Editor’s note: This is the first of two parts. Part 2 will be published next week.
Lack of affordable and workforce housing have been increasingly acute problems across the country — and across communities.
The U.S. has a shortage of 7.3 million affordable units available to renters with extremely low incomes — below the federal poverty line or 30% below median local incomes, according to the National Low Income Housing Coalition.
A March report from the housing group found the crunch is hitting 27 million low-income households across the country.
“Extremely low-income renters are facing a staggering shortage of affordable and available homes,” said NLIHC President and CEO Diane Yentel in a statement on the report. “In the wake of the pandemic, federal housing investments are more critical than ever for sustaining our communities and helping low-income people thrive.”
The problem has gotten worse during and since the coronavirus pandemic and its shutdowns and job and pay losses, subsequent 40-year highs with inflation and resulting interest rate hikes by the U.S. Federal Reserve Bank.
Those hikes are slowing down real estate and construction markets, and will curtail wages and job growth with the goal of reducing high prices spurred by pandemic relief spending and central bank infusions.
“Between 2019 and 2021, the shortage increased by more than 500,000 rental homes, as the number of renters with extremely low incomes increased and the supply of housing affordable to them decreased,” according to the March housing report.
NLIHC’s new Gap Report finds the housing crunch existing in “every state and major metropolitan area.”
California has more than 1.3 million very poor households — including 490,500 in Los Angeles — but only 309,800 affordable rentals, according to NLIHC. The state also has a deficit of 1.45 million affordable housing units for the working poor and other lower-income households.
The federal poverty line is $14,580 annually for a single person, $19,720 for a two-person household and $30,000 for a family of four, according to the U.S. Department of Health and Human Services.
Florida has 575,379 extremely poor households and only 131,487 affordable units for that population. Oregon only has 32,113 affordable units for 141,795 extremely low-income renters.
New York City and its suburbs need more than 653,100 new affordable units for the very poor and close to 825,000 additional residences for the working poor and those earning 50% or less than local median incomes.
The problem is also pronounced in more rural states, as well as smaller communities.
Wyoming has a deficit of 10,215 affordable housing units for 17,417 poor households. Montana needs 15,741 new affordable units to close its low-income housing gap for more than 28,600 households.
Taking on the challenge in Wyoming
“Housing has been a challenge for a while here in Cheyenne and Laramie County,” said Cheyenne Mayor Patrick Collins.
Mountain West areas such as Wyoming, Montana and Idaho have seen substantial population growth in recent years.
“There is just not enough inventory in rentals or the ability to buy,” Collins said of the affordability crunch, rising prices and now the impact of higher interest rates.
Collins said the local waiting list for affordable housing help has grown to 1,800, up from 1,000 in 2021 when he was sworn in as mayor.
“We have a rising need,” Collins said, noting the impacts of inflation, including shelter and food, on local households. “They don’t make enough money to pay the rent with all the inflation.”
In Cheyenne, a two-bedroom apartment goes for $1,800 per month or more, the mayor said. “Rents have definitely gotten more expensive,” Collins said.
Sticker shocks for rising rents and entry-level home prices are happening across the country — with higher mortgage interest rates also now accompanying the real estate price spikes during and after the pandemic.
But Collins, housing advocates and some private-sector interests are working on the problem.
“We’ve gone out and recruited builders to help bring in more new construction,” said Collins.
But he said those efforts and overall building are being challenged by higher interest rates, with the Fed hiking lending costs in its response to high inflation.
Cheyenne has also looked to its zoning rules and development codes to see where affordable and workforce housing can fit and fit better.
“We’ve changed some rules to allow for smaller homes to be clustered within an open area,” Collins said.
That has helped spark a new cottage development, as well as infill projects.
Dale Steenbergen, president and CEO of the Greater Cheyenne Chamber of Commerce, sees some progress regionally on bringing more housing for workers — including younger professionals and those with frontline jobs key to the economy and local communities.
“We’ve focused on workforce housing,” Steenbergen said.
That was keyed by a 2016 local housing study that showed the need for 5,000 new units and efforts to match builders and developers to what the local market needs.
“The average wage in Cheyenne is pushing $27 per hour,” Steenbergen said. “We have some available and very nice living units for $1,400 per month.”
Steenbergen said the efforts have been progressing, with new units coming online and a number smaller infill and greenfield projects happening, totaling “hundreds of units fitting our wage profile.”
The bigger challenge, he said, is addressing the housing shortage for lower-income households. That is still a steeper hill to climb, the chamber CEO said.
“We actually have projects being built all around town,” said the mayor, adding that those new units rent for between $1,300 and $2,000. “That will add 1,000 more units.”
The affordable housing problem extends to cost burdens, with rents across price points up significantly since the pandemic.
Rents increased 22.6% in Florida and 18.6% in Tennessee just between 2021 and 2022, according to an analysis by financial firm Credit Karma.
They are up by more than 30% the past three years in high-growth markets such as Tampa (39%), Tucson (37%), Miami (37%), Riverside (33%) and Orlando (30%), according to an analysis released March 27 by The Apartment List real estate firm.
Some of the rent numbers are eye-catching in popular submarkets. The median rent for a two-bedroom in Hoboken, New Jersey is more than $4,200 per month. It’s approaching $3,600 per month in Miami’s Aventura area and more than $3,500 per month in Foster City and other areas of Silicon Valley and nearby San Francisco, according to The Apartment List.
Rent hikes are stressful across income categories, with difficulties finding apartments or homes for rent under $1,500 per month in many communities — both large and small.
But they are most intense for poorer families and households. According to NLIHC, 83% of low-income renters in Florida and 79% in Texas face extreme cost burdens when renting. That is when households spend more than 30% of their income on housing.
The cost burden figure stands at 78% for poor households in California, 80% in Oregon, 77% in Delaware, 75% in Maryland, 66% in Idaho, 64% in Wyoming and 65% in Montana.
Local governments’ efforts
Across the country, jurisdictions large and small have been trying to address a housing crunch that hits from the very poor up the socioeconomic ladder to the middle class.
Some local governments are also looking at their own zoning rules, as well as property holdings as they navigate housing shortages and high prices. Others are trying to better coordinate housing policies across agencies and jurisdictions.
In March, Sarasota County commissioners on Florida’s increasingly expensive Gulf Coast and areas of southwest Florida still seeing the housing and inflationary impacts of Hurricane Ian have approved giving an 18-acre property in Englewood to a housing nonprofit, the Community Housing Trust.
The wooded, swampy and undeveloped property is slated to become home to 40 to 50 single-family detached affordable units along with protected wetlands areas, which includes a bald eagles’ nest. CHT President Brad Baker said some of the affordable units will be rentals, while others will be for sale.
Baker’s local ties and positive reputation with local officials helped forge the deal with Sarasota commissioners opting to donate the land (which the county acquired in 2004 for $800,000) instead of previous plans that called for a $200,000 purchase price.
Back in Wyoming, Collins said many of the affordable projects he sees are also in the 45- to 50-unit range.
Some of that stems from available federal and other housing grants, available land and frequent community preferences for smaller affordable and workforce apartment footprints.
But it is an uphill climb to fill a need for hundreds and sometimes thousands of needed new housing units with smaller projects.
“We need to build hundreds of units,” Collins said.