Many people write to us and complain about the cost of housing. They often say they are struggling to keep up with their rent at the same time as paying for all of their other household expenses. A new report issued in 2016 from the National Low Income Housing Coalition helps validate what many families are feeling, as it supports the view that the cost of housing is much more than what a typical American family can “comfortably” afford.
Not only is the cost of living, and particularity rent, increasing faster than income, but the National Low Income Housing Coalition also shows that it is impossible to afford rent on the current federal minimum wage. This is true for every single major city that fell within the guidelines of the report. In fact, people need to make over $20 per hour to comfortably afford a two bedroom apartment in most cities. Any person that earns a minimum wage would in fact need to work over 100 hours per week to cover their housing obligations!
The federal government as well as Housing and Urban Development (HUD) has guidelines in place over how much money someone should spend for their rent. That amount is 30% of a household’s gross, before tax income. If you were to use that 30% cut off, and take the average cost of housing nationwide, it would mean that a tenant needs to make about $20 per hour to live comfortably.
That rate of over twenty dollars per hour is about a 3.5% increase from last year. This means that unless a family is bring in that much more income year over year, they are not keeping up with the increase in nationwide rental payments. That being said, how many of you have received a 3% increase in their income since 2015? We would wager not very many have.
The National Low Income Housing Coalition reports shows that the average hourly wage in 2016 of of an America is about $15.40 per hour. This presents a major problem, especially for those households in which only one person is working. The $15.40 number is not high enough to cover what is needed to pay for housing, which is the ~$20 per hour number referenced above. This means it is very difficult, if not impossible, for an apartment that is being paid for by a single wage earner to be affordable.
You may ask, what can I do? Is the situation hopeless in that no one will be able to afford to live on their own? Do I really need to make over $20 per hour? The short answer is no, there is still hope. But it can be challenging to afford the cost of rent in today’s day and age.
The good news is that there are many resources to try. While the federal government is reducing some or all of the welfare type programs in 2016 due to budget constraints, there may still be housing support. It can come from states, non-profits, or some federal agencies, so assistance with rental expenses is still out there.
Another option is the federal government housing choice voucher program, commonly called section 8. This helps millions of Americans afford their monthly rent. But it is an income based program, and the family will need to pay some of their hard earned wages for their rent still. The challenge here is the demand for HUD vouchers as 2016 progresses, and the National Low Income Housing Coalition estimates that it may not be able 2018 or 2019 until the waiting lists are cleared up. So it could take years!
There may also be some charities that have funding available too for tenants with a job, but maybe it does not pay them $20+ per hour. In fact, the National Low Income Housing Coalition is a resource as well that can help the disadvantaged. All throughout 2016 the NLIHC will advocate locally and nationally in an effort to increase the availability of affordable housing.
The cost of housing is increasingly becoming un-affordable for many families. We always recommend seeking help early, before becoming evicted, and also continue to try to gain new job skills to bring your hourly wages to somewhere over that $20/hour threshold.