging about what we’ve been up to this year. This has been such a busy year for the National Low Income Housing Coalition that we couldn’t fit all our work into one email! Instead, we thought we’d share some of our staff’s other favorite 2012 accomplishments here on our blog.

National Housing Preservation Database

Project-based housing is a crucial part of our national strategy to prevent and end homelessness. But some of this housing is at risk of leaving the affordable inventory for a variety of reasons. Preserving this housing is good policy; it is a cost-effective way to invest in our communities.

The National Housing Preservation Database is a powerful new tool for preserving America’s affordable rental housing. The database provides communities with the information they need to effectively preserve their stock of public and assisted housing. It is part of NLIHC’s longstanding, data-driven effort help preserve this vital supply of affordable rental homes.

State Housing Profiles

We’ve always provided housing advocates with Congressional district-level information on the housing need in their communities. This year, NLIHC launched our State Housing Profiles, which provide key information about the housing available to extremely low income people, and the need for that housing, in each state. This information is perfect to use when advocating with your Senators, as well as with state legislators and your governor.

2011 Annual Report

Our 2011 annual report, Dedication, tells the story of NLIHC’s dedication to leadership, empowerment, analysis, and collaboration, and to our members and other supporters, using the new color scheme, logo and icons developed in concert with our new website.

Renters in Foreclosure: A Fresh Look at an Ongoing Problem

In 2009 NLIHC worked to help enact the federal Protecting Tenants at Foreclosure Act (PTFA), a law to ensure that renters in foreclosure have the right to at least 90 days’ notice before having to move after a foreclosure. Currently, the law is set to expire at the end of 2014 unless Congress takes further action. Our new research shows that the number of renters impacted by the foreclosure crisis has grown over the last three years, and if the law expires, these renters will be once again vulnerable to eviction with minimal notice. As such NLIHC has worked this year to line up support for efforts in the House and Senate that would make the PTFA a permanent and stronger law.

We’ve worked hard this year to advance socially just housing policy that assures the lowest income Americans have access to affordable and decent homes. If you agree that these accomplishments are important and if you value our work, please make a year-end donation to the National Low Income Housing Coalition so that we can continue to be strong advocates for the housing needs of low income people in 2013.

We need the facts – We need the ACS.

Many Americans probably wonder how decisions are made about what federal, state, and local funds will be spent on. At all levels of government, one of the most useful tools for understanding the needs of a community and for determining how funds are spent is the American Community Survey (ACS). At NLIHC and throughout the affordable housing field, ACS data are used to determine the need for affordable housing, making this resource extremely important to the work we do. Here’s how it works:

Approximately three million households across America participate in the ACS every year, providing timely data on the social, economic, demographic, and housing characteristics of the U.S. population.

NLIHC and other affordable housing organizations use the ACS data to produce resources and educational tools such as Out of Reach, the Congressional District Profiles, and other research reports like editions of Housing Spotlight.

Policy makers, academics, researchers, and advocates learn about real economic and housing trends in communities across America from the ACS data, helping our country make informed decisions on how to spend more than $400 billion in federal and state funds every year.

The House votes to eliminate the ACS Survey.

Wait, something isn’t right here – but you read that right… Much to our surprise, last week the House passed a bill with an amendment sponsored by Representative Daniel Webster (R-FL) that would eliminate all funding for the ACS. It also approved an amendment sponsored by Representative Ted Poe (R-TX) that would make the ACS voluntary. Research shows that a voluntary ACS would make the survey more expensive, less accurate, and less beneficial for research purposes.

So what’s the next line in this story?

Housing advocates and concerned citizens alike use their voices to ensure that this critical national survey is continued in a way that maintains its statistical reliability.

You can join NLIHC and do just that, and here’s how:
•    As an organization:  Sign on to a letter urging Senators to continue funding the ACS in its FY13 appropriations bill. The letter was produced by the Census Project, a coalition of organizations including NLIHC that is dedicated to a fair and accurate census. Sign on by emailing Brendan Nichols (bnichols@ccmc.org) your organization’s name and the city and state in parentheses. Click here to read the letter; the deadline is close of business TODAY so sign-on now!
•    As an individual:  Call your Senator and urge them to protect this critical housing data tool.  You can also contact your Senators directly by calling the Congressional switchboard at 877-210-5351 to be connected to your Senators’ offices. Or enter your zip code into the “Contact Congress” box on the bottom of the right side bar at www.nlihc.org.

NLIHC and other advocates tell a story of a country desperately in need of more affordable housing. But what makes this story so important and compelling are the hard facts behind it. The ACS provides critical data on the incomes and housing conditions for households across America. These data are what strengthens the argument made by NLIHC that there is a lack of, and need for, more affordable housing. And that’s why these data, and this story, are so important.

News Round-up: the ACS.

After the Thursday release of the U.S. Census Bureau’s 2010 American Community Survey (ACS), local, state, and national news outlets were quick to release coverage on the data. And it’s no wonder why; the ACS data provide a stark look at economic distress among an ever growing number of renters nationwide. The ACS is an annual survey of three million households that provides the public with demographic, social, economic, and housing characteristics of the American population. After mining this data, our Research team discovered that while wages are stagnating, rental costs continue to rise and more renters nationwide are housing cost burdened.

(Housing cost burdened households spend more than 30% of their income on housing costs.)

You might have seen that our Research team took over our Twitter account last Friday, tweeting #ACSdata all day. They also wrote about some of the data for this week’s Memo to Members. One especially revealing piece of the ACS data are the ongoing difficulties renters’ nationwide struggle with to find affordable housing.

The rise in cost burdened renters can be traced to the loss of affordable units and the overall decline in rental units at lower price points. Although the availability of units renting for more than $1,000 a month rose by nearly 800,000 units, to 37% of the rental market, those renting for $500 or less shrunk to only 14% of the total number of units.

Our Research team also takes a deeper look at the problems with affordable housing and releases the resulting report every spring, Out of Reach. This annual report provides an estimated housing wage; a figure that represents the hourly wage needed to afford a modest apartment unit, on average, nationwide and in every state, metropolitan area and county in the county.  Reflecting the rising costs of rental housing in America, this past year the Housing Wage rose to $18.46 an hour.

NLIHC Research Assistant Elina Bravve breaks it down:

“Our study of wages nationwide indicates that renters consistently come up short of the Housing Wage in reality. So, as rental costs continue to edge upwards, the number of housing cost burdened renters nationwide grows, as indicated by the 2010 ACS data.”

To cope with rising housing costs, renters must either find a second job, no easy feat in today’s economy, or spend an increasing proportion of their wages on housing.  In some high cost states, balancing over three full time minimum wage jobs would be required to afford Fair Market Rents. This Wall Street Journal infographic (based on Out of Reach data) shows how “as housing cost has risen, so has the number of jobs needed to afford to rent a two-bedroom home.”

Twitpic via @Seth_Hamblin of WSJ infographic featuring OOR data

Has there been a particularly good article that you have read recently on the ACS data? Share any local stories that did a note-worthy job covering this housing problem that renters are struggling with across the country.