Wages lag behind rental rates in Clark County

Report: County ‘housing wage’ is $17.73; average renter earns $12.96

By Scott Hewitt, Columbian social issues & neighborhoods reporter

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Thirty-four percent of all Clark County residents — approximately 54,000 households — live in rental housing. But approximately half of those renters can’t afford the federally determined fair-market rent for a two-bedroom apartment here — not without spending too much of their income on housing, that is.

To learn more

Read the National Low Income Housing Coalition’s annual report, titled “Out of Reach”

That’s according to the National Low Income Housing Coalition, a nonprofit think tank that released its annual analysis of housing affordability Monday. NLIHC crunches government data from sources like the Department of Housing and Urban Development and the Bureau of Labor Statistics to compare average incomes and rental costs nationwide, state by state, in major metropolitan areas and in every county in the U.S.

Did you know?

According to the federal government, rent is considered affordable if it, plus utilities, is no more than 30 percent of a renter’s gross income.

It found that Washington is the 16th-most expensive state if you’re hunting for a two-bedroom apartment. The “housing wage” for Washington is $18.65, NLIHC found — meaning, that’s the hourly pay one full-time earner needs to afford that fair-market, two-bedroom rental without spending more than 30 percent of gross income. Spending no more than 30 percent of gross income on housing, including utilities, is the long-held standard of housing affordability set by HUD.

Housing wage compared to real wages in 2014

The National Low Income Housing Coalition uses the term “housing wage” to mean the full-time wage needed to afford a fair-market, two-bedroom rental.

Overall housing wage for Washington state $18.65

Housing wage for Clark County and Portland metro area $17.73

Average real wage earned by Clark County renters $12.96

Washington minimum wage $9.32

Sources: U.S. Department of Housing and Urban Development, National Low Income Housing Coalition

The National Low Income Housing Coalition’s annual report found that the nationwide two-bedroom housing wage is slightly higher than the state’s at $18.92.

That means the nationwide housing wage is well beyond double the federal minimum wage, which is $7.25. Plus, NLIHC adds, the real value of the minimum wage is 20 percent less than it was in 1981.

There are now 40 million renter households in the United States, according to NLIHC. That’s an increase of 1.1 million over the previous year and the continuation of a fast growth rate in the rental market overall. The market has tightened in recent years and landlords are raising their rents in response.

“In no state can a full-time minimum-wage worker afford a one-bedroom or a two-bedroom rental unit at fair market rent,” the report summary says. The direst need for affordability is among “extremely low-income” households generally bringing in less than $20,000 a year; the NLIHC report found that there are just 31 affordable rentals for every 100 extremely low-income households in the nation.

Renters at this low end of the income spectrum tend to spend much more than HUD’s affordable 30 percent on rent. According to NLIHC, three-quarters of them spend closer to 50 percent of all they earn to keep roofs over their heads.

“Rents have recently risen faster than incomes here in Clark County,” said Lyn Ayers, president of the Clark County Rental Association, which works with landlords and tenants. “Operating costs are going up faster than tenant wages. I have felt for quite some time that many renters are only one paycheck away from being unable to meet their expenses.”

The report also points out that aging low-income rental properties are often replaced or remodeled into higher-income rentals, and that the overall proportion of low-income housing in the U.S. is shrinking.

“Only a sliver of the rental market remains affordable and available to the lowest income households,” the report notes. “The level of investment in new affordable housing units today is insufficient to meet the demand.”

Ups and downs

Fair-market rents

2014 fair-market rents for Clark County and the Portland-Vancouver-Beaverton metropolitan area

1 bedroom $774

2 bedrooms $922

3 bedrooms $1,359

4 bedrooms $1,633

Sources: U.S. Department of Housing and Urban Development, National Low Income Housing Coalition

Clark County remains more affordable than Portland and some of its other suburbs, according to real estate broker Phillip Barry, an apartment specialist with Joseph Bernard Investment Real Estate. But there’s no question that the whole regional rental market has been inflating for years, he said.

“We are in a time when we’re seeing owners taking advantage of low interest rates and upgrading their buildings,” he said. “They’re putting money back into their buildings and they’re raising their rents.”

Plus, he said, there’s now a cohort of young adults who watched older homeowners — their parents, for example — struggle to make mortgage payments and even face foreclosure during the Great Recession. “They want more flexibility and they saw what happened over the last 10 years,” Barry said. Now they are contributing to a tighter, more expensive rental market.

At $17.73 an hour, Clark County’s “housing wage” is almost a dollar more affordable than Washington’s $18.65. But the average hourly wage earned by renters in Clark County is $12.96, according to NLIHC. Renters earning that average wage must work 1.1 full-time jobs for that fairly priced single-bedroom flat and 1.4 full-time jobs to earn the two-bedroom apartment.

And if you earn Washington’s minimum wage, $9.32, the single bedroom will require 1.6 full-time minimum-wage jobs, and two bedrooms will cost you 1.9 full-time jobs.

NLIHC points out that according to HUD’s own 30 percent formula, $485 is the maximum rent that should be affordable to a single person earning Washington’s minimum wage; $674 should be affordable to a single person making the average wage for a renter in Clark County.

But fair-market rents in Clark County are $774 for a single-bedroom unit and $922 for a two-bedroom unit, NLIHC said.

“Rents are going up, vacancy rates are going down, there are more applicants per unit than available units,” Ayers said. But he added that “tenant quality” is on the decline while landlord expenses and crime and gang activity are rising.

“So Clark County needs more higher-paying jobs, or at least more security with the jobs that are here,” he concluded.

The most expensive state in the nation for housing is Hawaii, where the two-bedroom housing wage is $31.54, and the lowest is Arkansas, where it’s $12.56. The most expensive metropolitan area in the nation is San Francisco, where the housing wage for a fair-market two-bedroom unit is $37.62.