Issue Brief #1 May 2016 Housing & Homelessness Orders of Magnitude Short We are nowhere close to reaching the numbers of attainable 1 housing units needed to end homelessness in the Denver metro area and throughout the United States. If homelessness means being without a home, then, according to homelessness is astounding. According to the most recent report from the National Low Income Housing Coalition, there is a national deficit of 7.1 million units of such housing for extremely low-income residents. 3 If one adds the roughly 400,000 households of persons experiencing homelessness, the deficit climbs to 7,500,000 units. Every state in the country, on average, would have to create 150,000 units of low-income housing over night to eliminate that deficit. While it has become clear that providing housing alone is not the sole answer to ending homelessness, it is also evident that the inadequate supply of low-income housing has had a major effect on the lives of those experiencing homelessness and those at significant risk of becoming homeless. The national deficit in housing units for extremely low-income individuals and persons experiencing To its credit Denver s Road Home, the organization that supervises the implementation of the 10 Year Plan to End Homelessness in the Mile High City, was able to produce 3,000 units of low-income housing over the initial ten-year period. However, given the previously mentioned national deficit, we are orders of magnitude short of what is needed both locally and nationally in order to make housing attainable for all.
; Income and Housing The poorest Americans are spending unrealistic percentages of their household income on housing and receiving less support than the most affluent. Data on income paint just as bleak a picture. In the Denver metro area, the Area Median Income (AMI) for a single person is $56,000; for a family of four, it is $79,900. 4 Also, according to the U.S. Department of Housing and Urban Development (HUD), a family is housing challenged if it spends over 30% of its income on housing and severely housing challenged if it spends over 50% of its income on housing. The top quintile of housing owners and renters in the US spends 19% of its average annual family income of $153,300 on housing. The lowest quintile spends 87% of its $10,100 average annual family income on housing, leaving about $1,000 a year for every other expense including food, clothing, medical care, child care, transportation, etc.5 Speaking of housing challenged!! In Denver, 30,275 households at or below 30% AMI are spending half or more than half of their income on housing. This represents 79% of all the severely housing challenged renter households in Denver.6 Unfortunately, the current system fails to help those who need it the most. The amount of federal housing subsidies for low-income renters is 25% of what the government provides more affluent homeowners in subsidies, mostly through deductions for mortgage interest, real estate taxes, state income taxes and sales taxes on large items.7 2 2
; Housing Shortages Denver and Colorado vs. National Average 8 Deficit of Affordable and Units Affordable and Available Per 100 Available Units Households 15% AMI 30% AMI 15% AMI 30% AMI 50% AMI Denver- Aurora- Lakewood -26,735-68,799 19 23 56 Colorado -50,381-119,969 16 24 57 USA Totals -3,415,248-7,119,858 17 31 57 Housing Deficits in Denver The search for affordable housing for individuals and families with the lowest area median income has been compared to a cruel game of musical chairs. In the Denver area, there is a deficit of over 26,000 units for those at 15% AMI or less and almost 68,800 for those at 30% AMI. In Colorado, the numbers are over 50,000 and almost 120,000 respectively. As we reported earlier, for the US as a whole, there is a deficit of over 7.1 million units for those at 30% AMI or less. Another way to look at these numbers is to identify numbers of units that are available and affordable per 100 households. For every 100 households in Denver at the 15% AMI level or less, there are 19 affordable and available units. For every 100 families at the 30% AMI level, there are 23 units available and affordable. Across the state, there are only 16 units for those households at 15% AMI or less. Although these data are discouraging, it is even worse for those experiencing homelessness. Since they are not considered housed, they are not even included in the data cited above. Therefore, the deficit in housing units is actually worse than what the data indicate, especially for the individuals and families currently experiencing homelessness. According to the Regional Administrator of HUD Region VIII, the Denver metro area is experiencing a shortage of about 225,000 units of housing for those experiencing homelessness or those in extreme poverty. 9 3 3
; Colorado Fast Facts $19.89 Colorado Housing Wage for a 2-Bedroom Unit $16.62 Colorado Non-metro Area Combined Housing Wage for a 2-Bedroom Unit $15.43 Average Renter Wage $8.23* Minimum Wage 97 Work Hours at Minimum Wage Needed to Afford a 2- Bedroom Unit at FMR** 2.4 Full-Time Jobs at Minimum Wage Needed to Afford a 2- Bedroom Unit at FMR $1,034 Rent for 2-Bedroom Unit at FMR $802 Rent Affordable at Average Renter Wage $571 Rent Affordable at 30% AMI The Housing Wage In no state can a person working full-time at minimum wage afford a one-bedroom apartment at the Fair Market Rent Out of Reach 2015 The Housing Wage is what a full-time worker (40 hours a week, 52 weeks a year) must earn to afford the rent on a modest twobedroom home without spending more than 30% of his or her income on housing. Nationally, the Housing Wage is $19.35 an hour ($40,248 annually) for a two-bedroom unit. Across the state of Colorado, the Housing Wage is $19.89 an hour, or an annual salary of $41,377. In the Denver metro area, the Housing Wage is $22.23 ($46,240), or roughly 2.7 times the state s minimum wage of $8.23 per hour. 10 The housing wage for various metro areas across the state are shown in the graphic below. In recent years local media has reported that the situation may be even worse in some areas. In 2016 the Denver Post reported that in Boulder, the going rate for a 2-bedroom, 2-bath apartment is $2,400 a month. In order not to spend over 30% of income on housing, it would take an hourly wage of over $50 to afford that unit. At $15 an hour, it would require 3.3 full-time earners. 11 In 2014, the Denver Post said that according to an analysis by Zillow, renters needed to make $35 an hour in order to afford a median priced rental in metro Denver. 12 *At the time of data collection. Colorado s current minimum wage is $8.31. ** FMR: Fair Market Rent Source: National Low Income Housing Coalition, 2015, pp. 36-37 4 4
; Moving Forward 13 14 15 5 5
; Endnotes 1. Many people use the term affordable, however, this often refers to those in the 80-100% AMI, therefore we use the term attainable to include all of those below 80% AMI as well. 2. Burt, M. M. (1992). Over the Edge: The Growth of Homelessness in the 1980s: The Growth of Homelessness in the 1980s. Russell Sage Foundation. (Quoted on p. 4) 3. National Low Income Housing Coalition. (2015). Affordable housing is nowhere to be found for millions. Housing spotlight 5(1). Washington. 4. Denver Office of Economic Development. (2015). Housing and Neighborhood Development: Income Limits 2015. Retrieved from denvergov.org/content/dam/denvergov/portals/690/documents/housing_tf_new/2015%20inc ome%20limits.pdf 5. National Alliance to End Homelessness. (April 2013) State of homelessness in America 2013. Retrieved from http://www.endhomelessness.org/library/entry/the-state-of-homelessness-2013 6. Kinney, M. (March 2016). Denver s rent dilemma. Denver Voice, p. 7. 7. Collinson, R., Ellen, I. G., & Ludwig, J. (2015). Low Income Housing Policy. In Economics of Means-Tested Transfer Programs in the United States, volume 2. University of Chicago Press. 8. National Low Income Housing Coalition. (2015). Affordable housing is nowhere to be found for millions. Housing spotlight 5(1). Washington. 9. Remarks from Rick Garcia, Regional Administrator of HUD Region VIII. The Buechner Breakfast, December 4, 2015: Affordable Housing in Colorado. Event organized by the Institute for Governance, the School of Public Affairs at the University of Colorado Denver. 10. National Low Income Housing Coalition. (2015). Out of Reach, 2015. Retrieved from http://nlihc.org/sites/default/files/oor/oor_2015_full.pdf 11. Rusch, E. (2016, February 14). The market is very, very difficult. The Denver Post, p. 1K 12. Pankratz, H. (2014, December 11). Renters need to make $35 an hour to afford housing in metro Denver. The Denver Post. Retrieved from http://www.denverpost.com/business/ci_27118702/ renters-need-make-35-an-hour-afford-housing 13. Denver s Next Bold Step on Affordable Housing: Affordable Housing Public Meeting Presentation. (2016, April 26). Retrieved from https://www.denvergov.org/content/dam/denvergov/ Portals/767/Documents/Affordable%20Housing%20Public%20Meeting.pdf 14. Murray, J. (2015, August 30). Denver s $150M affordable housing plan highlights stepped-up strategy. The Denver Post. Retrieved from http://www.denverpost.com/politics/ci_28726601/ denvers-150m-affordable-housing-plan-highlights-stepped-up 15. Remarks from Denver Mayor Hancock. Public Meeting on Affordable Housing, April 26, 2016. Event hosted by the NAACP Denver Branch. 6 6