Moderate-wage workers can't afford a home, report says
By Emmet Pierce
UNION-TRIBUNE STAFF WRITER
6:47 a.m. January 10, 2007
Graphic:
S.D. housing costs and salaries
signonsandiego.com
The buying frenzy that took home prices to dizzying heights in the first half of the decade is over, but low- and moderate-wage earners in the San Diego area still struggle to keep a roof over their heads.
A study to be released today by the National Housing Conference's Center for Housing Policy finds that teachers, police officers, and health care workers don't earn nearly enough to afford a median-priced home with a 30-year fixed-rate mortgage.
People in many lower-paid occupations, such as retail workers, janitors, telemarketers and hairdressers, can't even afford to rent a two-bedroom apartment at current market rates, according to the center's “Paycheck to Paycheck” report.
While there have been recent drops in home prices and interest rates, they haven't closed the breach between housing costs and wages, said Barbara Lipman, research director for the policy center.
“I don't think declining interest rates and even declining home prices will solve the problem of this particular group, because the gap is so large,” Lipman said.
Even in occupations that have experienced increases in wages, “it's not enough to gain ground against the high level of home prices and rents. Really, the only way to address the problem is to find creative ways” to increase the number of affordable units, she said.
County home prices dropped by nearly 7 percent in November, marking the greatest year-over-year decline on record, according to DataQuick Information Systems. The overall median was $482,000 in November, down from the record of $518,000 in November 2005.
Lipman said that the policy center's study of rentals likely to be occupied by low- and moderate-income households showed a slight increase in affordability in 2006. The hourly wage needed to afford a fair-market, two-bedroom unit was gauged at $20.48 for the third quarter compared to $22.75 a year earlier.
Even so, wages for many working people “fall far short of what is needed for these units to be affordable,” she said.
In contrast to the center's study, a survey released in December by the San Diego County Apartment Association reported that average rents for all types of units had increased 5.8 percent over the previous year to $1,237. The combined average rent for one- and two-bedroom units, which dominate the market, increased by 6.2 percent to $1,229.
The National Low Income Housing Coalition recently reported that renters make up about 43 percent of the county's households.
Sharing a one-bedroom apartment in Imperial Beach with his wife, two children and a grandchild, auto mechanic Victor Bernal, 45, is relying on help from his adult daughter to make ends meet. Before he suffered an arm injury three years ago, Bernal said he earned about $52,000 per year. Unable to work full time, he now repairs cars for his friends, earning about $1,000 a month.
Bernal said he can pay his rent of $695 per month, but he worries that it will go up. He is looking for a new line of work to bring in more income.
“It is hard for me,” he said. “The money I get I have to stretch to pay for my rent and food.”
Tom Scott, executive director of the San Diego Housing Federation, noted that a December report from the National Low Income Housing Coalition estimated that the annual income needed to afford a one-bedroom apartment in San Diego was $39,720. To afford a modest two-bedroom apartment, the annual income needed was $48,200, assuming that 30 percent of income is used for housing costs.
While the overall median household income was placed at $64,900, the median renter household income here was estimated at $39,025.
“For low-income people in service jobs, in grocery stores, the retail clerks, they almost have to have two jobs today to be able to afford a place” to rent,” said Scott.
Many occupations considered essential to the community appear to be stressed by housing costs.
In part, the Center for Housing Policy's study found that the San Diego region's elementary schoolteachers, with a median income of $50,652, were nearly $113,000 short of being able to buy a median-priced house without a second income. With a median wage of $24.35 per hour, they earned just above the $20.48 per hour needed to rent a fair-market rate, two-bedroom apartment without exceeding 30 percent of their income. The 30 percent threshold is one of the center's measures of affordability.
Lipman said her group used a 30-year fixed mortgage in its formula for determining for-sale housing affordability because popular adjustable-rate mortgages carry too much risk and assume incomes will rise.
Michael Schuerman director of research at the San Diego Regional Economic Development Corp. said it is in the region's economic interest to create more affordable housing.
“We are trying to educate people,” he said. “We want to get out there that this is a significant factor that over the long term will in fact negatively affect the ability to attract and retain the best and the brightest workers,” he said.
“We do create a lot of jobs. There just isn't enough housing to go around and that constraint drives up prices,” he added.
The lack of affordable housing is hurting the ability of many metro areas to provide adequate health-care services nationwide, the report said. A licensed practical nurse would not qualify to purchase the median-priced home in 187 of the 202 metropolitan areas studied, including the San Diego region. Registered nurses were locked out of 115 communities.
Victoria Samaha, chief organizer of the Association of Community Organizations for Reform, said the gap between the county's haves and have-nots is widening. “Working-class families are really having to struggle to make it every day,” she said.
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The “Paycheck to Paycheck” report and a handbook of recommendations for solutions by Homes for Working Families are available online at nhc.org and homesforworkingfamilies.org
Emmet Pierce: (619) 293-1372; emmet.pierce@uniontrib.com
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