Housing Affordability: Worse for Renters, Better for Buyers

by Categorized: Housing Date:

Falling house prices and crazy-low interest rates have put home-buying in reach of more people, but renters continue to suffer as the supply of apartments shrinks and median wages fall, a report Tuesday shows.

The so-called housing wage, the hourly pay a household would have to make in order to afford a typical 2-bedroom apartment, rose to $23.58 in 2011, from $23.37 a year earlier, the Hartford-based Partnership for Strong Communities said.

That’s about $49,000 a year in income, and it assumes the apartment is $1,225 a month, since housing is considered affordable if it costs less than 30 percent of a household’s income.

That increase in the housing wage is less than in several recent years; the figure was $13.94, or $29,000, in 2004.

And the state –last in the nation in housing construction in 2011 and over the last decade — is short of the number of low-cost or subsidized apartments that are available, by 82,000, the report said.

In 2011, 52 percent of the state’s 436,538 households that rented in 2011 paid more than 30 percent of their income for their apartments or houses, up slightly from 51 percent a year earlier. Among all renters, 26 percent, or 114,891, made less than 50 percent of the state’s median income and paid more than 50 percent of their income in rent.

The percent of people who rent in Connecticut has risen over the last few years as some are unable to qualify for home mortgages and some have chosen to rent because house prices are falling.

Those falling prices, combined with historically low mortgage interest rates, have led to a decline in the number of towns in which a household at the statewide median in pay cannot qualify for a mortgage at the local median price. In 2011, there were 88 such towns, down from 112 in 201o.

The most affordable towns by that measure were, in order, Waterbury, Bridgeport, New Britain, Norwich and Windham — indicating a shortage of houses in Hartford and New Haven. The least affordable were Greenwich, New Canaan, Darien, Westport and Wilton, according to the Partnership’s companion study on towns.

The Partnership’s annual affordability report has been grim in recent years but comes with some notes of hope this year. Gov. Dannel P. Malloy has allocated $300 million for low- and moderate-cost housing and $200 million for subsidies and other supportive programs.

And, the reports note, there has been a significant uptick in the number of construction permits for multi-family housing in Connecticut.

The danger in this state is that rising interest rates and inflation, which are dictated by national trends, will happen before the state’s economy recovers, leaving Connecticut in a further squeeze.

As it is, the report said, 55 percent of real estate agents reported rising rents in August of this year, compared with 39 percent at the end of 2010.

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12 thoughts on “Housing Affordability: Worse for Renters, Better for Buyers

  1. Fran Dagostino

    After looking for an affordable apartment for the past 6 weeks, I know what this article says to be true. The waiting list for affordable – not only subsidized but affordable – is over two years in most places around the state, a discouraging situation for people who need housing now. We as people cannot have it both ways, not investing in and making affordable apartments available, while we complain about ‘the homeless.’ Don’t look now, in the blink of an eye, it could be you.

  2. Steve B.

    I appreciated your article. One detail concerned me however…You mentioned that Connecticut is short 82,000 subsidized apartments. Why should the state provide subsidized housing to these people? They are not “earners.” The money will be exhausted one way to people that do not contribute taxes. Secondly, our state cannot balance a budget as it is! Where will the money come from to support such housing? Or construct such housing? It would be one thing to provide such housing as a temporary fix…to give people a “pick me up” so to speak. But until such assistance becomes less of a “lifestyle” I cannot support a call for increased subsidized housing. Thanks for your time.

  3. Larry Berk

    Steve, you’re right. We don’t need that subsidized housing… Unless of course you would like to have house cleaners, Walmart employees, restaurant servers, fruit Pickers, construction laborers, convenience store employees, janitors, newly minted teachers, office receptionists and landscapers.

  4. SadandTrue

    I am a landlord, I refuse to raise the rent on my tenants. My taxes did go up a little but I’ll take the hit and by all means, I am not rich. I just got stuck with this due to the housing market and cannot sell in this economy. I just wish some landlords would not take advantage of the situation.

  5. L

    The biggest issue with rent in CT is that its not regulated and controled. Private landlords have no guidelines and nothing stops them from charging what they charge. Fewer and fewer places are even including heat and hot water anymore. The last few places I looked at wanted 1st, last, and 2 months for security just to get in the door. The rent standard in ct these days is the entire mortgage of the building for a small apartment, minimal maintanence, no utilities included and no ammenities. If thats too much for you, oh well the next person will gladly pay that. These “slumlords” are allowed to gouge people like this with high rent, not include any utilities, high deposits, high standards for credit scores etc.

  6. Bill Morico

    Good article.. but we need to look for the solution in the cause of the problem: LOW WAGES. Raise the minimum wage to $20.00 per hour, and in the future, employers must pass the proportionate share of the all productivity increase to their workers.

    If in fact corporations had passed on the workers share of productivity increases in the last 30 years to their employees, in proportion to the share of the employers costs that the workers contributed, we would not have this problem. Look to the simple solutions first.

    1. old capitalist

      Why not raise the minimum wage to $50/hr or $100h/hr., then lets see, it might cost you $100 for a happy meal, that is if you hold the pickle and a few fries.

      Simply solutions for simply people.

  7. L

    Exactly Bill. We need solutions, not just basicly defining that yes the state has a housing affordability problem because rents are too high, mortgage standards are too strict for the average person, and wages in CT are def too low considering the cost of living in this small state that has nothing to justify the higher than average cost of living.

    1. old capitalist

      Lets see – high gasoline taxes, high property taxes, high sales taxes, high income taxes, higher utility costs – Hey L, any idea why the cost of living is higher here than the average? Also, If wages are so low, one would think that companies would be flocking here to take advantage of low labor cost – guess what? – it “aint” happening.

    1. old capitalist

      - which might possibly deter job creation – or raise the price of a cup of coffee to $10 bucks.

  8. L

    True there is no justification to why CTs cost of living is so high when every other state surrounding it is more appealing and has more of offer for equal or same cost. Even our license plates advertise that the state is boring. Im one of those people thats forced to “double up” and live with family. Could be worse yes, but you cant do that forever no matter how well you get along. The only affordable housing in desirable areas is all reserved for Senior Citizens. Do they need it, no doubt they do, but people younger than age 65 do too.

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