Plummeting Supply of Affordable Housing Options

As the economy improves, many people tend to focus on things like the gross domestic product increase, the unemployment rate decrease, and other factors that provide a positive narrative. And although all of these outputs are extremely important for the nation's well-being, they are just the tip of the iceberg. If one was to dive deeper into the state of the communities around the nation, they would easily uncover issues that still exist or are growing worse. One of those issues is a growing concern related to a lack of affordable housing.

Here in Chelsea, for example, the percentage of those whose income is below the poverty line is 13.5%, yet rent is 50% higher than New York as a whole. While this speaks partially to the somewhat affluent status of this particular neighborhood, it also highlights an underlying problem. Of the nearly 50,000 residents in Chelsea, roughly 8,000 are likely unable to keep up with their rent without assistance and affordable housing options.

Why the Offering of Affordable Housing Is Reduced

The improvements in the economy tend to come with an increase in the prices of everyday items. After all, as the average pay goes up, the cost of living will be raised as well. In the long-run, this leads to a reduction of affordable housing options as landlords have to increase the cost of renting to continue being profitable. And even though one would think the growing salaries help compensate for such a spike in prices, they do not. The reason why is the fact that those who live below the poverty line are almost always left out of the conversation about growing pay. These tend to be individuals working minimum-wage jobs that pay the state minimum of $9.70 per hour.

Unfortunately, an overall improvement in the economy does not necessarily mean an improvement in their situation. This is because most minimum-wage jobs rely on the strength of demand in the market and seldom increase pay. For instance, McDonald's is well aware that there will always be those who will apply to work for them due to lax hiring requirements and minimum skill needed. Consequently, it does not have to raise its entry compensation for employees. Hence how it has been able to survive the numerous protests that demanded its franchises increase the minimum wage to $15. Additionally, the fact that the Republican Party controls the majority of the government's branches further minimizes the odds of an increase in the minimum wage.

How This Impacts Families Across the United States

According to the founder and CEO of Cedar Grove Partners LLC, Aaron Gorin, failing to increase compensation for low-income families makes it difficult for them to cover rent. Consequently, they may be subjected to eviction or hefty fines that landlords use to incentivize people to pay rent. Both of these, however, further worsen the situation as they increase the financial burden while also placing negative marks like eviction on renters' records.

A Vicious Cycle

As tenants fail to pay rent because they do not have enough income, the landlords will also start losing money. Just think about the fact that most property owners have large mortgages that are encumbered by their assets. Well, if the people who live there are not paying them monthly, the landlords will fail to cover their mortgages as well. Additionally, as Aaron Gorin of Cedar Grove Partners LLC reminds, the law is on the side of the tenants as they will often be given over 30 days to move out when non-payment-based conflicts arise. Thus, the landlords are more prone to focusing on making their housing luxurious and, in turn, minimizing the affordable options. This cycle only serves to further reduce the availability of affordable housing for those who need it.

Future Expectations

With the latest tax law changes, people are expected to see an increase in disposable income as their tax liabilities will be reduced for the next couple of years. Additionally, small business owners are also given many tax breaks in form of the qualified business income deduction, increased depreciation, and more. When these two are combined, it would be expected to see people meet their rental obligations more easily. Nevertheless, the growing cost of living will continue to undermine efforts to keep affordable housing available. A way to get around this is to invest in new housing opportunities, raise awareness, and look for ways to become a homeowner.