There Are Actually Two Problems With Rent
Either the rent is too high, or the income is too low.
For all of you who read Slate this morning and thought “I bet Nicole is going to write about this on The Billfold,” YES YOU ARE CORRECT:
The crisis is not confined to the American poor. Americans of all incomes have flooded the rental market, leaving the rental vacancy rate at a three-decade low and the homeownership rate at a five-decade low. Rents continue to rise faster than inflation. More than 11 million households pay half their income in rent; nearly half of all tenant households pay more than 30 percent of income in rent, the standard mark of affordability.
Slate’s Henry Grabar notes that there are two distinct reasons why more than half of us pay more than 30 percent of our income in rent: either we’re in a high-income area where rents have become overwhelmingly inflated, or we’re in a low-income area where rents are reasonable, but people aren’t earning enough money to afford them.
Grabar quotes Chris Krehmeyer, the CEO of St. Louis community development organization Beyond Housing:
“Our dilemma is not affordability,” Krehmeyer said. “We have a pretty significant single-family rental portfolio, three-bedroom single family homes, 1,200 square feet, that we rent for $675. Affordability is not an issue.” The crowd, made up mostly of big-city journalists, gasped audibly.
“Come to St. Louis, come to the Midwest,” he continued. “The challenge for us really becomes that even at that great price point, there are so many families that reach out to us and we say, ‘Sorry, we can’t rent to you because you don’t make enough.’ Even at those low price points. And that’s a function of poverty.”
You could nitpick and say that both high- and low-income areas have the same problem: rents are proportionally higher than people can afford, regardless of their earnings. (Why isn’t that three-bedroom house renting at a price point that matches local incomes?)
But here’s the reason they need to be treated differently:
The short answer is that rental affordability is not, despite appearances, a national problem. It’s two separate problems — one with rent, and one with income — that look like one. Solving the former without addressing the latter would make America more unequal, not less, because the cities that need the most help with rent also have the highest incomes.
Grabar also makes the argument that solving coastal and Midwestern rent problems the same way would drive more people towards the coasts, which… I’m not sure about that. If we could all afford to live where we live, then the reasons to move will change. People will still move to certain cities for job/cultural/social opportunities that they can’t find where they are. But they won’t move because they can’t afford to stay.
What do you think of the “rent is two problems” argument? Also, did any of you follow Slate’s link to that Zillow page that shows you how much you should be earning to make your current rent “affordable?”
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