Finding an affordable place to live remains a challenge — especially for renters — a decade after the Great Recession housing crisis, according to a report out this week.
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Finding an affordable place to live remains a challenge — especially for renters — a decade after the Great Recession housing crisis, according to one report.
The U.S. Census Bureau issued a release Nov. 4 detailing improving conditions for homeowners, but persistent problems for those stuck in the rental market.
Based on data from its American Community Survey, the agency reported on what are referred to as “burdened” households, which are those families spending 35% or more of their monthly budget on housing costs.
“A burdened owner-occupied household is one where the homeowner spends 35% or more of their monthly household income on mortgage payments, utility bills, real estate taxes, property insurance, and any required condominium or mobile home fees,” the report states.
The 10-year trend reveals improvements for some and stagnation for others, based largely on whether residents rent or own, according to the report.
As of 2018, only 20.9% of homeowners were classified as burdened — down nearly 8 points from the apex of the crisis of 2008 when 28.8% of owners ranked among the budget-challenged.
For millions of renters, however, the situation remains bleak.
“The picture wasn’t quite as bright for the nation’s 43.8 million renters. An estimated 40.6% of rental unit residents spent 35% or more of their monthly household income on rent and utility bills last year. That’s a dip of only 0.2 percentage points from 2008 when 40.8% of renters were burdened,” the report states.
The problem remains pervasive across the country, the agency said.
In 81 metro areas, more than 40% of renters were burdened in 2018 – the same number of communities reported a decade prior.
Nation-leading record population growth in the Valley has put pressure on both housing demand and employment — driving up the cost of the former, while holding the latter steady and well-short of income levels needed for many full-time workers to afford an apartment, let alone enter the home buyer’s market.
According to the U.S. Census Bureau, of the county’s estimated 4.4 million residents, half are earning a gross income under the $30,186 annually — or about $2,500 monthly, roughly equivalent to full-time employment at $14.50 an hour.
With a median mortgage payment of nearly $1,500 and apartments going for a median gross monthly of $1,033, affordable housing remains just beyond reach for many full-time workers in the Valley.
And moving from the rental market to the owner market is no easy task, said Roland Murphy, director of research for ABI Multifamily Apartment Brokerage & Advisory Firm in Phoenix.
“Young adults are moving out of their parents’ basements in heavy numbers except here in Arizona. That might be because of the barrier to household formation since almost everything delivered here is Class A or A+,” Mr. Murphy stated.
While workforce-affordable rentals may range from $887 up to $1,036 across the Valley, most new apartment development aims for the luxury market, where rents on average run from $1,282 to $1,486 in the Phoenix market.
An estimated 80% of new complexes planned for completion this year fall into the high-end categories, according to ABI’s analysis. The affordability problem has not improved, despite strong growth in other areas of the local economy, according to Mr. Murphy.
“We’re one of the lowest household formation markets in the country despite being among the best economic development success stories in the nation in terms of job creation and generalized opportunities,” he said.
Ongoing efforts
The Maricopa Housing Authority and its development partners opened their latest affordable housing, mixed-use development yesterday.
Located in Tempe, the 56-unit apartment River at Eastline Village complex is a public-private partnership driven by federal programs aimed at providing long-term solutions for those in need, according to Brian Swanton, president and CEO at Gorman & Company, which built the project.
“The Housing Authority was one of the earliest adopters of the federal government’s innovative Rental Assistance Demonstration program in the U.S., which encourages housing authorities to utilize public-private partnerships to modernize their stock of publicly-assisted housing,” Mr. Swanton stated in a press release.
Financing partners include the Housing Authority of Maricopa County, the Arizona Department of Housing, the U.S. Department of Housing and Urban Development, the city of Tempe, Chase Bank, Boston Capital and the Local Initiatives Support Corporation.
The Housing Authority and Gorman are nearing completion of another affordable housing project in the Original Town Site neighborhood of Surprise.
The 100-unit complex, called Heritage at Surprise, will open in the first quarter of 2020, according to Surprise City Councilman Ken Remley, who represents District 4, which includes the OTS.
He said city leaders recently toured the facility still under construction, which will include apartments and shared-use facilities to help residents make a better life for themselves.
“They’ve got 4,500-square-feet of amenities devoted to such things as before and after-school care for the kids, they’ve got programs for them there, they’ve got job assistance, case workers, a computer lab … all kinds of stuff that you would not normally see,” Mr. Remley said.
The facility will provide a computer center, workforce connection services, financial literacy classes, youth programming and a Kids Café with afterschool activities, among other options, according to a release from Gorman.
The Surprise project partners include the Housing Authority of Maricopa County, Arizona Department of Housing, HUD, LISC, city of Surprise, Enterprise, Chase, Hunt, Mercy Care and Freddie Mac.
Mr. Remley suggested new apartment construction in the OTS is also driving development of new homes in long-vacant areas in the community.
“The value to the community, oh my God, it’s going to be transformative!” he said. “In the last 18 months there have been 21 new homes built on lots that were previously vacant for years. There are nice homes going in all over the place.”
All 100 apartments are already accounted for, Mr. Remley said. But the Housing Authority is maintaining an interest list to e-mail information and notices of any future openings in the complex.
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