WOONSOCKET â€” A new study says the cost of rental housing has risen faster here than any other community in the Blackstone Valley.
The HousingWorksRI 2011 Fact Book, released this week, says the average two-bedroom rent in the city during the second quarter of the year reached $993, almost 75 percent higher than it was a decade ago.
The main culprit behind skyrocketing rents is the continuing wave of foreclosures, the agency said.
The blow has been particularly devastating to renters in communities like Woonsocket, Pawtucket and Central Falls, where a sizable chunk of the housing stock, if not the majority, consists of multi-family housing.
â€śBecause of this, foreclosures in Rhode Island have exacerbated our overall housing affordability crisis,â€ť the study says. â€śThe increased demand for rental homes coupled with a decreased supply has made affording a quality, rental home much harder for Rhode Islanders.â€ť
If there's an upside to the story, it's that, even at $993 a month, rents in Woonsocket are still among the lowest in the region. Though rents haven't increased as quickly in neighboring communities, in most of them they're still higher.
In North Smithfield, for example, the average rent for a two-bedroom apartment is $1,284; Lincoln, $1,161; Cumberland, $1,135; and Burrillville, $1,238.
Compared to similar urban areas, however, Woonsocket rents are still rather pricey.
A two-bedroom in Pawtucket was going for $958 a month, and in Central Falls, the figure was even lower, $837 a month.
But rents in those cities haven't been rising nearly as fast as they have in Woonsocket, according to the 2011 Fact Book.
The study says rents are just 34 percent higher in Pawtucket, and 32 percent higher in Central Falls, than they were in 2000.
Furthermore, there's cause to believe rents in Woonsocket are actually less affordable than the statistics make them appear, according to Nellie M. Gorbea, executive director of HousingWorksRI.
Housing experts define a rent as affordable when it is not more than 30 percent of household income. By that measure, HousingWorksRI's study suggests rents as high as $1,600 a month could be affordable.
That would be true if, as HousingWorksRI asserts, the average private sector job in the city paid $64,064 a year. But Gorbea says those figures are probably skewed by the fact that CVS Caremark is headquartered in the city. The pharmacy giant is also the city's largest employer.
â€śThey (rents) might look more affordable than they are,â€ť says Gorbea. â€śWoonsocket presents an interesting case because you have a major corporation with fairly high wage jobs and a distressed urban center.â€ť
Foreclosures wouldn't create as much volatility in rental markets if the state did more to address its shortage of affordable housing, said Gorbea.
That's a goal the agency has been working toward since its inception in 2006, when it led a campaign to pass a $50 million statewide bond to build new affordable housing.
Gorbea said the program, also known as Building Homes Rhode Island, has now used all its financial resources to build 1,255 affordable homes in 30 communities, including 28 units in Woonsocket. That means HousingWorksRI exceeded its construction goal by 255 units.
Many of the units were resurrected from the abandoned shells of foreclosure properties, killing several birds of the housing crisis in one fell swoop.
â€śThe program is providing quality homes for low-wage workers, individuals with disabilities, young working families, the formerly homeless, veterans and the elderly,â€ť said Gorbea. â€śBut more than that, BHRI has helped area businesses, communities, and the state's economy overall.â€ť
Despite the success of BHRI, there is still a dire need for long-term affordable housing, HousingWorksRI says. A household earning the state's median income of $54,119 a year would be able to buy a home affordably in just nine of the 39 cities and towns â€“ three fewer communities than 2010.
Reducing the shortage of affordable housing is a key ingredient in getting control of volatility in the housing market, said Gorbea, but no money was included for the development of new housing resources in the 2012 state budget. By contrast, Massachusetts budgeted $285 million, and Connecticut, $130 million, for housing programs.
â€śUntil the shortage of long-term affordable housing is addressed, Rhode Island will continue to be vulnerable to instabilities in the housing market, including foreclosures,â€ť Gorbea said.
During the first six months of 2011, the state was racking up about 30 more foreclosures a month than it did in all of 2010, when they were running at the pace of about 157 a month, according to the study.