Renting Down

During the New Berlin fracas, one recurring claim I've seen is that New Berlin already has the second most number of affordable units in Waukesha County.  I'm not entirely sure if this is a thing to be proud of as Waukesha County in general does not do a very good  job of providing affordable housing.  It's sort of like a player on the Detroit Lions crowing that he scores the second most number of points on the team.  Well, good for ya, but know what?  Your team still stinks! (It pains me to write this, actually, because my grandfather was a die-hard Lions fan.)

But I thought I'd take some time to talk about this a bit.

Is it the number of subsidized housing buildings?  Surely not-New Berlin has only one apartment with 47 subsidized units for the elderly.  Is it tax-credit units?  I count three buildings of 145 tax-credit units.  All elderly.  Not something available to the general population.

What about the vouchers?  True, I believe the Director of the Housing Authority may have said at a meeting that New Berlin has the second most number of vouchers (around 80, I believe) in Waukesha County.  But the number of vouchers used in the city has been going down over the years as housing costs have increased.

Ah, but what about housing that are market-rate, using neither subsidies nor tax-credits?  While I can't say for certain how many are considered affordable, I did make some calls to a few apartments listing availability from a rental website.  While many had rents that officially started at a lower range, most places did not have units actually available (at that time) at a rate that would be considered affordable. 

The only exceptions were two developments funded with bonds issues by the New Berlin Housing Authority.  Those buildings, I'm told, "has a 20% set-aside to households at 50% of median income, unless it was financed prior to 1986, in which case it is 20% at 80% of median income."  Assuming (for argument's sake) those buildings have 100 units each, that's what, 40 units that targeted at non-elderly low-income people in a city of over 35,000 people.  Even if we double that or triple that, that's still not much.

You see, that's a big problem.  Just because a market-rate unit is affordable doesn't mean that it's being used by someone who should be able to afford it at around 30% of the household income.

The Public Policy Forum did a report on Milwaukee County's housing in May 2009 that showed that 48% of the units affordable to people with extremely low income (at or under 30% of Area Median Income) in Milwaukee County are rented by a household "renting down."

The housing market is a free market where higher income households have the ability to outbid lower income households for cheaper rental units in an effort to reduce their housing expenses.  Further enabling this trend are landlords who are typically more inclined to rent to higher income households as a way to protect themselves against potential loss.

Let's look at the Census American FactFinder estimates as a rough estimate of renting down.  It shows that 46.8% of New Berlin renters are paying less than 25% of their household income toward rent, similar to the Waukesha County average of 45.9%, compared to 39.9% of West Allis households and 37.2% for Milwaukee County. 

So what we're seeing is a higher percentage of households in Waukesha County and New Berlin paying a smaller part of their income toward rental costs.  In an ideal world, this would be reflective of housing affordability.  But realistically, with many communities limiting the number of multi-family housing (and indirectly, rental housing), this shows that higher-income households are pushing out those with lower incomes.  Just because a market-rate unit is "affordable" doesn't mean it's actually being used by someone with lower income.