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WOONSOCKET â Record foreclosures have crimped the supply of affordable apartments, fueling an astronomical increase in rents that threatens the financial security of working families.
Thatâs the latest from HousingWorksRI, an advocacy group that says the average two-bedroom apartment in the state now costs $1,165 a month. At that rate, it would take an hourly wage of nearly $24 to limit oneâs monthly rental nut to 30 percent of salary, the level the government defines as affordable.
The average two-bedroom is about 50 percent higher than it was a decade ago, a trend that holds roughly steady in Woonsocket and Pawtucket, where the increase stands at 49 and 47 percent, respectively, according to HousingWorksRI.
âIf the state is to continue to meet the need for affordable rental housing, lawmakers must maintain a consistent public investment in these programs,â HousingWorksRI said in an âissue briefâ released Wednesday.
Nellie Gorbea, the executive director of the agency, said the dearth of affordable housing is particularly acute in Rhode Island, because nearly 40 percent of the stateâs residents live in rental property, more than anywhere else in New England. And because the average wage is less than $30,000 a year, one in four of all renters spend 50 percent or more of their income for rent, making those individuals âextremely cost-burdened,â said Gorbea.
Much of the problem can be traced to the foreclosure crisis. In cities like Woonsocket, Pawtucket, and Central Falls, foreclosures have fallen particularly hard on multi-family properties, which have long served as a bedrock resource for affordable housing.
Every foreclosure involving a multi-family house typically removes at least two units of rental property off the market, diminishing the supply and driving more people to look for a replacement. Hewing to the basic economics of supply and demand, rents across the state have risen steadily as more and more people seek out fewer and fewer available units.
As part of his $7.9 billion budget package, Gov. Chafee proposes $25 million in borrowing to build new affordable housing, a plan Gorbea says legislators should pass.
âThe solution is ongoing investment in statewide affordable housing,â she said.
The supply of affordable housing has been a matter of lively debate in the city for years. The problem isnât that thereâs too little, most city officials say, but too much.
The city was recently rebuked by the Division of Statewide Planning when it tried to make the goal of reducing the stock of affordable housing its official policy as part of the Comprehensive Plan, the legal foundation for zoning and land use. Meanwhile, the Woonsocket Housing Authority is also asking the federal bureau of Housing and Urban Development for permission to demolish dozens of units in the Veterans Memorial Family Housing Development and give displaced tenants Section 8 vouchers that would allow them to move elsewhere without a rent increase.
City officials argue the abundance of affordable housing has become a magnet for the poor, causing a drain on government services. They cite figures indicating some 16 percent of the cityâs housing stock is rent-subsidized, one of the highest concentrations in the state and more than 50 percent higher than the state-mandated minimum.
But Gorbea says reducing the supply of affordable housing in Woonsocket is a short-sighted policy that carries hidden social costs.
âIf you look at places have made ongoing investments in affordable housing you see a lot fewer foreclosures because youâve created a more stable real estate market,â she said. âItâs a mistake to just look at it in terms of percentages.â
Families that arenât forced to overspend on housing have more resources to stay healthy and improve their education, which can reduce costs for government.