May 12, 2016 | Today the California Housing Partnership released reports analyzing housing needs in nine California counties (Alameda, Fresno, Los Angeles, Orange, Sacramento, San Diego, San Joaquin, San Mateo, and Ventura). The reports describe a rapid increase in rents that in combination with a dramatic decline in state and federal funding has led to a shortage of more than a million affordable homes in these nine counties. Finally, the reports offer concrete steps that state and local representatives should take immediately to help lessen the burden on low-income families in these counties.
Key findings from the county reports include:
- Rents increased 13% – 32% while renter incomes declined between 2 and 13%.
- Minimum wage workers can no longer afford average asking rents in any of the nine counties. In five of the nine counties, renters need to earn more than 3 times the local minimum wage to afford the average monthly asking rent.
- 1,023,322 of the lowest-income households living in these counties do not have access to an affordable home.
- 970,626 ELI and VLI renter households are severely rent burdened, spending 50% or more of their income on rent, leaving little left over for other essential needs.
- With the end of redevelopment, exhaustion of state affordable housing bond funds, and cuts to federal programs such as HOME, affordable housing funding in these counties has declined between 44% – 79% from 2008 to 2014 for a total decline across the counties of over $905 million annually since 2008.
Growing Shortfall of Affordable Homes Increases Rent Burdens and Poverty Rates
From 2000 to 2014 (the last year that data is available), the rise in inflation-adjusted median rent ranged from 13% in Sacramento County to 22% in Fresno and San Joaquin County to a high of 32% in San Diego County. In contrast, inflation-adjusted median renter income declined in all of these counties, from 2% decline in San Diego to 13% in Sacramento County.
In total, 549,197 ELI and VLI renters in Los Angeles County do not have access to an affordable home (ELI households earn up to 30% of area median income (AMI) while VLI households earn between 30 and 50% of AMI). In San Mateo County, the shortfall is over 22,000 affordable homes. For Alameda, San Joaquin, Fresno, and Sacramento counties the shortfall for each county is between 30,000 and 61,000 homes.
The shortfall of affordable homes puts a severe financial burden on lower-income families. More than 73% of ELI renter households in all nine of these California counties are severely rent burdened, meaning they pay 50% or more of their income in rent. In five counties, at least 50% of VLI renter households are severely rent burdened.
When housing costs are factored in along with the benefits of social programs, Alameda, Los Angeles, Orange, San Diego, San Mateo, and Ventura counties all see significant increases in poverty when compared to the traditional poverty measure, which does not account for housing costs. Los Angeles County’s poverty rate jumps by more than 7% to 25.7% when high housing costs are factored in and counties traditionally seen as high income and low poverty, such as Orange and San Mateo see their poverty rates soar by more than 9% to 21.8 % and 17.0% respectively.
In Alameda County a renter would need to earn 3.5 times the City of Oakland’s minimum hourly wage of $12.55 in order to afford average asking rent, while in Orange County renters would need to earn 3.7 times the state minimum wage of $10 to afford average rents. In San Mateo County, renters would need to earn fully 5.5 times state minimum wage to afford the average asking rent.
Call for State Reinvestment in Affordable Homes
Since the 2008/2009 fiscal year, these counties have suffered from the loss of hundreds of millions of dollars annually in affordable housing funding from state and federal sources. In Los Angeles County the elimination of Redevelopment funding in 2012, the exhaustion of state housing bonds funded by Propositions 46 and 1C, and cuts to federal programs such as CDBG and HOME has meant the loss of $440 million per year in affordable housing funding; Alameda, Orange, and San Diego counties have each lost over of $100 million per year. Percentage reductions in funding from state and federal sources ranges from a -44% cut in San Joaquin County to a -79% cut in Ventura County.
The California Housing Partnership calls on the state’s elected leaders to take the following actions in 2016 to make a meaningful down payment towards addressing the shortfall in affordable homes in these counties:
- Invest at least $1 billion from the state’s General Fund surplus into established state programs prioritizing the lowest-income households.
- Expand the California Low Income Housing Tax Credit. (AB 2817)
- Improve the value of the California LIHTC by up to 40% at no cost to the state. (SB 873)
- Give state voters the opportunity to approve a new housing bond similar to SB 879.
- Authorize local governments to use tax increment financing for locally approved affordable housing benefit districts and to issue bonds. (AB 2031)
- Reaffirm cities’ authority to require the inclusion of a percentage of homes affordable to low- and moderate-income households in new rental housing development. (AB 2502)
- Streamline local approvals including environmental review for 100% affordable housing developments consistent with local plans and zoning.
- Create an ongoing, predictable revenue source of at least $500 million annually for the production and preservation of homes affordable to lower-income households.
- Approve the No Place Like Home Initiative to create affordable rental homes for the chronically mentally ill at no cost to the state using a portion of Proposition 63 revenues.
- Allow Community Revitalization and Investment Authorities to use property tax increment available to Enhanced Infrastructure Financing Districts. (SB 975)
Local housing leaders have also provided local recommendations to address the affordable housing crisis facing each of these nine counties and these recommendations can be found on the last page of each report.