Having a safe, affordable place to call home is a fundamental part of the so-called American Dream — a place to raise families, create community and live out the opportunities before one. However, this hope is becoming more and more of a dream to families across America. A new economic report on wages and apartment rent rates reveals that the cost of decent apartment living is not affordable to the average renter household.
The report titled “Out Of Reach,” was compiled by the National Low Income Housing Coalition out of Washington, D.C. In every state but Wyoming, the Coalition found the wages necessary for a household to rent a two-bedroom apartment at the “fair market rate” to exceed the actual wages earned by the average renter by over $4. That means millions of families are paying more for housing than some economists thinks they should be, hindering their potential to live out their lives in affordable ways.
Households, the usual unit of economic measurement, need more than just a place to stay. When costs of living include food, transport, insurance, student loans (if luck enough to attend college), savings, kids and so much more, it can become a debilitating thing to have housing take up more than its fair share of the budget.
While surely this speaks to the family lives of some APU students, its relevance is most clearly felt in the lives of recent graduates looking for work and no longer staying in University Village, or RAR-ing in dorms. If it is difficult for the average household to afford two-bedroom apartment living, what does that say about students navigating the job market with newfound student loans and no convenient meal plan?
“Coming straight out of college with a whole bunch of loans, and no job right now, I don’t know how I am going to pay off my loans on top of being able to afford a place to live here or anywhere for that matter,” senior art major Nate Martinez said. Martinez is now considering moving back in with his parents. It is a move he does not want to do, but admits makes sense.
APU economics professor Elwin Tobing agrees with Martinez, thinking that expensive housing means making decisions one does not wan to make.
“Even if you’re working, it’s not a bad idea to share an apartment. Many people in big cities, like Boston and New York, share apartments even with great salaries each. Because the tendency is, ‘I’ve been living with these four guys all of college, it is time to live by myself.’ It may take two or three years until you can go live by yourself in a better apartment,” Tobing said.
He added that the best decision for recent grads without a job often could be moving back in at home.
Some parts of “Out of Reach” are debated as painting the right picture of affordable. The report uses a mark of 30 percent of income to define what it means to pay an “affordable” amount for housing. Stuart Strother, a business professor who does work on urban economics, said that kind of number needs to become more relative to make any sense.
“For me, the big story is regional differences. For a recent grad looking for affordable housing, go somewhere else. Go to Dallas, go to Phoenix,” Strother said. “In economics, we talk about supply and demand. It’s high demand to be in California. If you look at migration patterns, lots of people are headed to California. Who leaves? As long as the place is desirable, the demand for housing will drive prices up. We will never have affordable housing here in California.”
It is not unnatural, he said, that where we live is expecting closer to 50 percent of income to go toward housing.
In order to deal with the financial reality of living in an expensive part of the country in a poor job market, students will have to plan carefully and make smart decisions. Tobing sees three ways to counter the disparity in wages earned and cost of renting: more government intervention, lowered housing and rising wages. Both he and Strother agree none seem to be coming soon.