Real Estate

Housing costs outstrip wages for low-income workers

Report finds Grand Rapids-Wyoming metro among state’s costliest markets compared to wages.

October 19, 2018
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A Michigan resident making minimum wage has to work 73 hours per week — or 1.8 full-time jobs — to rent a two-bedroom apartment, according to a recent study.

That ranks the state 28th in terms of affordable housing costs, according to the National Low Income Housing Coalition based in Washington, D.C. The report analyzed how much an hourly minimum-wage worker must earn to rent or own a home in a particular region without spending more than 30 percent of his or her income, which is the standard federal authorities recommend should be spent on housing.

Michigan’s minimum wage is $9.25.

Within the state, the costliest housing markets compared to wages are Ann Arbor, Livingston County, Detroit-Warren-Livonia, Grand Traverse County and Grand Rapids-Wyoming. The least expensive are Saginaw, Battle Creek, Montcalm County, Niles-Benton Harbor and Bay City.

A common misconception is that areas with lower housing costs are more affordable, said Andrew Aurand, vice president for research at the National Low Income Housing Coalition and an author of the agency’s 2018 Out of Reach report. But when the often lower wages of the residents of the area are applied, housing may not be as affordable as it is in higher income areas.

“You still have an affordability problem even in the least expensive places in the country when you compare wages, so we encourage people to look at not just the housing cost but also incomes in the area and look at the gap between the two,” Aurand said.

Growing income inequality combined with the effects of the 2008 recession brought on a shortage of affordable housing, said Julie Cassidy, a policy analyst at the Michigan League for Public Policy.

“The economic gains of the last couple years have almost all gone to the wealthiest families and even though unemployment may be down, there are a lot of people who are simply underemployed and not making enough money,” Cassidy said.

A bill introduced in the Senate would allow local governments to provide incentives to private housing developers to set aside a certain number of units as affordable or create local housing trust fund. The bill is sponsored by Sens. Wayne Schmidt, R-Traverse City; Steven Bieda, D-Warren; Dave Hildenbrand, R-Lowell Township; and Curtis Hertel, D-East Lansing.

“So often what happens when you redevelop a blighted area is it becomes too expensive for low-income people to live there, and that’s an unintended consequence,” Cassidy said. “What this bill is designed to do is encourage developers to invest their money in revitalizing economically depressed areas.”

Even communities outside of metro areas could craft incentives for developers, such as expedited permit processing or bypassing limits on the number of units allowed.

Regional differences exist in affordable housing, particularly in areas that rely on tourism.

“In northern Michigan, a lot of those areas are highly dependent on the hospitality industry and a lot of businesses can’t find people to work for them because there isn’t affordable housing nearby,” Cassidy said. “All those workers need places to live and if they wanted to work in a specific community, they would actually have to live quite a ways away and commute in.”

People who have been evicted in the past or owe money to landlords are not eligible for federally funded programs and are subject to credit checks if they decide to rent from a private party.

“We don’t have a shortage of housing, but we do have a shortage of people that are eligible to rent,” said Kate Schulz, director of the Cheboygan Housing Commission, which provides housing assistance to low-income residents. “We have a lot of people that apply that don’t meet the criteria for our programs or for private landlords.”

Metropolitan areas

Below is a list of the annual income needed to afford a two-bedroom apartment in selected metropolitan areas, as well as the full-time jobs equivalent at minimum wage to afford that unit.

Battle Creek: $29,280; 1.5

Grand Rapids-Wyoming: $35,120; 1.8

Holland-Grand Haven: $33,120; 1.7

Kalamazoo-Portage: $32,400; 1.7

Muskegon: $30,360; 1.6

Counties

Below is a breakdown of the same information for selected counties.

Allegan County: $30,320; 1.6

Ionia County: $30,200; 1.6

Kalamazoo County: $32,400; 1.7

Kent County: $35,120; 1.8

Muskegon County: $30,360; 1.6

Newaygo County: $29,920; 1.6

Ottawa County: $33,120; 1.7

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