Study: Affordable Rent Barely Exists in the US, Especially the DMV
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LANHAM, Md. (WNEW) — When the calendar page is turned, do you hand over more than 30 percent of your month’s income to your landlord?
According to a Harvard study, more than half of all American renters do. And the U.S. Department of Housing and Urban Development says that’s a bad sign.
“Families who pay more than 30 percent of their income for housing are considered cost burdened and may have difficulty affording necessities such as food, clothing, transportation and medical care,” HUD says.
Many renters in the DMV find themselves in that boat.
A National Low Incoming Housing Coalition study released in March says D.C., Maryland and Virginia are among the most expensive areas for renters in the U.S.
That statement may not seem like a surprise, but the report also revealed how much a household must earn per hour to afford a two-bedroom rental unit at Fair Market Rent while spending no more than 30 percent of income on housing.
That dollar amount is $28.25 in D.C., $24.94 in Maryland and $20.93 in Virginia.
Yearly salaries based on those hourly amounts would be about $58,760, $51,875.20 and $43,534.40, respectively.
The current minimum wage in D.C. is $8.25 and it’s $7.25 in both Maryland and Virginia. However, lawmakers in both D.C. and Maryland recently voted to raise their minimum wages.
The coalition study found, in fact, that nowhere in the U.S. can a minimum wage worker afford a two-bedroom rental unit at Fair Market Rent, working a standard 40-hour work week, without paying more than 30 percent of their income.
Maybe that’s why Shaun Donovan, U.S. Secretary of Housing and Urban Development, recently declared that we are “in the midst of the worst rental affordability crisis that this country has known.”
The two states that came closest to affordability were Arkansas and Montana. In both of those states, workers would need to work 69 hours per week at a minimum wage job to be able to spend only 30 percent of their income on rent on a two-bedroom unit.
By comparison, in D.C., Maryland and Virginia, minimum wage workers would have to work 137 hours, 138 hours and 115 hours, respectively, to meet the same standard.
In that case, even two minimum-wage workers in the home splitting rent would have to work more than 68 hours per week each in D.C. and Maryland, and more than 55 hours per week each in Virginia.
But a recent study by Zillow, an online real estate database, says the median gross income in the D.C. area is still high enough to keep many locals from spending more than 30 percent of income on rent.
The city’s rent-to-income ratio, based on median rent rates and median gross income, is about 27 percent.
Stan Humphries, the chief economist of Zillow, tells the New York Times that rental costs are going up due to demand. He says the amount of U.S. renters went up by 6.2 million between 2007 and 2013, compared with a homeowner increase of just 208,000 during that time.
To read the full National Low Income Housing Coalition study, click here.