Housing Complex

Low-Income Washingtonians Face Severe Housing Cost Burden

burden

The percentage of rental households at various income levels (extremely low, very low, low, middle, and high) paying more than 30 percent or 50 percent of income toward rent

The District's expensive housing market is placing a major strain on the financial stability of the city's residents, with more than half of rental households paying more than they can afford in rent, according to a study released today by the Urban Institute.

Slightly more than half, or 51 percent, of D.C. rental households pay more than 30 percent of their income toward rent, the widely accepted threshold for housing affordability. More than one in four, or 28 percent, face a severe housing burden, defined as paying more than half their income toward rent.

The fact that D.C. and national households are facing these housing burdens is nothing new; it's been reported several times over the past few years. But the Urban Institute report goes further than past studies in breaking down the data across a number of metrics to demonstrate the threats to housing security in both the District and the broader D.C. region.

As the chart above shows, the cost burden in D.C. varies widely by income. Among extremely low-income households, defined as those making less than 30 percent of area median income, a full 84 percent suffer from a housing cost burden, and two-thirds have a severe burden. Those figures drop steadily with each rise in income category; only 4 percent of high earners, making more than 120 percent of area median income, have a cost burden, and none has a severe burden.

And a simple look at the income categories themselves show how wealth-polarized the District has become. Only 8 percent of D.C. households fall into the low-income category, defined as making between 50 and 80 percent of AMI. (Because AMI is so high given the high incomes in the D.C. suburbs, more than $100,000 for a family of four, the "low" category would be considered middle-income in much of the country.) By contrast, 13 percent are extremely low income, 11 percent are very low income (between 30 and 50 percent of AMI), 30 percent are middle income (between 80 and 120 percent of AMI, which would be considered wealthy across much of America), and 38 percent are high income.

D.C. is actually not the jurisdiction where poor households face the greatest housing burden, according to the report. In Arlington County, 91 percent of extremely low-income renters are cost-burdened, followed by 90 percent in Prince William County, and 88 percent in Fairfax County (plus Fairfax City and Falls Church) and in Prince George's County.

Worsening the housing crunch for poor Washingtonians is the fact that some units they could afford are being occupied by higher-income residents. This is the case across income levels in the District, where 57 percent of units that would be affordable for extremely low-income renters and 33 percent of the units that middle-income renters could afford are being occupied by higher-income households.

The gap in available affordable units would imply two possible solutions. One would be to impose more income restrictions on low-cost housing, to ensure that the scarce units that are affordable to lower-income Washingtonians are available to them. The other would be simply to build more housing, and not just for low earners, but for the wealthier residents of the city as well, so that the competition for cheaper units eases. Of course, neither of these is easy or cheap, particularly when height and density limits, as well as neighborhood opposition, make it challenging to build an abundance of new housing, for poor or wealthy alike.

Chart created by Aaron Wiener with Chartbuilder; data from the Urban Institute report

  • chris lee

    DC is experiencing a wave of "homefullness" with new residents moving in monthly. And high employment amongst the able, fit and competent. People with sound practices and sensible personal strategies. A committee to study this crises in workability is being formed as we speak.

  • Bac

    Right! More housing for the rich, that's what we need. I'm sure the not-new apartments will make a frownie face and lower their prices. It's a lock, right?

    The rest of the article - lip service after the destruction has already occurred.

    That formula doesn't work, and never has. Can't build our way out, you'll see - eventually.

  • chris lee

    You're absolutely right ..this disaster of improved conditions will be our undoing.

  • Daniel

    I'm with Bac on this one. "...Simply to build more housing, and not just for low earners, but for the wealthier residents of the city as well, so that the competition for cheaper units eases."

    When are people going to stop pretending that EVER happens. Look at a place like downtown Silver Spring, if you want to see what happens in a place with no height limits (because yeah, let's keep pretending THAT'S the main source of the problem), where new high-rise apartments and condos were built seemingly endlessly for a couple of years. Spoiler alert: The rent at older buildings like Summit Hills DOESN'T MAGICALLY GO DOWN. I know because as I lived there between 2008 and 2010, my rent went up $400 in an unrenovated one bedroom, despite all the new, more expensive housing being built. Weird, right? It's almost like developers and landlords are motivated by profit or something.

  • howard

    I'm so confused by DC's housing market, mainly these 'luxury' apts. I see tons of vacant units in buildings all across DC, and yet there are more buildings being built as we speak. The rates for a one-bedroom range around 1600-1800, if you're lucky, not to mention the yearly increase in rent. Will the prices ever come down? Aren't they, the developers, losing money by having a half vacant building?

  • Yup

    "More housing for the rich, that's what we need. I'm sure the not-new apartments will make a frownie face and lower their prices. It's a lock,"

    That is correct. apt building mgmnts monitor their vacancy rates closely, and when the vacancy rates increase, they either lower rents (for new moveins, not for the folks already there) offer month off specials, or specials on move in fees, etc. They do not like to have lots of vacancies, for obvious reasons.

    Note - it may not work for the same way for less sophisticated landlords of small properties.

    but for larger old buildings it certainly does work that way.

  • Yup

    howard

    where do you see half vacant buildings?

    owners of large buildings generally do not cut rents to the point of having a zero vacancy rate. by keeping 5 to 10% or so vacant, they can get much more than 10% higher rents. There is always churn as people move in and out. The rents to keep the vacancy rate at zero would leave to much on the table, so they won't do that. But at 50% vacant (other than a brand new building which just takes some time to rent out) they will generally cut rents to fill.

    Note, I toured a brand new building in Alexandria recently. They were offering two months free rent, in order to induce people to place deposits on units that weren't even complete yet.

  • Yup

    "It's almost like developers and landlords are motivated by profit or something."

    Of course they are. So they will charge what the market can support. That has not gone down in Silver Spring, mostly because the new building is still catching up to growing demand - and demand has grown in DTSS because what used to be an undesirable area has become more desirable. But that has pulled people from other parts of the region. Regional rents have stabilized recently in real terms (adjusted for inflation) but it will take more new construction before they begin to decline.

    Why do people think that keeping new product off the market will make it cheaper? Do you think if no new cars were made, used cars would get cheaper?

  • Bac

    More buildings HAVE been built. So what you're saying is that being the case (supply having been increased) prices are now LOWER. That's the thinking. More supply, lower price, and we can't argue, that there is more supply now in 2014 than there was, say, in 2010.

    There are many looking for more affordable housing. So please give us two examples (only two) of buildings whose rent has been lowered as a result of increased supply. Please supply timelines, time markers.

  • Meh

    Bac the problem is the new supply does not meet the net gain in residents, we have only had about 9000 new units added last year in DC, even though there was 12,000+ new residents. That's the thing, until new supply catches up with demand you are going to have rising rates. Also until the vacancy rate is sufficiently low.
    However, there was a study, in many suburbs there was a modest decline in price for rentals because of the new supply of class A apartments being created in the district. The thing is the district still saw demand outstrip new supply, especially in desirable areas. This is the case in other high demand communities as well.
    There is also the fact there is another thing happening as well, which is the in-migration into cities, and the complete reversal of flight. Again...this is driving up demand in urban spaces. The only way for prices to level off, or even decline, is increase supply.

  • Bac

    Got it. It's just over the horizon, day in and day out.

    Thanks.

  • Yup

    "So what you're saying is that being the case (supply having been increased) prices are now LOWER. That's the thinking. More supply, lower price, and we can't argue, that there is more supply now in 2014 than there was, say, in 2010. "

    hmm, what else was going on back in 2008 to 2010, i forget.

    "There are many looking for more affordable housing. So please give us two examples (only two) of buildings whose rent has been lowered as a result of increased supply. Please supply timelines, time markers."

    Lower than it would otherwise be. You may not know this but demand in the region has increased.

    I actually do know of a building in NoVa that has a lower rent than it has had for months. I am moving there. Fore reasons of confidentiality I cannot say which it is. And its rent is probably higher than it was in 2010, because its only recently that supply has begun to catch up with demand.

  • Bac

    "And its rent is probably higher than it was in 2010, because its only recently that supply has begun to catch up with demand."

    That's because the horizon is still juuust over there. But we'll get there, one day. And then you can say, see?

    You let me know when that day comes.

  • Blah

    The one thing we should not be building is low-income housing. It just introduces blight and crime incubators, and become neighborhood instability.
    Those who cannot afford to live in DC should honestly just move to a place which is more affordable. Those who are very and extremely low income probably do not match the regional labor economy and struggle for jobs in the region. The reality this is one the lowest demand areas for low skilled labor. The higher cost of housing just serves to push out people who do not match the local labor economy to seek opportunities elsewhere where they may be better fit the local labor economy, but also be able to afford housing because of lower demand from high-income earners.
    Long story short...if you cannot afford to live here. Move. We should not be building public housing projects that bring blight and crime, or forcing low-income affordable housing, that brings blight and crime. We should be letting the economy work, and hopefully enough of the people who structurally do not meet the local economy figure things out and move to a region of the country they can both find a job and afford housing. Forcing housing affordability just causes problems.

  • Northwesterneer

    But, but, but I'm a farmer with farm skills and I want to live in DC. I mean, my family has always lived here. I want the city to build farms where I can live and work. If not, they are only catering to the newcomers with their dog parks and bikes and smart phones.

    There are people out there who mean well and are making $60k per year who only now realized that they will have to go to graduate school and make six figures to survive in this city. Otherwise, there are more rural/suburban areas or smaller cities (the south, Baltimore, Philadelphia) to move to.

    I work with many people who demanded a big house, a two car garage, and the rest. They found it in Bristow, VA for $250k.

  • Mike Madden

    @ Northwesterneer:

    Making $60,000 in D.C. is pretty common, as the median household income for a family of four is $64,267.

  • JS

    Mike Madden - what? That number seems awfully low. HUD seems to think it's closer to 107K. http://www.huduser.org/portal/datasets/il/il2014/2014MedCalc.odn

  • JS

    That last link didn't work right, but here are the numbers:

    Unrounded FY 2014 MFI Estimate $106,999
    Rounded FY 2014 MFI Estimate $107,000
    Area: District of Columbia, DC

  • Mike Madden

    @ JS: That's for the metropolitan area, not the city. Since Northwesterneer is suggesting people shouldn't expect to be able to live in the city on $60,000 a year, the District-specific median income seemed relevant.

  • Reuben

    Any suggestions as to where those who fail to meet the ultra $$$$ DC should go? I just love class and-uh-demographic -based arrogance. Almost as much as I love capitalism.

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