High-end rents drop, but poor pay­ing more

The Atlanta Journal-Constitution - - FRONT PAGE - By Jeff Stein

Rents have fallen for the high­est earn­ers and risen for the low­est in many U.S. cities, in­clud­ing At­lanta.

U.S. cities strug­gling with soar­ing hous­ing costs have found some suc­cess in low­er­ing rents this year, but that re­lief has not reached the renters most at risk of los­ing their hous­ing.

Na­tion­ally, the pace of rent in­creases is be­gin­ning to slow down, with the av­er­age rent in at least six cities fall­ing since last sum­mer, ac­cord­ing to Zil­low data.

But the de­cline is be­ing driven pri­mar­ily by de­creas­ing prices for high-end rentals. Peo­ple in low-end hous­ing, the apart­ments and other units that house work­ing-class res­i­dents, are still pay­ing more than ever.

Since last sum­mer, rents have fallen for the high­est earn­ers while in­creas­ing for the poor­est in San Fran­cisco, At­lanta, Nashville, Chicago, Philadel­phia, Den­ver, Pitts­burgh, Port­land and Wash­ing­ton, D.C., among other cities. In sev­eral other metro ar­eas — in­clud­ing Los An­ge­les, Las Ve­gas, Hous­ton and Mi­ami — rents have risen for the poor and the rich alike.

The on­go­ing in­crease in prices for low-end renters poses a chal­lenge for city of­fi­cials who have vowed to lower hous­ing costs for work­ing-class res­i­dents al­ready strug­gling with tepid wage growth in the U.S. econ­omy.

City of­fi­cials have said that a boom in lux­ury hous­ing con­struc­tion would cause rents to fall for ev­ery­one else, ar­gu­ing that cre­at­ing new units for those at the top would ease com­pe­ti­tion for cheaper prop­er­ties.

In part based on that the­ory, cities have ap­proved thou­sands of new lux­ury units over the past sev­eral years, hop­ing to check high rents that have led more than 20 million Amer­i­can renters to be clas­si­fied as “cost bur­dened,” de­fined as spend­ing more than 30 per­cent of one’s in­comes on hous­ing.

But although some ad­vo­cates say the div­i­dends could still pay off for low-in­come renters, oth­ers say more di­rect gov­ern­ment ac­tion is needed to pre­vent poor res­i­dents from be­ing forced out of their cities or into home­less­ness. They have called for the fed­eral gov­ern­ment to help con­struct more af­ford­able units, or of­fer greater rental as­sis­tance for poor fam­i­lies.

“For-profit devel­op­ers have pre­dom­i­nantly built for the lux­ury and higher end of the mar­ket, leav­ing a glut of over­priced apart­ments in some cities,” said Diane Yen­tel, pres­i­dent and chief ex­ec­u­tive of the Na­tional Low In­come Hous­ing Coali­tion, an ad­vo­cacy group. “Some de­ci­sion-mak­ers be­lieved this would ‘fil­ter down’ to the low­est-in­come peo­ple, but it clearly will not meet their needs.”

Poorer city res­i­dents have ex­pe­ri­enced sig­nif­i­cant rent in­creases over the past sev­eral years. In Port­land, av­er­age rents for the poor have risen from about $1,100 to $1,600 — or by more than 40 per­cent — since 2011.

In San Fran­cisco, the av­er­age rent at the bot­tom of the mar­ket has soared from $1,700 to $2,600, a nearly 50 per­cent in­crease. Seat­tle’s poor have also had their rents rise by close to 40 per­cent. Na­tion­wide, rents for those at the bot­tom have in­creased by

18 per­cent.

Ris­ing rents for the poor threaten to add to the na­tion’s home­less pop­u­la­tion, and put an ad­di­tional se­vere strain on tens of mil- lions of fam­i­lies, of­ten forc- ing them to forgo other ba­sic needs to avoid los­ing their hous­ing.

Con­struc­tion in most U.S. cities came to a stand­still dur­ing the Great Re­ces­sion, amid a broader col­lapse in the hous­ing mar­ket. As the economic re­cov­ery took off, its gains were dis­pro­por- tion­ately con­cen­trated in a hand­ful of cities, lead­ing renters to move in droves to al­ready densely pop­u­lated ur­ban ar­eas.

There was not enough hous­ing there to greet them. By the early 2010s, rents in ma­jor cities were be­gin­ning to in­crease by more than 10 per­cent an­nu­ally. Sev­eral cities de­clared emer­gen­cies over their ris­ing home­less pop­u­la­tions.

In the fol­low­ing years, pro­tracted bat­tles have oc­curred in city halls na­tion­wide over the size and makeup of ur­ban com­mu­ni­ties, of­ten pit­ting long­time home­own­ers try­ing to pre­serve the value of their prop­er­ties against devel­op­ers seek­ing to profit from the high de­mand.

May­ors have been caught in the mid­dle, aim­ing to ac­com­mo­date an in­flux of new res­i­dents who help boost the lo­cal econ­omy with­out dis­plac­ing those who have lived in their cities for decades. They have also faced in­tense pres­sure from in­flu­en­tial devel­op­ers and busi­ness groups that have pressed for the abil­ity to de­velop new homes, as well as from land­lords who en­joy high rents and fear see­ing those val­ues di­luted.

The re­sult has been a range of pol­icy mea­sures, in­clud- ing re­form­ing zon­ing codes to en­cour­age more de­vel­op­ment, cre­at­ing new tools to fi­nance projects ing that devel­op­ers af­ford­able and rules man­dat- hous­ing in­clude af­ford­able units in their prop- er­ties.

These mea­sures have shown some signs of re­duc­ing rents, for both the rich and, to a lesser ex­tent, the mid­dle class.

For renters in the mid­dle third of the in­come dis­tribu- tion, av­er­age rental prices have re­mained vir­tu­ally un­changed since last sum­mer, ac­cord­ing to the Zil­low data. Rents over the past year have also fallen slightly for the mid­dle class of renters in Port­land, Chicago, Phila- del­phia and Seat­tle. The lack of af­ford­able hous­ing can be par­tic­u­larly pro­nounced in smaller cit- ies such as Port­land, which has strug­gled to ac­commo- date about 40,000 new res­i­dents since 2010.

From 2010 to 2014, the city built only a few hun­dred af­ford­able hous­ing units, ac­cord­ing to a city re­port. Since 2014, more than 95 per­cent of pri­vate con­struc­tion in the city has been in “the lux­ury end of the mar- ket,” said Nick Fish, a city com­mis­sioner.

Pri­vate hous­ing con­struc- tion has ex­ploded in Port­land’s down­town area, along its south wa­ter­front and in its his­tor­i­cally black north- east com­mu­nity. But even as the city’s pop­u­la­tion has bal­looned, its black popu- la­tion has de­creased since 2014 by an av­er­age of 800 peo­ple ev­ery year, prob­a­bly pushed out by gen­trifi- cation, ac­cord­ing to a study by Port­land State Univer­sity re­searchers.

In an em a il, Port­land Mayor Ted Wheeler, a Dem- ocrat, pointed to 948 af­ford­able rental units ex­pected to open in 2018 and an ad­di­tional 978 units sched­uled for 2019.

“We are ac­tively cre­at­ing hous­ing op­tions at ev­ery in­come level in ev­ery area of the city,” he said, adding that 10,000 more units are com­ing soon. “Our ef­forts are be­gin­ning to pay off: This will be the largest num­ber of af­ford­able units ever pro­duced by the City of Port­land in a sin­gle year in mod­ern his­tory.”

But for Rakhelya Le­vit­skaya, a 66-year-old home­care aide who works with the el­derly and dis­abled, lit­tle help ap­pears to be on the way. A Ukrainian im­mi­grant who has lived in the same Port­land hous­ing com­plex for 18 years, Le­vit­skaya re­ceived no­tice of an ap­prox­i­mately 10 per­cent rent in­crease this sum­mer that she fears will push her into home­less­ness.

“I’m afraid of liv­ing out on the streets, with­out a house,” she said in an in­ter­view. “I’m very wor­ried.”


In San Fran­cisco, the av­er­age rent at the bot­tom of the mar­ket has soared from $1,700 to $2,600, a nearly 50 per­cent in­crease.

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