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Property taxes notwithstanding, housing affordability has long been seen as one of Rochester’s selling points. For homebuyers, prices here are a bargain compared with those of many other metro areas.
Not everyone wants or can afford to own a home, though. And for renters, the affordability picture looks quite different. In fact, by some key measures, Rochester ranks among the more expensive markets nationwide.
Governing magazine recently examined Census Bureau data for 2010-12 to measure housing affordability. In its analysis of more than 300 cities with at least 100,000 residents, Rochester ranked 27th in median gross rent as a percentage of household income. Among the cities with more affordable median rents were Los Angeles (44th), New York City (168th) and Washington, D.C. (250th). Syracuse (60th) and Buffalo (85th) also were more attractive markets for renters.
The federal standard for affordability says a maximum of 30 percent of a household’s gross income should be spent on gross housing costs. In Rochester, the median gross rent in 2010-12 was 38.1 percent, with nearly two-thirds of rentals topping 30 percent of gross income.
Two trends have made housing affordability increasingly difficult for many renters to maintain. One is a shift away from ownership. A study by Harvard University’s Joint Center for Housing Studies shows that chiefly because of the foreclosure wave after the financial meltdown and the severe recession that followed, the renter share of all U.S. households increased to 35 percent in 2012 from 31 percent in 2004.
The other trend is stagnant wages. Coupled with rising rents driven by demand, flat wages have made housing affordability more of a stretch.
The Census Bureau data also contain some good news for Rochester: For homeowners with mortgages, affordability is more easily attained. The share with monthly housing costs exceeding 30 percent of household income falls to 34.3 percent.
But rent affordability matters. It affects not only low-income urban households but also recent college graduates at first jobs. If outmigration of young people is a concern, the relative cost of rental housing cannot be ignored.
There are no simple fixes, but a very good first step would be to recognize this problem exists.
2/28/14 (c) 2014 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email email@example.com.