Monday, October 26, 2015

The Rent is Too Damn High or What is the Meaning of “Best”? (Part II of the Series That Began with Rents Rise)

If the near past and the present were not depressing enough for renters of lesser means, the Atlantic in a recent darkly named article, A Bleak Future for Renters talks about what is next to come. The author Gillian B. White, cites a study by the Harvard Joint Center for Housing Studies and Enterprise Community Partners, which predicts a rise of 4 million people in the renting population, and a total of 13 million people being severely rent-burdened (i.e. spending 50% or more of their income on rent) by 2025. The study’s researchers also predict that due to multiple factors, including but not limited to: stagnant wages, low vacancy rates, limited rental housing stock, and decreased rates of homeownership, minorities, Millennials, and the elderly will be hardest hit.
Dr. Chris Herbert, Managing Director of the Harvard Joint Center
(Courtesy of the Harvard Joint Center)
Digging deeper, specifically here in Dallas, limited single family housing stock may be the cause for the decreased rates of homeownership. Earlier this month in D Magazine’s D CEO, in an article titled, The Year's Best Real Estate Projects, Christine Perez, cited a shortage of construction workers and those who could manage them, as the drivers of this shortage. The former, an executive she interviews says, may due to the Great Recession have pushed into different lines of work, or have returned to Mexico, while the latter have opted for office jobs in place of the trades. The economic slowdown seems too have also trimmed government apparatuses devoted to project approvals, which puts a further crimp on the number of projects getting through the pipeline.

Though Perez cites these reasons as those behind the shortage of single family housing stock, one might surmise that these could have an effect on multifamily housing construction too. Regardless, Perez does say that this shortage itself puts more pressure on the multifamily housing market. She quotes Steve Bancroft, of Trammel Crow Residential, who says, “By most accounts, this is the best multifamily market that Dallas-Fort Worth has ever seen.” Perez fails to mention that, of course, the word “best”, used here and in the title of the article, is from the developers’ point of view. This situation is not exactly the “best” for those in the market for a rental unit, especially if they are struggling. And so unsurprisingly, Perez admits that, “Ongoing (rent) increases likely will compel renters to begin considering other options,” even, she says, “doubling with a roommate.”

Speaking with The Washington Post’s Emily Badger, two of the above Harvard study’s authors are ready to sound the alarm, even if D CEO is not. The effect, they say, will cascade from renters to others they interact with. “Money pooled in the hands of landlords, doesn't circulate through the economy with the same impact as money spent at local retailers and grocery stores,” one says, while the other, “suggests there may be serious health costs associated with a population that has to sacrifice health spending to pay the rent.” And so, Badger ends her piece with an ominous warning from one of the scholars, “In certain places, we’re probably getting close to the breaking point for a lot of folks, and I don’t know how that plays out."
Earnest Burke, Plano Housing Authority
(Courtesy of WFAA)
With all of this in the background nationally and locally, should we really be surprised with the Kafkaesque story of Navy veteran, Jermaine Williams? If all you read was the title of the WFAA report, you would be forgiven for thinking that a junior editor forgot to fix a typo: Navy vet gets to use housing assistance, after 70 tries. If only. The piece by Jobin Panicker tells the story of Williams, who after a long episode of homelessness received a voucher from the Plano Housing Authority, only to find that a housing voucher did not equal housing. Panicker quotes Earnest Burke, with the Plano Housing Authority, who blames the over-saturation of the rental housing market throughout North Texas for Williams’ woes. Out of the 15 vouchers he gave out, only three veterans actually landed housing*, as “apartments are filling up and becoming more selective of potential tenants.” More selective means, that landlords can (legally), and indeed do refuse to rent an apartment to someone like Williams, due to the source of that rent money, Uncle Sam. In the next installment of this series, we will discuss how government could save people like Williams from the trials and travails of searching for months, spending hundreds of dollars in application fees, just to find an apartment.  

* I reached out to Burke, for an update on how many additional veterans have been housed in the four weeks since September 30, 2015, the date of the WFAA story, but have yet to hear back. I will update on the blog, when I do hear back.

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