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Housing squeeze tight for Minnesota’s low-income families

The dramatic decline in home values has not resulted in improved access to affordable housing for extremely low-income families.

Of 12 states in the Upper Midwest, Minnesota ranks the worst for housing affordability for minimum wage workers.

The dramatic decline in home values over the last several years has not resulted in improved access to affordable housing for the people who need it most – extremely low-income families.

That’s the conclusion of a study released recently by the National Low Income Housing Coalition, a Washington, D.C.-based group. It estimates that for the nation as a whole, a household would need to earn $18.25 an hour in order to afford a modest two-bedroom home without spending more than 30 percent of its income on housing costs.

The situation is not much better in Minnesota. A household here would have to earn $15.50 per hour to afford a two-bedroom home without spending more than 30 percent of its income, the group said. By contrast, the typical Minnesota renter earns $12.17 per hour.

For a minimum wage worker earning $7.25 an hour, the picture is worse. He or she would have to work 86 hours a week – or hold 2.1 full-time jobs – to make that rent ($806 a month) without exceeding 30 percent of income. Of 12 states in the Upper Midwest, Minnesota ranks the worst for housing affordability for minimum wage workers, according to the Minnesota Housing Partnership.

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The housing meltdown and foreclosure crisis have actually worked to the disadvantage of extremely low income households, according to the national coalition. Families with modest incomes who once were able to own homes have flooded the rental market, reducing vacancy rates and driving up rents.

“It is estimated that the number of renter households rose by nearly 4 million between 2005 and 2010,” the report said. “Over the next decade, the number of renters may increase by upwards of 470,000 annually, further straining the rental market and disproportionately affecting extremely low income households.”

In the Twin Cities, the vacancy rate for the fourth quarter of 2011 stood at 2.8 percent, well below the 5 percent “balanced” level where rental rates generally are stable, according to the Minnesota Housing Partnership.

The group also said the Minneapolis, St. Paul and Duluth school districts reported having 6,000 children who were homeless, an increase of more than 800 from the previous year.

Waiting list

In the Twin Cities, some 2,500 families are on the waiting list for federal public housing vouchers with the Metro HRA, which provides assistance to some 6,800 households in nearly 100 communities. It is the largest of 11 agencies administering the federal Section 8 voucher program in the seven-county metro region.

Leigh Rosenberg, research and outreach manager for the Minnesota Housing Partnership, says Census Bureau data shows about half of Minnesota’s renters are paying more than 30 percent of their income for housing and a quarter of renters  are paying 50 percent or more of their income for housing.

“Lots of people are being forced to pay beyond their means for housing,” Rosenberg said.  “In general, it means that other vital needs are being sacrificed – and that can have really negative consequences.  Even children’s development and nutrition can be compromised.”

The national coalition’s study found rents in the Twin Cities are the most expensive in Minnesota. A worker must earn at least $17.38 an hour to afford a two-bedroom unit without spending more than 30 percent of income for housing costs.

However, counties that are least affordable to renters – given the incomes they earn – are located throughout the state. The five least affordable counties are Wadena, Carlton, Winona, Chisago and Ramsey.

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Rosenberg acknowledges that the problem of affordable housing is “enormous in scope” and greatly exceeds any infusion of public resources that might be attainable in the current political and economic climate.

Still, Rosenberg said, the Minnesota Legislature could take a significant step forward this session by approving a $40 million bonding request that would fund efforts to build or rehabilitate affordable housing. The state bonding bill that emerged in the House last week included $15 million for this purpose.