Housing Affordability and Economic Security:What Else Matters?

Prepared for the 11th 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.

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?

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).

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.

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 type Household members Rental unit type

1 person 1 adult 1 bedroom

2 person 1 adult and 1 child 2 bedrooms

4 person 2 adults and 2 children 2-3 bedrooms

Senior 1 adult 65-years-old or older 1 bedroom

• Household types

Monthly Budget ComponentsExpenditure Assumption Source

Rent Average rent per unit sizeAnnual 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 Association’s Your Driving Costs, US Department of Energy, US Department of Transportation (retrieved from DC Metro Area Self-Sufficiency Calculator, Wider Opportunities for Women)

Monthly Budget ComponentsExpenditure Assumption Source

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)

Monthly Budget ComponentsExpenditure Assumption Source

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)

Budget Components Excluded

• Taxes• Public assistance (cash/in-kind)• Alimony/child support

Arlington vs. Metro Area Average Rents

Apartment category Arlington rent DC 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 $1,724Source: Arlington County DCPHD; HUD.

Household IncomesArlington County

Household Size

Area Median Income (AMI)

40% AMI 60% AMI 80% 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.

Monthly budget profile: 40%AMIMarket rent values, Arlington County

Budget item 1 person 2 person 4 person Senior

40% AMI (gross) $2,507 $2,863 $3,577 $2,507

Rent 1,936 2,213 2,497 1,936

Food 288 422 836 251

Transportation 497 537 1,024 214

Child care 0 1,217 2,389 0Personal and household items 438 521 628 333

Health care 157 321 557 416

Total expenditures $3,316 $5,231 $7,931 $3,150

Balance - 809 - 2,368 - 4,354 - 643

Monthly balance: 40% AMICAF rent values, Arlington County

Budget item 1 person 2 person 4 person Senior

40% AMI (gross) $2,507 $2,863 $3,577 $2,507

Rent 806 968 1,118 806

Food 288 422 836 251

Transportation 497 537 1,024 214

Child care 0 1,217 2,389 0Personal and household items 438 521 628 333

Health care 157 321 557 416

Total expenditures $2,186 $3,986 $6,552 $2,020

Balance 321 -1,123 -2,975 487

Monthly balance: 40% AMIMarket v. CAF, Arlington County

Income Balance 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

Monthly budget profile: 60% AMI Market rent values, Arlington County

Budget item 1 person 2 person 4 person Senior

60% AMI (gross) $3,760 $4,295 $5,365 $3,760

Rent 1,936 2,213 2,497 1,936

Food 288 422 836 251

Transportation 497 537 1,024 214

Child care 0 1,217 2,389 0Personal and household items 438 521 628 333

Health care 157 321 557 416

Total expenditures $3,316 $5,231 $7,931 $3,150

Balance 444 - 936 - 2,566 610

Monthly balance: 60% AMICAF rent values, Arlington County

Budget item 1 person 2 person 4 person Senior

60% AMI (gross) $3,760 $4,295 $5,365 $3,760

Rent 1,209 1,452 1,564 1,209

Food 288 422 836 251

Transportation 497 537 1,024 214

Child care 0 1,217 2,389 0Personal and household items 438 521 628 333

Health care 157 321 557 416

Total expenditures $2,589 $4,470 $6,998 $2,423

Balance 1,171 -175 -1,633 1,337

Monthly balance: 60% AMIMarket v. CAF, Arlington County

Income Balance with market rents

Balance with CAF rents

$3,760 444 1,171

$4,295 - 936 -175

$5,365 - 2,566 -1,633

$3,760 610 1,337

Monthly budget profile: 80%AMI Market rent values, Arlington County

Budget item 1 person 2 person 4 person Senior

80% AMI (gross) $5,013 $5,727 $7,153 $5,013

Rent 1,936 2,213 2,497 1,936

Food 288 422 836 251

Transportation 497 537 1,024 214

Child care 0 1,217 2,389 0Personal and household items 438 521 628 333

Health care 157 321 557 416

Total expenditures $3,316 $5,231 $7,931 $3,150

Balance 1,697 496 -778 1,863

Monthly balance: 80% AMICAF rent values, Arlington County

Budget item 1 person 2 person 4 person senior

80% AMI (gross) $5,013 $5,727 $7,153 $5,013

Rent 1,613 1,936 2,086 1,613

Food 288 422 836 251

Transportation 497 537 1,024 214Child care 0 1,217 2,389 0Personal and household items 438 521 628 333

Health care 157 321 557 416

Total expenditures $2,993 $4,954 $7,520 $2,827

Balance 2,020 773 -367 2,186

Monthly balance: 80% AMIMarket v. CAF, Arlington County

Income Expenditures with market rents Balance with CAF rents

$5,013 $1,697 2,020

$5,727 496 773

$7,153 -778 -367

$5,013 1,863 2,186

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 household’s rent in Arlington is nearly

twice as high as the national average;– Four-person household’s 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.

Budget Profile ComparisonArlington County and U.S.

Rent Food Transportation Personal and household items

Health care0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

One-person Family Basic Budget Profile

Arlington County

U.S. Average

Dolla

rs

Budget Profile ComparisonArlington County and U.S.

0

500

1,000

1,500

2,000

2,500

3,000

Four-person Family Basic Budget Profile

Arlington County

U.S. AverageDol

lars

Conclusion• Rent is a major—though not the only—cost 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.