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Report: Housing costs out of reach for many workers

In the Baltimore area and across the country, rents and home prices are unaffordable for people in a variety of professions

By Jamie Smith Hopkins, The Baltimore Sun

6:27 AM EDT, July 21, 2011

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A broad swath of workers in the Baltimore region — including those landing jobs in the sector doing the most hiring these days — do not earn enough to afford a home or even to rent a two-bedroom apartment on their salaries alone.

That's the conclusion of a study released today by the Center for Housing Policy. The Washington-based nonprofit reports each year on whether workers in common occupations that typically require no more than a bachelor's degree can find housing that doesn't take up a huge chunk of their income.

"Although the recession has pushed a lot of workers into taking whatever job is available, most of the jobs that workers are likely to get right now just don't pay enough for typical housing costs," said Maya Brennan, co-author of the "Paycheck to Paycheck" report.

Three-quarters of the 72 occupations the center analyzed in the Baltimore region do not pay workers enough to afford a typical two-bedroom apartment here, the center said. More than 30 percent of those workers' before-tax income would be eaten up by the rent and utilities because they don't earn at least $50,000.

And buying? Forget it: The $220,000 sales price for a typical home here is too high for all but a handful of workers in those low- and medium-income jobs, the center said. Assuming a 10 percent down payment, you'd need to earn $65,000 — $10,000 more than the average salary in the region, according to state figures — to make the numbers work.

The region is one of the more expensive in the country: Of the 209 metro areas the center studied, the Baltimore area ranks 22nd in rent and 31st in home prices. But the problem of unaffordability is nationwide, the analysis found.

"It's symptomatic of the bad times that people are experiencing," said Dean Baker, co-director of the Center for Economic and Policy Research, a Washington think tank that was not involved with the report.

"You'd hope we'd start to see some light at the end of the tunnel, but as long as you have 9 percent unemployment, that's not an environment in which workers are going to be seeing wage gains."

Brennan says people find myriad ways to compensate for high housing costs. Getting a place that's too small. Doubling up with roommates. Spending less on food and other necessities. Commuting long distances.

And many families make the numbers work by putting both adults to work. But Brennan says the steep recession and its aftereffects suggest that it's a bad idea to structure financial plans around dual incomes.

"Any job loss, medical conditions, things like that, could really push you over into unaffordability," she said.

To see whether people getting back to work after a job loss can afford typical housing costs, the center looked closely at five common jobs in the sector doing the most hiring nationwide, professional and business services: accountants, groundskeepers, janitors, office clerks and security guards.

Accountants earn the most, with a median annual salary of about $55,000 in the Baltimore area for workers with several years of experience — the same as the average salary for all workers in the region.

But even that earning power is too small to buy a typical house in the region, despite years of dropping values. And for many one-earner households, an apartment isn't an affordable alternative.

Of those five common jobs, only accountants can afford a unit at the going monthly rates of just over $1,000 for one bedroom and nearly $1,300 for two bedrooms in the Baltimore area, the center said. The figures include utilities.

Groundskeepers, janitors, office clerks and security guards in the region earn between $26,000 and $33,000, far less than the $42,000 needed to afford the typical one-bedroom rent, according to the analysis.

As foreclosures, tighter mortgage rules and a rough housing market press more workers into apartments and rental homes, rents are rising — strongly in some markets. That could continue for a while, because builders cannot erect more apartments overnight.

"It takes a long time to meet demand," said Laura Williams, co-author of the report.

jhopkins@baltsun.com

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