Rhode Island Housing Affordability Drops in 2009
Wednesday, September 29, 2010
Rhode Islanders are now facing a larger gap between their income and their housing costs, according to the 2009 American Community Survey performed by the U.S. Census Bureau.
Even though housing prices have decreased overall, the median household income has also decreased by $1,582 since 2008. The ACS survey goes on to indicate that the number of Rhode Islanders earning moderate income, low-income, and very-low-income has increased.
Higher Housing Prices Lurk in the Future
In response to this decrease in median household income, the demand for affordable housing is starting to increase, which will adversely affect the lower income earning bracket by forcing home prices to increase. According to the Rhode Island Association of Realtors, home prices went up 73 percent in Providence and 10 percent for the state, during the second quarter of 2010, compared to the same quarter in 2009.
These higher prices will push out lower income earning Rhode Islanders from the affordable housing market.
Rhode Islanders are also spending more of their income on housing costs than is recommended by federal and state standards. According to these standards, a household should spend no more than 30 percent on housing costs. In 2009, 43.4 percent of mortgaged Rhode Islanders and 50.1 percent of RI renters were paying more than the recommended 30 percent.
The Importance of Affordable Housing
Nellie M. Gorbea, Executive Director of HousingWorksRI, emphasized the importance of this new data as a strong indicator that the state must explore and discuss new strategies to build more affordable housing in RI, especially in light of the upcoming 2011 expiration date for the Building Homes Rhode Island program, a $50 million bond.
Gorbea ultimately points out that affordable housing is necessary to stimulate economic growth in RI and therefore should be a huge state priority. "The lack of affordable homes is a key actor in economic development," she said. "We need homes for the workforce to live in if we're going to have a growing economy."
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