The housing burden

The Federal Reserve Bank of Kansas City’s Low to Moderate Income Survey for the 3rd quarter showed a slight decrease. Employment improved slightly, but the improvement was offset by the decline in the availability of affordable housing and credit.

Our homeless families, of course, fall into the low income segment the survey measures. We saw some of the same improvement in employment recently. The average wage for the adults who found jobs was hovering around $10/hour until September when it rose to $12.

At $12/hour, a single parent will earn about $25,000 per year. Housing costs will start to become a burden if rent and utilities climb together are above 30% of income = $7,500/year or $624/mo. Rent alone averages $784 for a two bedroom apartment in the Kansas City area, which means our families will remain financially fragile.

However, our families will not be alone. A study from the Joint Center for Housing Studies at Harvard University, a record 20.2 million people spent more than 50% of their income on housing as far back as 2010. Most of these families will live in or on the brink of poverty, but the vast majority will not become homelessness.

If history prevails, 80% of our parents will not become homeless again. They may struggle, but they leave better equipped to provide for themselves and their children. And, the children leave knowing they have options that may break the cycle of poverty.

From Poor to Homeless

The National Alliance to End Homelessness and Enterprise Community Partners commissioned a review of the existing research on family homelessness. Marybeth Shinn of Vanderbilt University wrote the brief, released on the 27th - Ending Homelessness for Families: The Evidence for Affordable Housing.

Just one of the many insights in the brief is about the differences between the families that became homeless and poor families that never became homeless.

Homeless families resemble poor families in many ways. They have limited education and work histories – only about half have a high school diploma or GED. Both groups experience high levels of depression and are exposed to high levels of community and domestic violence.

A major difference though is that the homeless families are younger. Having a baby can stretch resources even for middle class families. About a quarter of all episodes of poverty begin with the birth of a child, so it isn’t surprising that having a baby can coincide with homelessness.

As a side note, “Nationally, infancy is the age at which a person is most likely to stay in a homeless shelter. Risk of homelessness remains high in the preschool years, when parents struggle to juggle child care and jobs, but is lower during the elementary and high school years than in adulthood.”

The three most important differences between homeless families and poor families are: (1) they have extremely low incomes, which is less than 30% of area median income (2) they have less access to housing subsidies, and (3) their social networks are not able to provide sufficient help.

So what does all of this mean? First, homeless families have far too little income to both rent housing at the market rate and provide for any other needs. Second, they many never have had the resources to rent their own place. They are more likely to have doubled up, moving frequently among friends and family to avoid literal homelessness. Finally, their community of friends and family are smaller and poorer, so they are less able to help the family prevent homelessness.

A final variation in the rate of homelessness is geographic, because of varying availability of affordable housing. For example, a high rate of homelessness in California coincides with few vacancies and costly housing.

According to the National Low Income Housing Coalition, the 2009 “housing wage” in Kansas City is $15.21 per hour. That is the hourly wage a household must earn (working 40 hours per week, 52 weeks per year) to afford the fair market rent on a two-bedroom apartment at 30% of income. It requires 2.2 jobs per household at minimum wage.

In 2009 extremely low income in Kansas City meant the family made less than $21,120. Affordable housing should be no more than 30% of income, or $528 per month. Fair market rent for a two bedroom apartment in Kansas City is $791. A family needs to make $31,640 per year to afford fair market rent. Obviously, families with extremely low income can’t afford fair market rent.

Because there wasn’t enough affordable housing in Kansas City, about 14,000 people became homeless last year. We know there will be more this year.

Next time, I’ll share more from the brief about ending homelessness for families.

- Laura Gray