How will this affect rental rates in my town?

Question

I found this notice in this week's newspaper:

It goes on to explain various parts of the new plan, but then at the end it has this:

Note the part I underlined in red. Current rent for a 3BR apartment in low income housing is $350, and it's going up to $702. Wow!

So I have no idea how "low income" housing works. When they raise the rates like this does the tenant actually have to come up with the extra money, or do we, the taxpayers?

Is this likely to boost SFH rental rates in the area?

Sylvia B. · Answer

@Aaron Montague

Housing increase? No. Very little building going on here.

From city data:

Demographics? We are a small town, 2100 pop. Here are some facts from city data:

Estimated median household income in 2011: $25,842 (it was $21,887 in 2000)

Estimated median house or condo value in 2011: $77,862 (it was $48,900 in 2000) Median gross rent in 2011: $396.Houses: 1,023 (892 occupied: 531 owner occupied, 361 renter occupied)Most common occupations:  Driver/sales workers and truck drivers (13%)Other production occupations including supervisors (8%)Other sales and related workers including supervisors (6%)Building and grounds cleaning and maintenance occupations (6%)Material recording, scheduling, dispatching, and distributing workers (5%)Law enforcement workers including supervisors (4%)Health technologists and technicians (4%)Percentage of residents living in poverty in 2011: 30.9% Race:White alone - 2,339 (92.6%)Hispanic - 74 (2.9%)Two or more races - 65 (2.6%)American Indian alone - 32 (1.3%)Black alone - 8 (0.3%)Asian alone - 8 (0.3%)compared to Missouri state average:  Median household income below state average.  Median house value below state average.  Black race population percentage significantly below state average.  Foreign-born population percentage significantly below state average.  Institutionalized population percentage above state average.  Number of college students below state average.  Percentage of population with a bachelor's degree or higher below state average.Based on all that information, it seems that we should focus on low income rentals, but that is not the whole picture, of course. There are very few rentals for professionals - nurses, teachers, preachers, etc. and that is our focus. We really aren't interested in low income/section 8 rentals.

Estimated median house or condo value in 2011: $77,862 (it was $48,900 in 2000)

Median gross rent in 2011: $396.Houses: 1,023 (892 occupied: 531 owner occupied, 361 renter occupied)

Median gross rent in 2011: $396.

• Driver/sales workers and truck drivers (13%)
• Other production occupations including supervisors (8%)
• Other sales and related workers including supervisors (6%)
• Building and grounds cleaning and maintenance occupations (6%)
• Material recording, scheduling, dispatching, and distributing workers (5%)
• Law enforcement workers including supervisors (4%)
• Health technologists and technicians (4%)

Percentage of residents living in poverty in 2011: 30.9% Race:White alone - 2,339 (92.6%)Hispanic - 74 (2.9%)Two or more races - 65 (2.6%)American Indian alone - 32 (1.3%)Black alone - 8 (0.3%)Asian alone - 8 (0.3%)compared to Missouri state average:  Median household income below state average.  Median house value below state average.  Black race population percentage significantly below state average.  Foreign-born population percentage significantly below state average.  Institutionalized population percentage above state average.  Number of college students below state average.  Percentage of population with a bachelor's degree or higher below state average.Based on all that information, it seems that we should focus on low income rentals, but that is not the whole picture, of course. There are very few rentals for professionals - nurses, teachers, preachers, etc. and that is our focus. We really aren't interested in low income/section 8 rentals.

Percentage of residents living in poverty in 2011: 30.9%

Race:White alone - 2,339 (92.6%)Hispanic - 74 (2.9%)Two or more races - 65 (2.6%)American Indian alone - 32 (1.3%)Black alone - 8 (0.3%)Asian alone - 8 (0.3%)compared to Missouri state average:  Median household income below state average.  Median house value below state average.  Black race population percentage significantly below state average.  Foreign-born population percentage significantly below state average.  Institutionalized population percentage above state average.  Number of college students below state average.  Percentage of population with a bachelor's degree or higher below state average.Based on all that information, it seems that we should focus on low income rentals, but that is not the whole picture, of course. There are very few rentals for professionals - nurses, teachers, preachers, etc. and that is our focus. We really aren't interested in low income/section 8 rentals.

• White alone - 2,339 (92.6%)
• Hispanic - 74 (2.9%)
• Two or more races - 65 (2.6%)
• American Indian alone - 32 (1.3%)
• Black alone - 8 (0.3%)
• Asian alone - 8 (0.3%)

compared to Missouri state average:

• Median household income below state average.
• Median house value below state average.
• Black race population percentage significantly below state average.
• Foreign-born population percentage significantly below state average.
• Institutionalized population percentage above state average.
• Number of college students below state average.
• Percentage of population with a bachelor's degree or higher below state average.

Based on all that information, it seems that we should focus on low income rentals, but that is not the whole picture, of course. There are very few rentals for professionals - nurses, teachers, preachers, etc. and that is our focus. We really aren't interested in low income/section 8 rentals.

Aaron Montague · Answer

Politics aside, to answer your original question: rents should rise across the area. The local section 8 program has determined that the rents they are paying are too low, therefore they need to start kicking in more money to make their tenants viable candidates for tenancy.

Is the amount of housing in your area increasing dramatically?  I.e. are lots of new developments going in?

What are the population demographics in the area?  Are they working class folks for the most part?  Are the people employed?  Do they have a number of industries coming (or going) to the area?

How many people will the rent increase affect?  If it is a large number, it sounds like a good time to jump in on the low income housing market.  If this isn't going to change the way most of the people in your area pay rent, then it doesn't really matter.

The article seems to indicate that the agency hasn't looked at fair market rents in a long time.  Economically this is a disincentive for low income landlords to add section 8 tenants to their rent roles.  With new, higher rents coming on the horizon, the section 8 housing market looks to gain in your area, no matter how large the section 8 population actually is.

According the Kansas City Housing Authority website, "a family cannot pay more than 40% of it's gross income towards housing and utilities."  So it appear the increase in the rental payments will be going towards the landlords directly from the housing authority, not out of the tenants pockets.  Even if the rents are going up, the tenants won't be expected to pay more than 40% of their gross income to the landlord.  The housing authority will pick up the rest of the tab.  The article above seems to have glossed over that fact.

So the question remains, is there money to be made in your neck of the woods with section 8 housing?  Probably.  And the nice part about section 8 checks: there is NO question when they will arrive.

Trevor K. · Answer

Or maybe an incentive to earn more income, and pay their own rent.  It's all a matter of perspective.

Kyle Hipp · Answer

I have talked with a couple people that applied for those income based places and they are pretty pricy already. If you make a certain income level even if single person then you need to get bumped up to a 3 bedroom instead of a 2 bedroom. Sounds like the income adjusted rent will remain the same at its higher level but the flat rate will rise essentially pushing all rates up for the most part. Just another incentive for folks to earn less income in order to keep costs down on rent.

Sylvia B. · Answer

@Kyle Hipp

This sounds right -

"I know there is a low income, income based housing (something like wic  1426 or something) and that is managed by a private entity with strict  guidelines to continue in the program and recieve its benefits."

According to the article, "residents will have the choice of paying an income-adjusted rent, or paying a flat rent" but it doesn't say how those paying an income-adjusted rent will be affected. The flat rate for a 3br is doubling, so will the income-adjusted rents also double?

People are already hurting for money in our area. This is definitely not going to help.

Kyle Hipp · Answer

http://www.indybay.org/newsitems/2014/04/08/18753792.php

Here is an article that goes into this a little deeper. Looks like the recipients of public housing must pay higher amounts.  I am somewhat familiar with section 8 housing however not at all with public housing. Is that managed by a federal entity? I know there is a low income, income based housing (something like wic 1426 or something) and that is managed by a private entity with strict guidelines to continue in the program and recieve its benefits.

Unfortunately this bill will suck more income and money out of the areas that are already the most poverty stricken. This will make it much hard for folks in these areas to have the opportunities to change their position in life in their current location. Just imagine if every family within a 10 block radius of your house all of the sudden had $150 less in disposable income each month.... Not a good place to start a business. This appears to be an effort to make sure the federal government can remain solvent, which is the most foolish statement ever. The federal government benefits from a strong economy so to inflict pain on the economy in order to appear healthier is a downward spiral of foolishness. Until people understand this the federal government will continue to be filled with people who shoot our nation in the foot in the name of responsibility......

Matt R. · Answer

Hi Sylvia, it appears that the housing authority has plans to raise the rent and my best guess is the checks will be coming via tax payers expense. I imagine it will help increase or stabilize private rentals generally. I know in some areas section 8 type rentals are getting a top of the market rental rates.

thanks,

Matt

Thanks,

Matt

Sylvia B. · Answer

Nobody has any input on this?