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EXCLUSIVE: Providence Has Highest Rents in RI

Thursday, October 31, 2013

 

Providence residents rent apartments at the highest rate of any city or town in Rhode Island, new data shows—challenging previous reports that suggest that the rental housing market in the capital city is affordable.

A Providence resident who earns $38,922 annually must pay 35 percent of his income to rent a $1,126-a-month two-bedroom apartment, according to the data provided by the Providence Apartment Association. No other community comes close to such a high rate of unaffordability. The second highest rents were in Central Falls, where median income earners pay 32 percent of their wages towards their rent. Next were Woonsocket and Pawtucket, both at an income-to-rent ratio of 31 percent.

Generally, housing is defined as “affordable” if it costs no more than 30 percent of household income.

The new data challenges a common perception—fueled, in part, by the annual HousingWorks RI fact book—that rents in Providence are within the limits of affordability.

The difference arises from whose income is counted. HousingWorks RI looks at the incomes of those who work in a community and ask if they can afford to live there. But, for a city like Providence, that includes many high earners who commute to work in the city but live in suburbs. Instead, the Providence Apartment Association says it’s better to focus on the incomes of those who live in a community.

“When income of residents in the city of Providence is considered, Providence ranks last in affordability. Providence [residents] pay approximately 35 percent of their income towards rental housing. This is the highest in the state,” the association said in a statement provided by board member Keith Fernandes, a local investor.

The association lays the blame squarely in one place: rising property tax rates.

Fernandes contrasted the current owner-occupied residential tax rate of $19.25 with the non-owner occupied rate of $33.75, a difference of 73 percent. “Providence tenants support the 73 percent higher tax rate... Housing is not optional. When the city places such a disparate burden on tenants it falls on the people that can least afford it,” the association concluded in its statement. (The association has 450 members, representing thousands of city properties.)

Councilmen call for change in property taxes

“I agree 100 percent,” said Providence city Councilman Michael Correia. “They’re right. The burden gets passed on to … tenants.”

Correia, who represents Ward 6—the Mount Pleasant, Manton, Olneyville, and Fruit Hill neighborhoods—said he has heard from his own constituents that they are struggling to cope with higher rents. He said the city has to get out of the cycle of cutting services and raising taxes. “We need to come up with up with some type of formula and a better way to stop this from happening,” Correia said.

“Affordability for renters in Providence has become tenuous at best,” added Councilman Luis Aponte, who represents Ward 10, encompassing Lower South Providence and Washington Park.

Aponte agrees that higher property taxes only make matters worse for tenants. Since higher taxes cut into the profit margins for landlords, he said it's inevitable they will pass those costs on to their tenants. “The folks that are in this are … not followers of Mother Teresa,” Aponte said. “They’re business people. They’re trying to make money.”

The city needs to rethink its tax policy, Aponte said. After a national study found that Providence had the highest commercial tax rates in the country, the city froze the commercial rate for the current fiscal year, in an effort to spur economic growth. But Aponte said the housing industry is also an engine of economic growth. Both sources of economic growth should be fostered, he said. “We need to make sure we’re not punishing one to favor another,” Aponte said.

Taxes a culprit, but not the only one

But housing advocates say that high property taxes aren’t the only problem.

“The other part of the picture is 40 percent of the tax base is zero,” Aponte said, referring to tax-exempt colleges, universities, and hospitals.

Those institutions impact rents in other ways as well, according to Donna “DeeDee” Williams, the outreach and engagement coordinator for the Housing Action Coalition of Rhode Island. She said employees at local colleges and hospitals want to live close to where they work. Those employees can afford higher rates, she said. So, as they move into the area, they contribute to a rise in property values.

Local politics is another factor. In the past, local nonprofit developers had a close working relationship with the city administration, according to Aponte. “Over the last three years, that has not been the case,” he said.

Yet another cause for higher rents is the foreclosure crisis, according to Williams. Former homeowners have been driven into the rental housing market, which may not have had a sufficient supply of affordable apartments for them, according to Williams.

How HousingWorks RI assesses the affordability of Providence rents.

Housing advocates: Providence rents not affordable

Overall, the data reflects the reality on the ground, according to Williams. Every year, her organization works with thousands of low-income residents seeking affordable housing, Williams said. Some no longer qualify for Section 8 or subsidized housing and are looking for homes that meet their still-low incomes. Others have lost their homes due to the foreclosure crisis and are entering the rental market.

One common refrain from them all: “They want to live in Providence and they can’t afford it,” she said. Other than Providence, Williams hears that second least affordable community is Pawtucket, which ranked fourth on the Providence Apartment Association list.

A spokeswoman for the organization known for producing annual reports on the state of affordable housing stressed the common ground between the new data and what has previously been reported.

“So, for example, the Providence data pages in the 2013 Housing Fact Book shows that the median renter household income for the area is $27,657. On the East Side of Providence, the income needed to afford the average 2-bedroom rent ($1,313) is $52,520. For the rest of Providence, the income needed to afford the average 2-bedroom rent ($1,089) is $43,560. That is quite an affordability gap,” Nichole Lagace, spokesperson for HousingWorks RI, wrote in an e-mail.

The big difference between the HousingWorks RI data and that used by the Providence Apartment Association is whose income is used to calculate the affordability of local housing. At the municipal level, workers in Providence earn $52,728. But not all of those people live in the city. The median incomes of those who live in the city—regardless of whether they work there or not—is $38,922, which is 35 percent lower than the city worker figure.

Overall, Lagace said the new data affirms a larger message: Rhode Island has a housing affordability problem. “However you look at it, almost half of renter households in Rhode Island spend more than 30 percent of their income on housing,” she said. “That is problematic no matter what municipality you’re talking about.”

Stephen Beale can be reached at [email protected]. Follow him on Twitter @bealenews

 

Related Slideshow: The Most Affordable Communities for Renters

In the below slides, communities are ranked from most affordable to least affordable. Affordability is determined based on the ratio of the median income in a community the average rent for a two-bedroom apartment. Find out where your community ranks.

About the ranking: Data was provided by the Providence Apartment Association. Median income figures are taken from the U.S. Census Bureau’s American Community Survey, which provides a five-year sample of incomes between 2007 and 2011. Rents are taken from survey data collected by Rhode Island Housing. Because of the insufficiency of rental data, the following 11 communities are not in the ranking: Exeter, Foster, Glocester, Hopkinton, Jamestown, Little Compton, New Shoreham, Richmond, Scituate, Smithfield, and West Greenwich.

Note: Since median incomes were only available for Providence as a whole, and not able to be broken out separately for the East Side, the apartment rental data for the East Side is included with the rest of the city. The data for the rents in the East Side and the rest of the city was merged using a weighted algorithm based on the approximate geographic range, putting one sixth of apartments on the East Side and rest in the city.

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Barrington

Rank: 1

Median Resident Income: $98,612

Average Two Bedroom Rent: $1,154

Percent of Income Spent on Rent: 14%

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East Greenwich

Rank: 2

Median Resident Income: $96,591

Average Two Bedroom Rent: $1,335

Percent of Income Spent on Rent: 17%

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North Smithfield

Rank: 3

Median Resident Income: $79,005

Average Two Bedroom Rent: $1,151

Percent of Income Spent on Rent: 17%

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Cumberland

Rank: 4

Median Resident Income: $72,689

Average Two Bedroom Rent: $1,107

Percent of Income Spent on Rent: 18%

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Lincoln

Rank: 5

Median Resident Income: $74,136

Average Two Bedroom Rent: $1,133

Percent of Income Spent on Rent: 18%

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North Kingstown

Rank: 6

Median Resident Income: $78,369

Average Two Bedroom Rent: $1,271

Percent of Income Spent on Rent: 19%

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Burrillville

Rank: 7

Median Resident Income: $68,898

Average Two Bedroom Rent: $1,138

Percent of Income Spent on Rent: 20%

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Coventry

Rank: 8

Median Resident Income: $67,016

Average Two Bedroom Rent: $1,128

Percent of Income Spent on Rent: 20%

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South Kingstown

Rank: 9

Median Resident Income: $74,147

Average Two Bedroom Rent: $1,274

Percent of Income Spent on Rent: 21%

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Bristol

Rank: 10

Median Resident Income: $64,405

Average Two Bedroom Rent: $1,135

Percent of Income Spent on Rent: 21%

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Portsmouth

Rank: 11

Median Resident Income: $76,500

Average Two Bedroom Rent: $1,391

Percent of Income Spent on Rent: 22%

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Charlestown

Rank: 12

Median Resident Income: $69,271

Average Two Bedroom Rent: $1,271

Percent of Income Spent on Rent: 22%

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Middletown

Rank: 13

Median Resident Income: $71,901

Average Two Bedroom Rent: $1,322

Percent of Income Spent on Rent: 22%

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Westerly

Rank: 14

Median Resident Income: $60,432

Average Two Bedroom Rent: $1,123

Percent of Income Spent on Rent: 22%

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Tiverton

Rank: 15

Median Resident Income: $63,767

Average Two Bedroom Rent: $1,216

Percent of Income Spent on Rent: 23%

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Narragansett

Rank: 16

Median Resident Income: $64,031

Average Two Bedroom Rent: $1,235

Percent of Income Spent on Rent: 23%

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Cranston

Rank: 17

Median Resident Income: $58,442

Average Two Bedroom Rent: $1,157

Percent of Income Spent on Rent: 24%

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Warren

Rank: 18

Median Resident Income: $53,284

Average Two Bedroom Rent: $1,057

Percent of Income Spent on Rent: 24%

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West Warwick

Rank: 19

Median Resident Income: $50,006

Average Two Bedroom Rent: $1,096

Percent of Income Spent on Rent: 26%

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Warwick

Rank: 20

Median Resident Income: $59,973

Average Two Bedroom Rent: $1,315

Percent of Income Spent on Rent: 26%

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Johnston

Rank: 21

Median Resident Income: $54,880

Average Two Bedroom Rent: $1,213

Percent of Income Spent on Rent: 27%

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North Providence

Rank: 22

Median Resident Income: $50,211

Average Two Bedroom Rent: $1,114

Percent of Income Spent on Rent: 27%

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Newport

Rank: 23

Median Resident Income: $58,080

Average Two Bedroom Rent: $1,371

Percent of Income Spent on Rent: 28%

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East Providence

Rank: 24

Median Resident Income: $49,408

Average Two Bedroom Rent: $1,197

Percent of Income Spent on Rent: 29%

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Pawtucket

Rank: 25

Median Resident Income: $39,628

Average Two Bedroom Rent: $1,026

Percent of Income Spent on Rent: 31%

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Woonsocket

Rank: 26

Median Resident Income: $39,329

Average Two Bedroom Rent: $1,021

Percent of Income Spent on Rent: 31%

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Central Falls

Rank: 27

Median Resident Income: $32,759

Average Two Bedroom Rent: $863

Percent of Income Spent on Rent: 32%

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Providence

Rank: 28

Median Resident Income: $38,922

Average Two Bedroom Rent: $1,126

Percent of Income Spent on Rent: 35%

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Statewide Average

Median Resident Income: $55,975

Average Two Bedroom Rent: $1,176

Percent of Income Spent on Rent: 25%

 
 

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Comments:

Good job Taveras! Time for another tax increase?

Comment #1 by Odd Job on 2013 10 31

What's keeping all of these fine poor folks here? BENEFITS

Comment #2 by donatello gori on 2013 10 31

Thats what you get with Taveras!

Comment #3 by anthony sionni on 2013 10 31

A building is a building - the tax rate should be the same, whether it is an owner-occupied dwelling or not. Just another example of how the small business owner - yes, landlords are small business owners -is looked down on and gets screwed in this State!

Comment #4 by C B11 on 2013 10 31

Tenants aren't without blame either. I supply heat for a 2 family in Woonsocket and I drive by in the winter and see the windows open. I guess since they don't pay for the heat, they don't care as much, but it costs me about $700 a month to heat that house in the winter. Another issue... if you need to terminate a lease for some reason and the renters don't want to leave, they can essentially stay there for about 3 months while it goes through the court system, and at the end they never have to pay you back the rent they owe. Even if you let them know months ahead of time that you won't be renewing their rent, they can still refuse to leave and guess who ends up footing the bill for the squatters? What does a landlord do to address that? He jacks up the rent in case the new tenants pull the same thing.

Comment #5 by Rob Felber on 2013 10 31

this makes absolutely no sense. you need to carve out east side and the college rentals at pc.

once you do that, I bet the average rental is more like $600-750 per month.

regarding providence city workers.. why would they want to live in providence? house taxes, car taxes, crime, schools, roads,

Comment #6 by john paycheck on 2013 10 31

No coincidence that the worst for housing are the municipalities that have lost the most industry over the years, yet continued to give away the store to the municipal unions. Kinda like Detroit.

Comment #7 by David Beagle on 2013 10 31

John,

of course the data includes varying types of renters but it also includes various types of incomes. So incomes of the relatively well to do progessional communities surrounding these colleges raise the median income even as avg. rents are raised because of the inclusion of those areas.

They are all providence after all.

The housingworks study separates the east side and the rest of the city but one thing that you quickly notice is that rents on the east side aren't that much more than in the rest of the city, about 20%.

So the rent for non-east side 2-bedroom apts is $1089, not $600 or 700.

Now that doesn't take out PC students but there is no available data that would really boil it down to that level. But, more to the point, you can't get income data that separates those neighborhoods which is why this research grouped the entire city.

There are ways to be more precise that actually makes things look worse for Providence renters. There is data on median renter income -- which, as you might expect, is substantially lower than the median income. About 10,000 dollars less in Providence. That would make Providence look even less affordable,with renters paying on average almost 50% of their income even using the lower $1089 non east side rental average.

But that data is only available on a countywide basis due to the smaller sample sizes of renters actually captured by the census. And it makes the incomes the same in Lincoln and Cumberland as in Providence, Pawtucket, Woonsocket etc. It is clearly pretty legitimate for Providence which is the most populous location in the county, but it would skew comparison to other towns and cities that are smaller and have incomes different than the larger towns and cities in each county.

The data is not perfect but it is a reasonable basis for comparing cities in the state.

Comment #8 by Brian Bishop on 2013 10 31

Maybe they should include the incomes of those parents that are paying the rent for the hundreds of renting college students that only work part time for the most part. That would certainly skew the data.

Comment #9 by David Beagle on 2013 10 31

Very misleading study. The data definitions were drawn to support a conclusion that had been reached before the study was undertaken. It appears from the data that there is a small spread in average rents statewide, smaller than might have been expected. It is not a reasonable basis for comparing cities in the state.No unbiased researcher would ever reach these conclusions.

Comment #10 by Fruma Efreom on 2013 10 31

I'm waiting for the one truthful story.....PROVIDENCE IS A TOTAL CESSPOOL.
From it's historically corrupt politicians, to it's crime ridden streets, to it's abandoned mills and boarded up houses.
Golocal.....tell it like it truly is....Providence totally SUCKS!!!!

Comment #11 by pearl fanch on 2013 10 31

Fruma Efron, do you work for the City? Taveras? From what I see the data is from the census. At the bottom it says that the discrepancies on the east side are accounted for. Can't argue with facts. I own a rental property in the city and it is insane that I am paying a 73% higher tax rate. Not even NYC classifies a bldg which is 1-4 units differently.

Comment #12 by Providence Can do Better on 2013 11 01

THANK YOU DEMOCRATS FOR 70 YEARS OF ABUSE ! THANK YOU FOR OUR HIGH PROPERTY TAXES!..WE PAY FOR YOUR STINKIN' VOTES VIA YOUR OVERLY GENEROUS ENTITLEMENT PROGRAMS,PUBLIC SECTOR UNION GIVEAWAYS, THE UNDOCUMENTED AND EVERY HEALTH AND HUMAN SERVICE PROGRAM YOU CAN THINK OF.I CAN'T BREAK EVEN ON MY RENTAL PROPERTY,EVERY YEAR IT GETS WORSE AND WORSE..IT'S YOU DEMOCRATS WHO HAVE AN ALL OUT ASSAULT ON THE MIDDLE CLASS BECAUSE YOU KNOW THAT'S WHERE THE MONEY IS! IT'S CERTAINLY NOT IN YOUR VOTER BASE,YOU'RE CERTAINLY NOT GOING GET ANYTHING FROM THEM.RHODE ISLAND'S BUSINESSES AND MIDDLE CLASS FAMILIES FEEL ALL THE PAIN.. YOU KEEP IMPORTING MORE CRIME AND POVERTY TO OUR CITIES AND TOWNS TO BUILD UP YOUR BASE WHILE DESTROYING GOOD, HARD WORKING,TAX PAYING FAMILIES.YOU PEOPLE SUCK! AND YOU PEOPLE SUCK WHO KEEP VOTING THEM IN YEAR AFTER YEAR AFTER YEAR!THIS STATE IS DEAD LAST IN PRACTICALLY EVERY CATEGORY AND PROVIDENCE IS RIGHT ON TRACK TO BE THE NEXT DETROIT.

Comment #13 by LENNY BRUCE on 2013 11 01

YOU"RE WELCOME!!! GLAD YOU"RE ENJOYING IT! ANYTIME!!!!

Comment #14 by Rob Felber on 2013 11 01

Yup.. your tenants from hell that you provide the heat for are a perfect example.

Comment #15 by LENNY BRUCE on 2013 11 01

This is ridiculous. I have a perfectly nice, fully renovated, three bedroom apartment available (on the West Side) for under $800 + utilities. I haven't been able to rent it for 6 months because the people applying have terrible credit or terrible landlord references. Or they're too precious to live on the West Side. I advertise every two-three days on Craig's List and get plenty of responses, but the prospective tenants are generally miserable candidates. If responsible people want to live in affordable apartments, there is no lack of housing. But they might need to live on the West Side like the rest of us. Many of us survive just fine over here paying low taxes and living quite well on a budget. Providence should not legislate to accommodate the irresponsible, nor should we expect everyone to live on the cozy East Side. And we should be very skeptical about these numbers. There are many affordable, decent, interesting and "diverse" neighborhoods on the other side of town if people are willing to broaden their minds just a fraction.

Comment #16 by Karl Treen on 2013 11 04




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