“Affordable.”

I guess we all get a little nervous when new people move to town.

So this is a practical shelter blog, which means that I'll be talking about affordable housing quite a bit going forward. People tend to get all up in arms about affordable housing and write me off as some kind of left wing crystal-gripping-mantra-chanting hippie when I use that term so I wanted to take a moment to talk about what it actually means.

"Affordable" does not mean low-income housing. "Affordable" does not mean Section 8 housing. It doesn't even mean "crappy low-rent vintage housing with leaking windows and creaky porches." When I talk about affordable housing - in particular, affordable rents - I am talking about housing that costs less than 30% of the average person's gross income.

So let's say that you're earning under $35k per year. That's a little above the median income for Chicago rental households. According to a 2011 survey by the Depaul Institute of Housing Studies and a recent study from early 2012 from the National Housing Conference, 75-80% of you guys are paying more than is considered affordable. 24% of you are paying more than half of your income in rent.  This does not make it cool or okay to do so. In fact, I'd go so far as to say that you guys are holding us back economically. 

Ramen. 150 Billion packs sold. Annually. (source: http://www.mattfischer.com/ramen/)

These folks are lining the pockets of their landlords and the makers of Cup Noodles and not much else. But they do not have much of a choice, and they make up over half of the population. According to the Illinois Department of Employment Security, 461 out of 727 entry-level careers are earning less than $35k per year. This includes entry-level workers in professions such as:

• Waiters, waitresses & bartenders
• Childcare workers
• Security guards
• Massage Therapists
• Ambulance Drivers
• Preschool teachers (and pretty much all teachers, really)
• Pharmacy Aides
• Exterminators
• Medical Secretaries
• Travel Agents
• College Economics Professors
• Mental Health Counselors
• Clergy
• Realtors
• Medical Lab Techs
• Legal Secretaries
• Marriage Counselors
• Police Dispatchers
• Fashion Designers
• Property Managers

Yup. Property managers who can't afford to live in their own buildings. "Ok," you say, "but that's entry level. What about the median income levels?" It isn't quite so bad there - 232 out of 719 surveyed professions were earning less than $35k at the median across all levels of experience. (Oh wait, that's still nearly 1/3 of the surveyed professions.) Folks in the following professions are still likely to be earning less than $35k per year once they get a few years of experience:

• Office and administrative support workers
• Dental techs
• Medical secretaries
• Flight attendants
• Chefs and Head cooks
• Healthcare support workers
• Library techs
• Veterinary techs
• Cabbies

Meanwhile, according to Housing Illinois, a Chicagoan must be making $18.29 per hour (or 2.21x minimum wage) for an $875 apartment to be available. And I'll tell you, I've been out there representing tenants this year, there are not many $875 apartments to go around. But who knows a landlord willing to list his apartment at $875 when all of his neighbors are listing at $1200? Private market landlords are investing to make money (as well they should), meaning that affordable housing falls to the government. The government does not make for a very good landlord.

So there's a shortage of affordable housing in Chicago. A major shortage. The Depaul study stated that if Cook County started building affordable housing structures in 2011 they might catch up with the shortage in about 2030. If they don't start building, the demand will grow even worse, exceeding the supply by close to 235,000 units within the next 8 years.

Yes, city living is supposed to be expensive. Demand will always exceed supply because we have so much cool stuff here. However, when the gap leaps to 235,000 units it goes from "expensive" to "detrimental." If the economy is to recover, people need to be in a situation where they can buy homes without help from the government. Each real estate purchase stimulates the local economy in ways that few other purchase can match, and if buyers focus on keeping their purchase in the community then even more gains can be made. The half of the Chicago population earning less than $35k needs to have somewhere to live where they can save up enough to buy a home, send their kids to school without moving them around every 2 years, plant gardens and support businesses. We cannot expect the job market to recover overnight. We have to play this as it lays and do what we can to allow our younger workers to stay within the city.

Haggling. Not just for sheep anymore.

How to do this? I have some thoughts. I welcome others.

• If you can afford a $1200 apartment, don't rent a $900 apartment - leave it for someone who really needs it. Get the $1150, get the $1100, but leave that sweetheart of a deal for someone less affluent than you.
• If you are a landlord with 30 apartments at $1600, you're investing 100% back into your own holdings. Consider what you will be contributing to your community if you designate 3 of those apartments to be $1200 apartments - and not just the crummy garden units. You will be allowing a greater blend of folks to live in your area and contribute to the overall diversity and momentum of your neighborhood.
• Haggle. For heaven's sake, everybody needs to get used to haggling again. Modern Americans are so darned scared of conflict that they never bother to ask for a lower price, and even if they get it, they rarely keep pushing for that real deal. $50 off your rent is $600 saved over a year.
• Tenants, get roommates. A lot of the old affordable one bedroom apartments got converted to 2 beds over the past few years. The stock of full-sized 1 beds with real dining rooms was particularly devastated by the condo conversion movement, and a lot of local landlords followed suit. Privacy is a big luxury and getting bigger every day.
• Petition HUD to reassess the Keating Memo. The Keating Memo is the Federal government's guideline to maximum acceptable occupancy in apartments. Landlords have been using it for years to refuse housing to large families in small apartments, as it gives a hard and fast limit and dodges the whole age discrimination issue. The only problem was that the Keating Memo is over 20 years old. While it was issued at the end of the early '90s US recession, it's a document that predates the entire internet era. Society has changed, and besides, trying to apply any universal rule to every piece of property in the country is a dangerous proposition.
• If you must spend half your income on housing, make sure that it really is half. Scale back your other purchases accordingly. Sacrifices are required on all fronts. Life, as my grandfather often said, is tough.
• Accept that 30% of your income is no longer an effective maximum for housing expenses in the modern world, especially when it comes to renting. Crowded India sets its benchmark at 40%. (Source: [1])

Have a better idea? Let me know in the comments!