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Amy Traub

Who Can Afford to Live Here?

It always seemed like there should be a significant silver lining to the collapse of the nation’s housing bubble. In a nation where 40 million Americans spent more than a third of their income on housing (large pdf) -- including more than 18 million paying half or more of their income – when the market was near its peak, shouldn’t falling home prices at least benefit people struggling to afford a roof over their heads?

Yes, says a new report by the Center for Housing Policy. And no. The group’s annual “Paycheck to Paycheck” report notes that “historically low mortgage rates and steep drops in home prices” in 2009 meant that the income needed to buy a median-priced home did indeed fall in most of the nation’s metro areas. The problem? Costs still didn’t drop enough to make up for the moderate incomes earned by “key community workers” in many cities. With data that should serve as wake-up call to those launching attacks on “overpaid” public sector workers, CHP finds that police officers and elementary school teachers cannot afford to purchase a typical home in four out of five metro areas. The typical firefighter or librarian can’t afford the median home in the New York, Los Angeles, Chicago metro areas, or dozens of others. And nowhere is a school bus driver’s income enough to purchase the median home.

To make matters worse, while housing prices were falling, rents were going up. In many markets, “Paycheck to Paycheck” reveals, rents rose faster than recession-battered incomes, meaning that for those who never had a prayer of owning a home in the first place, housing became even less affordable. Critical workers like retail salespeople and janitors could not afford the median rent for a two-bedroom apartment in any but one metro area. Licensed practical nurses couldn’t make rent in a quarter of the nation’s cities. And because the study is designed to look at how people in a range of jobs fare when it comes to affordable housing, it doesn’t even capture the millions of Americans who have lost their jobs altogether.

The Center for Housing policy is, obviously, a housing group. But what makes their study so compelling is that it shines a light on not only the lack of affordable housing in many American communities, but also on the problem of inadequate income. What’s the waitress in Dallas supposed to do when she can’t even afford to rent a typical one-bedroom apartment? Spend a higher proportion of her income on rent than analysts consider affordable, and, as a consequence, cut back on food, utilities, medical care and maybe an effort to save for college; rent a worse-than-typical apartment, one in poor condition or in an unsafe neighborhood; double-up with roommates; move back in with her parents? And what if the waitress herself is a single mother? High housing prices and low wages combine to cripple Americans’ standard of living. We need policy solutions that address both.

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Posted at 8:54 AM, Mar 25, 2010 in Economy | Housing
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