Many US workers struggle to cover housing costs across major metro areas

Many US workers struggle to cover housing costs across major metro areas

In the midst of a housing and economic recovery, many workers key to Americans’ summer vacation plans struggle to afford housing in metro areas across the country. In the latest edition of Paycheck to Paycheck, Center for Housing Policy (CHP) researchers draw on the latest data from the first quarter of 2013 to reveal the gap between wages and the costs of housing, both rental and owned, in 207 U.S. metro areas.

This report looks at a variety of wage metrics and focuses in on travel and tourism workers – areas of the economy which were booming until recently, and have been consistently plagued by low wage jobs. Of these professions, only one—flight attendants—has an average wage high enough to afford the mortgage on a median-priced home in the U.S., and workers in two of the jobs—housekeepers and wait staff—cannot afford the typical rent on either a one- or two-bedroom apartment in any metro area.

Incomes for housekeepers and wait staff (salary range for both professions is approximately $17,000-22,000 per year gross), were not enough to afford the fair-market rent for a two-bedroom apartment in any of the 207 metro areas studied. The slow housing recovery in some markets made homeownership more affordable than renting – as long as workers had enough savings for a down payment and could obtain a mortgage.

In only eight of the metro areas could a housekeeper afford the mortgage on a median-priced home, and wait staff could afford to buy a typical home in just ten metro areas. Lagging home prices, however, were not universal across the study. In the 25 most expensive markets covered, which includes many popular vacation destinations, even relatively high-earning flight attendants could not afford to own a median-priced home.

According to data in the report, the lowest price rental city was Wheeling, West Virginia, with a median rental price of $615/month – out of reach for many of the professions studied. The national median rental price is $977/month. While many cities on the list come in below the national average, you’d often be hard pressed to find jobs in these towns at all. Detroit, Michigan, for example comes in around the middle of the overall list, with the median rental price at $821/month. Detroit just filed for municipal bankruptcy citing a significant drop in tax base, owing at least in part to a lacking local job market.

Homeownership data isn’t that much better. South Bend, Indiana comes in as the cheapest place to own a home, although that typically isn’t an incentive to go buy one,  as buyers aim for high return on investment or increases in equity. Prices there actually dropped, to a median home price of just over $67,000 compared to $69,000 the year prior. This could be good news, however, for low wage workers looking to own.

In other markets, housing prices are going up, which is good news for people who already own, but bad news for those who don’t and hope to. Some cities saw increases that would amount to potential homebuyers needing as much as 30% more in income to qualify to purchase the home, before a down payment. Nationwide, potential homeowners need to make 6.7% more in income than they did last year to afford a mid-priced home, in an environment when real wages are actually on the decline across the board.

Overall, the report pokes some pretty big holes in the idea that Americans can just work at Costco or the Howard Johnson’s and get by. In actuality, it looks like getting by means an efficiency studio and maybe a roommate.

“When housing costs consume more than half of household income, workers may be forced to live in distant communities at or beyond the edge of the metro area where housing costs are lower but the commutes are long and transportation expenses are higher. Other workers will cut back on essentials such as food and health care in order to devote large portions of their paycheck to rent. In the Honolulu metro area, for example, nearly 86% of income would be required for wait staff and 89% for housekeepers to afford a typical two-bedroom unit. This leaves little left for other essentials,” the report says.

Knock on effects of increased traffic congestion and air pollution for transportation are also part of this equation. Or, as is the case in much of the country it also means that people will forego things like food because they don’t have a car, and mass transit isn’t available, thus forcing them to live within a certain distance from work.

In some cases, two incomes may not be enough either, if one of those incomes isn’t above $100k. “For example, in the San Francisco metro area, the combined wages of a front desk manager and auto mechanic would still leave a shortage of $71,000 in annual income before a median-priced home would be affordable,” the report says.

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