News / Business

Explosive local rent increases far exceed growth in incomes

Agencies had to ask feds to reconsider assessment for 2016

By Patty Hastings, Columbian Social Services, Demographics, Faith

Published: July 5, 2016, 9:12pm

Crews work in August 2015 to build an apartment complex to serve low-income residents on Southeast First Street, east of 164th Avenue. The vacancy rate for apartments in east Vancouver is just under 3 percent, creating pressures on renters competing for scarce rental units.

As economists and local housing advocates have been saying, growing rent costs outpace wage growth. But the numbers reveal just how wide the gap is: Monthly rent for a two-bedroom apartment in Clark County has increased 37 percent since 2005, while incomes among renters increased at least 11 percent at the same time.

In 2005, two-bedroom apartments in Clark County went for about $717. If they’d followed the general rate of inflation, that would be $882 now; instead, the going rate is $1,208. That’s according to Fair Market Rents set by the U.S. Department of Housing and Urban Development, which uses local housing surveys each year to determine the going rate for a modest rental.

Census data on incomes are available through 2014; from 2005 to 2014, median incomes for renter-occupied households increased 11 percent — adjusted for inflation — to $40,851. Assuming that renter incomes continued to rise since then at the average pace of the last few years, then the median renter-occupied household currently makes a little over $45,300 annually.

Projecting incomes is tricky, said regional economist Scott Bailey, who works for the state Employment Security Department.

While Clark County has been attracting higher-wage jobs, incumbent workers and lower-wage workers haven’t really seen wage increases, Bailey said. Job churn — that is, when workers change jobs to improve their prospects and pay — is at a low level, he said.

“I don’t know if that’s a cause or a result of wages’ not going up,” he said. “I suspect it works both ways.”

Median renter-occupied household income slowly increased until 2009, when it dropped more than 11 percent, according to census estimates. Since then, income among renter households wavered and then started to see gains.

Complicating the numbers, though, is that people with higher-than-expected incomes are renting instead of buying, because of the low inventory and high prices of residences for sale in Clark County.

Regardless of who renters are, rents are still rising faster than their incomes.

“That’s created the housing crisis that we’re in,” said Andy Silver.

He’s the executive director of the Vancouver-based Council for the Homeless and part of Bring Vancouver Home, a group advocating the passage of an affordable housing levy this November. At a rate of 36 cents per $1,000 assessed property value, the proposed city of Vancouver levy would generate $6 million annually for seven years to buy, build and preserve low-income rental housing, and prevent homelessness.

About half of Clark County renters are considered cost-burdened by Housing and Urban Development standards because they spend more than 30 percent of their income on rent and utilities. That’s nothing new, though. Census data indicate that’s been the case for years. The difference is that nowadays, renters are faced with low vacancy rates and stricter screening criteria, Silver said, so they don’t have the mobility or stability they used to have.

There were an estimated 46,146 renter-occupied households in the county in 2005 and 60,913 in 2014, an increase of 32 percent, according to census data. At the same time, the number of local homeowners increased 5 percent.

Nationally, 2005 to 2015 saw the highest increase in renter-occupied households of any 10-year period, Silver said.

Rapid increases

Fair Market Rents are used to determine payment standards for Section 8 subsidized housing vouchers. In Clark County, 2,776 households use these vouchers. For 2016, HUD initially set the local FMR for a two-bedroom apartment at $1,026, but by the time that number was published, it was outdated and didn’t accurately represent rising rent prices.

Area housing agencies, including the Vancouver Housing Authority, paid about $75,000 for Washington State University to conduct a market rent survey and appealed the numbers using the survey results. So the 2016 FMR got bumped up to $1,208.

In his 16 years working at the VHA, David Overbay doesn’t recall the local FMRs’ ever being revised before. Typically, the figures are published and housing authorities get notified in October.

In 2015, the FMR for a two-bedroom was $944. The $264 difference is an increase of about 28 percent from 2015 to 2016.

Fair Market Rents in Clark County

2016

Studio: $886

One-bedroom: $1,021

Two-bedroom: $1,208

Three-bedroom: $1,757

Four-bedroom: $2,109

2005

Studio: $535

One-bedroom: $620

Two-bedroom: $717

Three-bedroom: $1,044

Four-bedroom: $1,257

Prices not adjusted for inflation.

Source: U.S. Department of Housing and Urban Development

Those searching for a two-bedroom apartment on Craigslist.org will find some units above $1,208 and some below. A new complex, for instance, recently listed a two-bedroom apartment for $1,544 while another place had a two-bedroom going for $1,060.

From 2015 to 2016, the area’s FMR for a one-bedroom grew 29 percent from $793 to $1,021. Studios went from $682 to $886, a 30 percent increase. Overbay, the federal program policy manager, assumes FMRs will go up again for 2017, but probably not as much.

What’s being built the local apartment market, aside from subsidized projects designated as affordable for low- to moderate-income families, is at the higher end, Silver said. There’s a trickle-down effect when those who can afford to move to those higher-end rentals and open up space at more moderately priced places, but, “The people who are most vulnerable in our community are going to be hurt the most by this rental market,” he said, adding that they’ll also be the last to see relief.

Rapid increases

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