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Housing Affordability and Economic Security: What Else Matters? Prepared for the 11 th Annual Leckey Forum October 18, 2013 AHS thanks the Housing Association.

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Presentation on theme: "Housing Affordability and Economic Security: What Else Matters? Prepared for the 11 th Annual Leckey Forum October 18, 2013 AHS thanks the Housing Association."— Presentation transcript:

1 Housing Affordability and Economic Security: What Else Matters? Prepared for the 11 th Annual Leckey Forum October 18, 2013 AHS thanks the Housing Association of Nonprofit Developers for its support of this work. The research was conducted by Joanna Biernacka-Lievestro at the GMU Center for Regional Analysis.

2 Context Housing affordability is generally defined by comparing household income to housing costs 30% rule. Other costs are rising and take up large shares of households incomes. A complete picture of affordability considers all household expenses. Efforts to look holistically include the Living Wage Project, Self-Sufficiency Standard, Economic Security Initiative. How economically secure are Arlington households?

3 Project Analyzed monthly budgets for three family types using actual expenditure data. Compared total monthly budgets with total incomes. Assessed gaps between expenses and incomes. Compared budget gaps for families living in market rate apartments versus committed affordable units (CAFs).

4 Highlights Families below median income struggle to support modest living standard in Arlington County. One- or two-person households need to make 80% of AMI to break even. Four-person households at 80% of AMI cannot meet expenses. Rent is the largest expense, but child care is also a significant cost pressure. Access to CAFs is important, predominantly for families. Households are making sacrifices to live in Arlington for other benefits most likely schools.

5 Household Types and Data Sources Data sources - Annual Affordable Housing Targets Report for FY 2012, Arlington Department of Community Planning, Housing and Development - Median Family Income Documentation System for FY 2011, U.S. Department of Housing and Urban Development - DC Metro Area Self-Sufficiency Calculator (BEST Index and Elder Index,) Wider Opportunities for Women - Consumer Expenditure Survey 2011, Bureau of Labor Statistics Household typeHousehold membersRental unit type 1 person1 adult1 bedroom 2 person1 adult and 1 child2 bedrooms 4 person2 adults and 2 children2-3 bedrooms Senior1 adult 65-years-old or older1 bedroom Household types

6 Monthly Budget Components ExpenditureAssumptionSource Rent Average rent per unit size Annual Affordable Housing Targets Report for FY 2012, Arlington Department of Community Planning, Housing and Development Food Includes age-specific diet consisting entirely of foods prepared and eaten at home. USDA Low-Cost Food Plan (retrieved from DC Metro Area Self-Sufficiency Calculator, Wider Opportunities for Women) Transportation Includes fuel, maintenance, license and registration fees, depreciation, finance charges and vehicle taxes; cost of public transit. American Automobile Associations Your Driving Costs, US Department of Energy, US Department of Transportation (retrieved from DC Metro Area Self-Sufficiency Calculator, Wider Opportunities for Women)

7 Monthly Budget Components ExpenditureAssumptionSource Child care Includes age-specific market rates: licensed family care rates are used for infants and toddlers; licensed care center rates are used for preschoolers and schoolchildren. State market rate surveys (retrieved from DC Metro Area Self-Sufficiency Calculator, Wider Opportunities for Women) Health care Includes health insurance premiums and out-of-pocket costs. Health care premiums for workers with employer- sponsored health insurance are average premiums. Non-employer sponsored health insurance premiums are those for the least expensive plans which approximate typical employer- sponsored plans. US Department of Health and Human Services Medical Expenditure Panel Survey (MEPS), (retrieved from DC Metro Area Self-Sufficiency Calculator, Wider Opportunities for Women)

8 Monthly Budget Components ExpenditureAssumptionSource Personal and household items Includes clothing, housekeeping supplies, personal care products, a landline telephone, and minimal life insurance and bank fees. US Bureau of Labor Statistics Consumer Expenditure Survey (retrieved from DC Metro Area Self-Sufficiency Calculator, Wider Opportunities for Women)

9 Budget Components Excluded Taxes Public assistance (cash/in-kind) Alimony/child support

10 Arlington vs. Metro Area Average Rents Apartment categoryArlington rentDC Metro rent 1-person household (1 bedroom)$1,936$1,328 2-person household (2 bedrooms)$2,213$1,506 4-person household (2 to 3 bedrooms)$2,497$1,724 Source: Arlington County DCPHD; HUD.

11 Household Incomes Arlington County Household Size Area Median Income (AMI) 40% AMI60% AMI80% AMI Poverty Threshold 1-person$58,438$23,375$35,063$46,750$11,490 2-person$66,750$26,700$40,050$53,400$15,510 4-person$107,300$42,920$64,380$85,840$23,550 Source: HUD, HHS.

12 Monthly budget profile: 40%AMI Market rent values, Arlington County Budget item1 person2 person4 personSenior 40% AMI (gross)$2,507$2,863$3,577$2,507 Rent1,9362,2132,4971,936 Food Transportation , Child care01,2172,3890 Personal and household items Health care Total expenditures$3,316$5,231$7,931$3,150 Balance ,368- 4,

13 Monthly balance: 40% AMI CAF rent values, Arlington County Budget item1 person2 person4 personSenior 40% AMI (gross)$2,507$2,863$3,577$2,507 Rent , Food Transportation , Child care01,2172,3890 Personal and household items Health care Total expenditures$2,186$3,986$6,552$2,020 Balance321-1,123-2,975487

14 Monthly balance: 40% AMI Market v. CAF, Arlington County IncomeBalance with market rents Balance with CAF rents $2,507$- 809 $321 $2,863- 2,368 -1,123 $3,577- 4,354-2,975 $2,507$- 643$487

15 Monthly budget profile: 60% AMI Market rent values, Arlington County Budget item1 person2 person4 personSenior 60% AMI (gross)$3,760$4,295$5,365$3,760 Rent1,9362,2132,4971,936 Food Transportation , Child care01,2172,3890 Personal and household items Health care Total expenditures$3,316$5,231$7,931$3,150 Balance ,566610

16 Monthly balance: 60% AMI CAF rent values, Arlington County Budget item1 person2 person4 personSenior 60% AMI (gross)$3,760$4,295$5,365$3,760 Rent1,2091,4521,5641,209 Food Transportation , Child care01,2172,3890 Personal and household items Health care Total expenditures$2,589$4,470$6,998$2,423 Balance1, ,6331,337

17 Monthly balance: 60% AMI Market v. CAF, Arlington County Income Balance with market rents Balance with CAF rents $3, ,171 $4, $5, ,566 -1,633 $3, ,337

18 Monthly budget profile: 80%AMI Market rent values, Arlington County Budget item1 person2 person4 personSenior 80% AMI (gross)$5,013$5,727$7,153$5,013 Rent1,9362,2132,4971,936 Food Transportation , Child care01,2172,3890 Personal and household items Health care Total expenditures$3,316$5,231$7,931$3,150 Balance1, ,863

19 Monthly balance: 80% AMI CAF rent values, Arlington County Budget item1 person2 person4 personsenior 80% AMI (gross)$5,013$5,727$7,153$5,013 Rent1,6131,9362,0861,613 Food Transportation , Child care01,2172,3890 Personal and household items Health care Total expenditures$2,993$4,954$7,520$2,827 Balance2, ,186

20 Monthly balance: 80% AMI Market v. CAF, Arlington County Income Expenditures with market rents Balance with CAF rents $5,013 $1,697 2,020 $5, $7, $5,013 1,8632,186

21 Budget Profile Comparison Arlington County and U.S. Rent is the major cost pressure in the basic budget of singles and families nationwide. Rent in Arlington County is much higher than the national average. – One-person households rent in Arlington is nearly twice as high as the national average; – Four-person households rent in Arlington is over twice as high as the national average. Child care is the second highest financial burden for families nationally, but it is exceptionally high in Arlington. – Child care cost for a four-person household in Arlington is over twice as high as the national average.

22 Budget Profile Comparison Arlington County and U.S.

23

24 Conclusion Rent is a majorthough not the onlycost pressure. It is the one where the County can make the most difference. Better data are needed about the number and composition of households below 40% of AMI, and especially larger families. It is important to understand how household get by when expenses exceed incomes. Continous research is necessary to investigate and asses options for assisting families below under median income in securing a modest standard of living in Arlington County.


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