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Housing hardship: 1 in 4 U.S. renters must use half their pay for shelter

A woman walks next to a "For Rent" sign at an apartment complex in Palo Alto, Calif., in 2006. A new analysis of Census data shows that 25 percent of U.S. renters have to use half their income or more to pay housing costs.
A woman walks next to a "For Rent" sign at an apartment complex in Palo Alto, Calif., in 2006. A new analysis of Census data shows that 25 percent of U.S. renters have to use half their income or more to pay housing costs. AP

More than one in four U.S. renters have to use at least half their family income to pay for housing and utilities.

That’s the finding of an analysis of Census data by Enterprise Community Partners, a nonprofit that helps finance affordable housing. The number of such households has jumped 26 percent to 11.25 million since 2007.

Since the end of 2010, rental prices have surged at nearly twice the pace of average hourly wages, according to data from the real estate firm Zillow and the Labor Department.

“It means making really difficult trade-offs,” said Angela Boyd, a vice president at Enterprise Community Partners. “There are daily financial dilemmas about making their rent or buying groceries.”

A recent report by Realtor.com found that South Florida is one of the most expensive rental markets in the country. The median cost of renting in South Florida (nearly $19,700 per year) would eat up 40.1 percent of the local median annual income. Nationwide, the rent-to-income ratio was 29.5 percent.

And there are at least 50,000 low-income families in Miami-Dade County who spend more than half of their income on rent, according to figures collected by the Miami Coalition for the Homeless.

The crisis reflects one of the shortcomings of the recovery from the Great Recession: Income has failed to match rent increases. At the same time, construction has failed to keep pace with demand from renters. The recession pushed more millennials, former homeowners who faced foreclosure and low-wage workers into rental housing.

A result is that 2.3 million more families face pressures that leave them perilously close to homelessness.

More than 30 percent of renters in California, Florida, New Jersey and New York devote at least half their incomes to housing and utilities, according to the analysis. Other than Alaska, South Dakota and Wyoming, at least 20 percent of renters in every state face similarly high costs relative to income.

The analysis was developed for a “Make Room” awareness campaign sponsored by Enterprise Community Partners. As part of the campaign, pop stars such as Carly Rae Jepsen of “Call Me Maybe” fame, who sang for the Duartes, are performing concerts in the homes of financially distressed tenants.

Enterprise Community Partners’ analysis dovetails with findings from other organizations. The U.S. Department of Housing and Urban Development has estimated that 12 million renters and homeowners spend at least 50 percent of their income on housing.

And Harvard University’s Joint Center for Housing Studies found in a 2013 report that roughly 27 percent of renters were devoting half their incomes to rent. Those levels were “unimaginable just a decade ago,” the report said.

Average hourly wages have risen just 2.1 percent in the past 12 months, according to the Labor Department, while rental prices have climbed 3.7 percent, Zillow said last week.

Many renters lack the income to pay the cost of maintaining and operating these buildings, said Barry Zigas, director of housing policy at the Consumer Federation of America and a trustee at the nonprofit Mercy Housing.

Mercy Housing has a portfolio of 12,000 units for low-income people and senior citizens. It costs an average of $500 a month to manage each unit, Zigas said. A monthly rent of $500 would mean that anyone working full time for a minimum wage would devote more than a third of his or her income to housing.

Either the tenants must fork over a greater share of their pay each year or landlords may let buildings fall into disrepair.

“Low-income renters are getting caught in a total squeeze play, as are the owners of the properties,” Zigas said.

The Great Recession caused waves of foreclosures and layoffs that pushed more Americans into renting. More than 36 percent of people now rent, compared with 31 percent before the recession began in late 2007. The increased demand has yet to be matched by construction and renovations.

In March, the National Low Income Housing Coalition reported a shortage of 7.1 million apartments for low-income renters. The shortages are most pronounced in Nevada, California, Arizona, Oregon, Florida, Colorado and Utah.

Construction firms are building apartment complexes at an annual pace of roughly 321,333 this year, according to the Commerce Department. The rising rental prices suggest that construction hasn’t kept pace with demand, according to economists.

Miami Herald staff writer Nicholas Nehamas contributed to this report.

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