Slate

Suburban Housing Costs Are Stretching Families to the Brink

By Margaret Hennessy       March 21, 2018  

Better Life Lab is a partnership of Slate and New America.

Photo illustration by Slate. Photos by Thinkstock.

In Suburban Slide, the Better Life Lab explores the changing face of poverty in the United States and how the symbol of American prosperity became the new place of poverty. In a six-part series, we explore what this means for Americans’ work-life conflicts and American identity in general.

“I was surprised by the lack of empathy,” Carrie Merino said. “I would say, ‘I’m a single mom with three kids and I have a job so I can pay the rent. I just don’t have three times the amount of income you require to qualify.’ ”

In May 2015, after her divorce, Merino moved back to her hometown of Scappoose, Oregon, a suburb of Portland, with her three kids, ages 4, 1, and 14. Like any cross-country move, this ate up a lot of her already limited resources and credit. At first, she didn’t qualify for housing because she hadn’t lined up her job yet, but also because she didn’t have three times the rent price (rent plus first and last months of the lease). “Most places were charging at least $1,000 at that time,” she said, recalling a host of conversations like the one she recounted. “And there was no way I was going to make that.” So, for the first month back they lived in an RV on her grandfather’s land.

The property managers would apologize and tell her she’d been rejected. “And they could do that because demand was so much higher than supply. If they don’t let me rent, they’re going to find someone else within minutes,” said Merino. Without a stable, permanent place to set up her family, balancing the responsibilities of single motherhood has been all the more difficult.

Home ownership has long been seen as the key to unlocking the “American dream.” And, owning a home in the suburbs was central to this illusion. The suburbs of the 1950s were like havens for what were thought of  “ideal” breadwinner-homemaker family types. American suburbs separated the Joneses from everyone else who couldn’t keep up. They were constructed as physical barriers of segregation during the initial white flight of the 1950s and 1960s. Yet most suburbs today look nothing like that illusion, although white flight still persists.

Home ownership has long been seen as the key to unlocking the “American dream.” And, owning a home in the suburbs was central to this illusion.

The 1950s stereotypes surrounding place-based, “urban” poverty are still deeply embedded in American policy and culture, preventing families from accessing affordable, safe housing key to their work-life stability and wellbeing. American suburbs were not designed to accommodate affordable housing units or the influx of renters who are now the norm, nor were federal housing policies designed to confront the suburbanization of poverty.

From 2011 to 2015, the number of renter households in suburban areas outgrew urban areas, and yet, the number of new apartments constructed in the suburbs lagged behind. Simultaneously, suburban rent prices crept closer to their urban counterparts. Aaron Terrazas, a Senior Economist at Zillow, an online real estate database, explains that urban and suburban home values fared similarly during the bust, both falling about 26–28 percent from peak. Urban home values, however, have recovered much better than their suburban counterparts. Since January 2012, the median home value per square foot is up 58 percent in urban areas compared to only 39 percent in suburban areas, which overturns long standing trends in suburban homes’ stronger appreciation and appeal.

                                                  Carrie Merino and her family. Stephen Merino

For families there facing lagging incomes and growing poverty, depreciated home values only add to the increasing lack of economic opportunity in the suburbs. Property values as proxies for quality of life measures mean that suburbs with high concentrations of poverty and low property values may generate less property taxes for schools, jobs, parks, etc. Moreover, these areas may be seen as less desirable from an investor’s point of view, which contributes to a continued downward spiral.

For those millions of Americans who lost their homes during the recession, or never owned to begin with, their troubles are not over. The Joint Center for Housing Studies (JCHS) at Harvard reports that renters are likely to account for one-third of household growth, but the growth is uneven across income groups. Because the rental market hasn’t responded with enough housing options for low- and middle-income families relative to the influx of renters since the housing crisis, there are more families competing for limited rentals. Pressure on families to find an affordable place often ends up with them paying far more than they can and should, like Merino.

Recent findings from the National Low Income Housing Coalition estimate an average of 35 available units for every 100 low-income households across geographies. The report also found that 8 million extremely low-income renters are cost-burdened and forced to spend half of their income on rent. As urban markets become increasingly more expensive, housing opportunities for low-income renters are pushed further from urban centers into the periphery in the suburbs, increasing the distance between their jobs, social services, care networks, and transportation.

Recent findings from the National Low Income Housing Coalition estimate an average of 35 available units for every 100 low-income households across geographies.

Merino is a college-educated substitute teacher, and yet, even after she secured a job it was difficult to find housing with her $1,800 a month of fluctuating income, plus child support from her ex-husband. By August, she was lucky enough to find a landlord willing to let her rent. There was just one catch: The house was going through foreclosure. After a year-and-a-half of paying $900 a month in rent, Merino was on the market again once the house sold. The tumultuous period was especially hard for Dallin, her son (11), who started acting out in school. When Merino got a phone call from his teacher, she worried that he was also feeling her uncertainty and stress.

“Apartments never open up, because once people find them they stay there,” that’s how she describes the landscape for affordable multifamily rental units in Scappoose. She found a three-bedroom apartment for $500 more a month, just over half of her income, which tightened her remaining budget for utilities, trash, water, internet, child care, and food. After adding up all expenses, she has around $860 of disposable income leftover every month, and it goes fast. Although Merino dreams of one day owning a home, she is too economically insecure to even consider a down payment today.

Generally, nearly half of all renter households are “cost-burdened,” contributing more than one-third of their income to housing expenses. The affordable rule of thumb—spend no more than 30 percent of income on housing—was established by the U.S. Department of Housing and Urban Development vis-a-vis the National Housing Act of 1937. Accordingly, spending more than 30 percent of income on rent signifies a cost burden. The benchmark fails to account for how incomes, housing quality and affordability, and family budgets have changed over the last 80 years. Unsurprisingly, for the lowest income households the share of income devoted to rent has steadily increased to nearly 60 percent of pay.

Rent, utilities, and child care eat up the bulk of Merino’s family budget. She spends an average of $800 a month to keep her youngest, Chloe, in child care. In Oregon, the cost of full-time child care is more than the median rent in the state. On average, families save more by raising their children in the suburbs, but this is not true across the board. For example, in suburbs surrounding Philadelphia and Baltimore it has become more affordable to raise a child in the city, and that’s with a mortgage payment, which is more stable than rent. Because rental prices are subject to market fluctuations, renting can have harmful effects on middle- and low-income families with volatile incomes. Rising rents and child care costs can easily turn into a downward spiral for already cost-burdened families, especially for mothers of color.

Matthew Desmond, author of Evicted, estimates that 1 in 8 renters will likely be evicted, but that rate is even higher for African American women due to discriminatory renting practices. Add kids into the mix and the picture is even more dismal. A woman with children, like Merino, is more likely to be evicted than a woman without children. These statistics have devastating consequences for the health, stability, and well-being of the parents and children being displaced. Merino struggled to make rent this past Christmas, where she was unable to work for three weeks due to breaks in the schools where she substitute teaches. She had to borrow $1,000 from her father to cover her family’s expenses.

During the recession, African Americans were offered subprime loans at higher rates than their white counterparts, which further deepened inequalities in housing markets.

John Henneberger, a MacArthur Foundation fellow and housing expert, affirms that legacies of discriminatory housing policies, like denying or pricing housing selectively based on applicants race, i.e. redlining, still persist today, making all these dynamics harder for families of color. Discrimination relents in artificially created barriers to housing that are designed to restrict people’s freedom of choice. The practice of discriminatory lending, for example, makes it more likely for people of color to pay higher mortgage costs compared to their white counterparts. During the recession, African Americans were offered subprime loans at higher rates than their white counterparts, which further deepened inequalities in housing markets. A report from the Urban Institute found that the rate of homeownership, which is one of the most important ways to acquire wealth, has remained largely unchanged for African Americans over the past 50 years. In spite of this history, HUD Secretary Ben Carson recently removed anti-discrimination language from the department’s mission statement.

As for public programs designed to combat these inequalities, federal housing programs were not designed with the suburbs in mind, and they’ve not kept up with trends in place-based poverty. According to former HUD Secretary Julian Castro, the formulas for determining need are not nuanced enough to capture the needs of suburban communities. Castro explains that the Community Development Block Grant (CDBG), which provides communities with resources for development, structures its allocation formula on the age of the housing stock. From his perspective, this approach fails to capture the needs of people living in suburban communities in newer housing who may be impoverished and/or economically insecure. According to Henneberger, how CDBG funds are spent doesn’t always align with HUD’s goal of creating and maintaining affordable housing. Since there’s a fixed block of money that can be used flexibly, it’s spent on everything from plugging budget holes to actual housing development.

In part, the variations in housing experiences across the U.S. are result of historical slashing of HUD’s budget. President Trump is calling to zero out funds in the CDBG program, cut the public housing operating fund, and decrease housing choice vouchers, leaving states and localities to fill in the gaps. Many regions have turned to federal housing choice vouchers to provide affordable housing, essentially, supplementing available money for paying rent rather than working to increase the supply of low-rent options altogether. The program is widely used by working families with children, in urban and suburban or rural areas, who are stretched thin by housing costs. The vouchers gained immense popularity by giving the urban poor greater mobility and freedom. In Portland, Oregon, vouchers cannot account for whether affordable options even exist outside the metro center, nor can they revitalize distressed communities, or ensure that their affluent or white counterparts become more integrated and diverse.

Sociologists Alexandra Murphy and Danielle Wallace raised concern over whether or not the suburban neighborhoods are organizationally equipped to provide resources such as housing to the poor living in these communities. Spatial mismatches of jobs, transportation, and housing in suburban versus urban areas contribute to immobility and isolation. Moving to the suburbs doesn’t necessarily mean that people are moving to better opportunities, especially in light of high concentrations of continued segregation—racial and economic—in the suburbs.

The voucher strategy is good in theory, but it doesn’t go far enough to address the inadequacy of existing housing stock in the suburbs. From his experience visiting states and localities across the U.S., Castro believes public servants who represent a suburban community, on city councils or township boards, are not used to having to grapple with combating poverty, and they still see it as a problem that’s in the big cities. Stigmatizing attitudes about what it means to be poor exacerbate this problem. Castro said, “A lot of times the reactions that poor people get in suburbs is not a pretty one, like people don’t know what to do with them because that’s not how the suburbs see themselves.” Assumptions about suburbs being places where the “grass is greener” still persist, and these stereotypes are not conducive to tackle suburban poverty.

Scappoose is no longer the working-class town Merino grew up in, and she says some residents equate people’s search for affordable housing with “looking for a handout.” She isn’t, though, she says, “I’ve been on welfare before, and I never felt ashamed of it until I moved back here.”