Rent or food? Housing costs burden one in three metro families

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Annie and her husband, Tim, (not their real names) live with their ten-year-old daughter in the Cathedral Hill neighborhood of St. Paul. When they first rented their two-bedroom apartment, the $900 rent was “doable,” Annie wrote in an e-mail. At that time the cost of rent amounted to 25-30 percent of the couple’s combined incomes. That all changed when Annie lost her job because the company she worked for downsized. Then, her husband lost his job, and had to start over with a new career. Annie is partially disabled and has not been able to find another job. Last year, the family’s income was $25,000, and the cost of rent ate up 43 percent of their income.

The couple worked out an arrangement with their landlord to reduce their rent payment by taking over the building caretaker duties, so that only 38 percent of their income now goes to pay the rent. With the added costs of heat and electricity, which amounts to a budget saver amount of $130 a month, the family struggles to live within their means.

Annie wrote, “ We don’t go out to dinner ever.” She cooks at home and the meals that she cooks “generally have to last for two meals, hopefully, with a lunch or two left over.” Her daughter qualifies for reduced price lunches at school , and Annie said, “ frankly, we dread school vacations. ”

Only Tim has health care insurance, which he gets through his work. The family had to give up coverage for Annie and their daughter because they could not afford to pay the premiums.

The family never goes to movies at the theater any more. Their entire entertainment is Netflix movies. They used to have basic cable, but had to give that up, too. The one thing they did keep was internet service because, said Annie, “That is a way to connect for cheap with friends and family out of state. Neither of us have family in Minnesota, and traveling is too expensive.”

The couple is grateful to friends who help out with things like buying school supplies for their daughter because Tim and Annie cannot come up with enough at one time.

Annie said, “I think the hardest part of this is the no safety net and the constant worrying about any unexpected expense. We have cut out much from our budget, but still a car repair, an illness … a parking ticket… can cause days of worry, putting off one bill to pay the immediate expense.”

Annie and Tim’s story is reality for increasing numbers of households throughout the seven county metro region.

One-third of all households in the seven-county metro region now pay more than 30 percent of their income on housing. That’s considered “cost-burdened,” with high housing costs eating up money so there’s not enough for other household needs. About 75 percent of all low-income households are cost-burdened compared to 33 percent of all people. A total of 215,000 households — about one in five in the metro area — are both low-income and cost-burdened, according to Trends and Issues 2008:Affordable housing for low-income families a report issued by the Wilder Foundation at the end of 2008.

The Wilder report also finds that, “People living in single parent families, people of color, those living in rental housing, and children are all more likely than the Twin Cities general population to live in cost-burdened households.” Some 52 percent of families of color are cost-burdened by housing, compared to 33 percent of the general population.

With so much emphasis placed on homelessness, housing cost burdens have remained in the background, said Craig Helmstetter, who is with Wilder Research. Cost burdens increase when someone loses their job, when rent or the cost of utilities, insurance, or property taxes rises, or, recently, when adjustable rate mortgages re-set to higher rates.

Housing cost burdens are not expected to go away for a long time. Another Wilder report, East Metro Housing Needs, projected that in Anoka, Dakota, Ramsey, and Washington counties, “The number of households that that are both low-income and cost-burdened will nearly double during the current decade, and will continue to increase by approximately 20% by 2020.”

Homeownership and the housing cost burden

Although the Twin Cities homeownership rate remains at a relatively high 74 percent, the recession and foreclosures threaten many homeowners.

The number of severely cost-burdened homeowners–those paying more than half of their income for housing — doubled from five percent in 2000 to ten percent in 2007. The high cost burdens often lead to foreclosures. Realty Trac, an online foreclosure information resource, reported a 75 percent increase in foreclosure-related filings in the Twin Cities between third quarter 2007 and third quarter 2008.

While foreclosures are found in nearly every neighborhood in the Twin Cities, lower income households and households of color have been hit the hardest, threatening deterioration of neighborhoods in North Minneapolis, South Minneapolis and the north central and northeast quadrants of St. Paul. A recent report from the Institute on Race and Poverty at the University of Minnesota Law School described the continuing impact of racial discrimination in mortgages and housing on families of color.

Renters and the housing cost burden

About half of the renters in the seven-county region are now cost-burdened, compared to less than 40 percent in 2000. The average rental rate for the seven-county region has risen from slightly more than $700 per month in 2000 to slightly more than $900 per month in 2008.

According to the Wilder report, “The wave of foreclosures may have contributed to the tightening of the rental market and increased rents as former homeowners become apartment dwellers. ” In addition, foreclosures on rental properties dislocate renters and take rental units out of circulation.

For very low-income households, waiting list to receive a Section 8 housing voucher is two to four years at several suburban public housing agencies – and that does not include the wait to even get on the list, which opens only periodically (every two to six years). (See Low-income and nowhere to live.)

Homelessness

While current numbers are not available, homelessness appears to be on the rise. (See Homeless in Minneapolis for a description of increasing homelessness in the Twin Cities.)

In the last two weeks of December 2008, Ramsey County began the Rapid Rehousing Pilot Project, in partnership with the YWCA, using some unspent 2008 contingency funds. Seventeen families were selected to receive several months of rental assistance as well as damage deposits for the first six months of 2009.

As a result of the implementation of the pilot project, the county was able to accommodate a significant number of new requests for family emergency shelter.

Jim Anderson of Ramsey County Human Services wrote in an e-mail that the pilot,
“albeit for a short time, clearly demonstrated that it is possible to move a significant number of families from emergency shelters to market rate housing in a very short time, but only if there is rental assistance available to provide a family the breathing space they need to start over and build stability.” He added that many of the families would also need supportive services to help them during the transition.

Kristine Zimba is Family Support Services Manager of YWCA St. Paul which is managing the pilot program. She said that families in the pilot program need the additional supports in order to get back on their feet. She told about one young couple with two toddlers. Zimba said, “ Budgeting their money especially when it comes to diapers, transportation, utility bills, etc the family has had difficulty in the past with not being able to manage bills and sometimes they find themselves paying large late bills so their phone or heat isn’t cut off and then they don’t have enough money for rent, transportation and the diapers.” She said that having a case manager they can call upon to help find resources makes all the difference.

Mary Thoemke, a lifelong resident of Saint Paul, is a free lance writer for the Twin Cities Daily Planet. Email her at marythoemke@tcdailyplanet.net

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