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July 29, 2014, 2:52 pm

Housing market increasingly squeezes poor

Philadelphia can be a great city to live in — if you can afford it.

And according to the Housing Alliance of Philadelphia, more and more low-income Philadelphians are feeling the financial squeeze of finding adequate and affordable housing.

The National Low Income Housing Coalition recently released a sobering report, which concluded that nationally, more than 25 percent of all renter households now must spend over half their income on housing related costs. Those problems become multiplied and magnified when factoring in low-income renters who do not receive any government subsidies.

“Housing affordability problems disproportionately impact the lowest American households … in 2010, 53 percent of the 19.4 million cost-burdened renter households were households earning under $20,000 a year,” the report read. “Renters earning under $20,000 make up one-third of the total renter population.”

That resonates in Philadelphia, especially when considering there are only 36 units out of every 100 available that are both available and affordable “for people that are severely low income,” according to Pennsylvania Housing Alliance Executive Director Elizabeth Hersh, who defined “severe low income” as those renters and prospective renters who earn $20,000 annually or less.

“There’s only about a third of the housing available that is needed; it basically means you have a supply-side problem,” Hersh said. “Making $20,000 is about $12 dollars an hour, which isn’t a bad wage. It’s four dollars above minimum wage, which means people that are working and playing by the rules can’t afford housing.”

The Department of Housing and Urban Development recently released a report that backs up the claims leveled by Hersh. That document, “Worst Case Housing Needs 2009,” found that the number of renters with worst case needs jumped 20 percent between 2007 and 2009, the last year of quantifiable data. The report defined people with “worst case needs” as severely low income Americans earning at or below 50 percent of the Area Median Income, or AMI.

“Over the past several years, housing prices have continued to rise, and have risen much faster than income, especially for people of low income,” Hersh said. “So you have this widening gap between what people earn and how much it costs to rent a place. And that’s one thing that has made the problem worse.”

Hersh also believes that recent government cutbacks have dampened the “American Dream” of home ownership or living in a decent apartment; the results of a predatory lending industry that issued mortgages to people unable to make payments has trickled down to the rental sector as well.

“They really weren’t building a healthy rental market, and haven’t had adequate growth in the rental market,” Hersh said. “There’s an over-supply of owner-occupied units and an under-supply of high-quality rentals for people living on real wages.”

There is also another obstacle blocking the creation of quality housing for low-income renters, and that boils down to the very nature of being in business to begin with.

“Let’s say you’re going to do the right thing; you own an apartment, and decide to rent to a low-wage earner, someone making ten bucks an hour,” Hersh theorized. “That rental [revenue] stream is not enough to cover your own expenses” incurred from owning the rental unit.

“In Philly, there’s plenty of [overall] rental stock, but you can’t keep the rent low and meet housing codes.”

All is not lost for low-wage earners aspiring to move into decent housing, Hersh said.

“From a rental perspective, there’s lots we can do; in Philadelphia, there’s the local housing trust fund,” Hersh said. “We also could fund the state housing fund. There’s also a national housing fund, dedicated exclusively to rentals.

“The president has put a billion dollars in his budget for that, which would bring a nice chunk of change to Philadelphia.”

Hersh feels other politicians beyond the president should help via legislation.

“We should look at it like building bridges and create the infrastructure and financial incentive to provide quality and affordable housing. I think the way we’ve been going, shrinking public investment in the housing market is the wrong direction,” Hersh said. “From our perspective, the housing market leads the way out of the recession. The private market alone — or capital and tax credits and subsidies — cannot provide adequate supply.

“We are missing an opportunity to grow the market and economy.”

 

Contact Staff Writer Damon C. Williams at (215) 893-5745 or This email address is being protected from spambots. You need JavaScript enabled to view it. .