How rising rents, falling incomes crush communities

Sabri Ben-Achour Jun 30, 2014

How rising rents, falling incomes crush communities

Sabri Ben-Achour Jun 30, 2014

Garrado Odigie sat sobbing in his chair. 

He’d gotten the most important thing to him in his life, and it meant his life was falling apart. Four months earlier his long, drawn out, international custody battle for his children had finally ended. After several years of separation, his children had been returned to him.

All five of them, ages 5 to 14. To his one bedroom apartment in Flushing. 

“These are the things I live for,” Odigie said. “Five kids, one bedroom apartment. I put the girls on the bedroom, then I let the boys sleep on the living room, then I sleep on the floor. Then everybody’s coming down to sleep with daddy on the floor. Nobody wants to sleep on the bed.”

Odigie says he’s been looking for a two or three bedroom in his area of Brooklyn, but most places ask for around $2,000. “I cannot afford that right now.”

In fact, he can’t afford his current rent either now. The rent is a little over $1,000 a month, half of his annual income. A single father accustomed to working two to three jobs late into the evening when his children weren’t with him, Odigie found he needed to quit one job and reduce his hours at the other if he was to take them to therapy, go with them to the doctor’s, or to simply spend time with them.

He’s four months behind on rent. He’s in housing court, on the verge of getting evicted. He says his kids will live at his church for awhile so he can work and save up some money.

“My 11-year-old just told me, ‘Daddy, why are we keeping on moving?’” says Odigie, his voice breaking along with his composure. “‘We tired.’ You know. I’m doin’ my best to take up my children.”

People who, like Odigie, sit precariously on the edge of personal calamity don’t need much of a push to slip over. The rent will do it. The rent does do it. Often.

“We see all the time people having to make really terrible choices,” says Judith Goldiner, an attorney in charge of the Civil Law Reform unit at the Legal Aid Society. “Do they feed their kids, do they buy medicine for their kids, do they buy clothes — or do they pay rent? The rents just keep on creeping higher and higher.”

It is not simply that rents have risen, it is that renter incomes have fallen since the recession. Between 2005 and 2012, median gross rent in the U.S. rose from $868 to $897 (in 2011 it was $902) In the same period, median household income declined from $55,158 to $52,123 in real terms according to data compiled by the Furman Center for Real Estate and Urban Policy.

Some landlords, perhaps out of greed, or perhaps out of their own struggles to maintain old buildings, have tried to push lower income renters out.

“Sometimes we see landlords who cut off services, take people to housing court even if they don’t owe any money, tell people they don’t have the right immigration status and so they have to leave or they’ll call INS – all kinds of bullying,” says Goldiner.

Rent burden is the share of a renter’s income spent on gross rent – the lump sum to the landlord, plus utilities and other fees. The U.S. Department of Housing and Urban Development (HUD) labels rent burden “between 30 and 50 percent of household income on gross rent as “moderate,”  and anything above 50 percent as “severe”.

Last year was the first year more than half of households in New York City were rent burdened, meaning they pay more than a third of their income in rent. In 2011 37 percent of renters in Philadelphia were severely rent burdened, paying more than 50 percent of their income towards rent. Sixty-two percent of all renter households in Los Angeles were severely (50 percent going towards rent) or moderately rent burdened.

“The largest increases in the share of households that are rent burdened are actually happening at the moderate and middle income level,” says Max Weselcouch, director of the Moelis Institute for Affordable Housing Policy at NYU.

The forces behind all of this are, it turns out, fairly simple: supply and demand.

“There’s been very little production of new housing,” says Weselcouch. “Even though new housing construction has begun to rebound a little bit in 2012 and 2013, it’s still at lower levels than we’ve seen since at least 1960.”

Simply put: During the Recession, people made less money and built fewer places to live. After the Recession, people are still here, there are more of them, and they still need places to live. Many of them are moving to cities – 200,000 to New York City in the past three years alone – further piling onto demand.

“This is kind of a classic economic problem,” says Weselcouch.

Some of the strategies cities have used to address the problem are under strain.

Many cities offer developers incentives to build temporarily affordable units, though many of these agreements are now expiring (In New York, 25,000 expired since 2007 and another 50,000 will be eligible to do so in the next ten years). New York’s new mayor, Bill DeBlasio, has promised to create 200,000 new affordable units in ten years.

One approach is rent stabilization. For 34 percent of rental units in New York, a politically-appointed board determines by how much rents can rise each year. Several cities do this. Many landlords do not like it.

“To try and micromanage the increases each year is ludicrous,” says Frank Ricci, director of government affairs for the Rent Stabilization Association, the largest trade group for residential building owners in New York. He says landlords suffer when they can’t raise rents by as much as they’d like. 

“When you own a building, there are big expenses that pop up from time to time. Could be the roof, could be the boiler, you don’t know what it is, but when big things break, they cost a lot of money,” Ricci says – and half of all residential buildings are over 75-years-old. His opponents argue landlord incomes have been rising faster than operating expenses for nearly a decade.

Property taxes and fees put more pressure on landlords as well, says Ricci. Property taxes on rental units in New York City, which are higher than those for homeowners, are the subject of an ongoing lawsuit. 

There are many ingredients that go into the acrid crucible of the real estate market for renters. Supply, demand, taxes, investors, summering jetsetters, declining incomes, greed, desperation.

At the end of the day the exact recipe is of little consequence to people like Garrado Odigie, who is still searching for a way to keep a roof above himself and his children.

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