Big trouble in the Little Apple – Affordable Housing

MY problem is that I didn’t have a place to live. Most rental properties in Manhattan don’t fit my needs, are overpriced, or, more likely, both. I couldn’t afford a new house, nor did I want to lock myself into a 30 year mortgage on top of my $90k student loans. Just your typical millennial, except that I don’t live with my parents. 

Turns out, I’m not alone. A widely accepted standard for gauging the cost of housing in is to calculate how much of your income you spend on housing. If you’re spending less than 30% of your income on housing, you’re in pretty good shape. If you’re spending over 30%, you qualify as ‘cost-burdened’. It turns out that Manhattan, KS is home to the most cost-burdened renters and owners in the state of Kansas.

Over 52% of Manhattan renters pay >30% of their income on housing, making them the most cost-burdened renters in the state of Kansas

(KS average = 45%; KC Metro ave = 44.1%; National average = 49%)

I’m a university professor, make a decent salary, and I still fall into the cost-burdened category. For many others, however, it gets worse.

An additional 26% of Manhattan renters are ‘severely cost burdened’, paying >50% of their income on housing

(KS average = 7%; KC Metro ave = 21%; National average =  26.5%).

These burdens are even more prevalent among low income populations, where 96% of renters, making less than $15K per year, pay >30% of their income for housing (National Low Income Housing Coalition, 2016). It is no surprise, then, that according to the 2015 Manhattan Community Survey that only 36% of owners and 29% of renters are satisfied with the availability of affordable housing for sale or to rent, respectively.

cost_responsibility-resized-600

Manhattan is a great community and I’m happy to share the company of many great friends here. The company I keep with my cost-burdened comrades, however, is company I could do without.

Little Apple, Little Incomes

You’ll notice that the Riley county averages are not so different from the national averages. And surely, with KState and a thriving business environment, people in Manhattan make more money than the rest of the state, right?

Wrong. In fact, according to the Robert Wood Johnson Foundation’s County Health Rankings the average median income for Riley county is $46,500 (margin of error = $42,000-$50,900), which is significantly below the KS average ($52,400). It’s even lower for renters, at $37,400.

pennies

Minimum wage in KS is $7.25 an hour. A Manhattan resident wanting to buy a 2BR home would need to make at least $14.92 an hour (40hr wk), or 2.1 full-time, minimum wage jobs to own a house. If you want to rent,  you need 1.5 full-time, minimum wage jobs. In other words, Riley county residents pay the MOST of any county in the state of Kansas, while earning less than the average county (101 counties, total).

We have us a problem.

Housing at large

The lack of affordable housing in Manhattan, KS is not unique. According to the State of the Nation’s Housing 2015 study by the Joint Center for Housing Studies at Harvard University, at the national level, 1 in 4 owners pay more than 30% of their income for housing and another 1 in 10 pay over 50%. It’s worse for renters, especially those aged 25-34, where 46% of renters pay >30% of their income on rent. For low-income and minorities, 80% of households with incomes under $15k are cost-burdened. In other words, everybody is getting screwed.

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Supply and demand

Consistent with supply and demand economics, there are at least 2 causes of cost-burden, especially for renters. Homeownership rates are at 20-year lows, rental demand is booming, and the rental vacancy rate is at it’s lowest in nearly 20 years (7.6%). In other words, supply simply cannot meet the demand. With this imbalance, rent increased at the national level by 3.2% last year, twice the pace of overall inflation. It’s a great time to be a landlord, not so much a renter.

This trend is mirrored, if not amplified, in Manhattan and the greater Flint Hills region. In the most recent and comprehensive study, to date, the Flint Hills Fair Housing Equity Assessment and Regional Analysis of Impediments to Fair Housing project, found the cost of housing to be much greater than any median income family can afford- especially in rapidly growing markets (i.e., Manhattan). Paying more for housing, however, did not translate into better quality housing. In fact, the low vacancy rates (i.e., high demand/low supply), along with the lack of code enforcement, allows landlords to provide disturbingly low-quality housing at a high cost. In other words, the cost of housing does not reflect quality and there is currently no incentive for landlords to change that.

The missing middle

The missing middle, a term originally coined to describe urban-dwelling millennials who want a more affordable, walkable, community-oriented housing option, seems like an apt term for several demographic groups in the cost-burdened market. In Manhattan, KS, the missing middle includes college students (who are likely the most exploited renters), military families and elderly individuals, as evidenced by the 2015 Riley County Community Needs Assessment. In fact, the #1 rated problem among the aging population in Manhattan, KS was lack of affordable housing. Talk to any student or military family and they’ll make a pretty convincing case that they’re right at the top of the list, as well.

Senior couple at home with many bills
Senior couple at home reacting to many bills

What’s being done?

In short, not much. Land and housing costs within the city are too expensive to buy and/or develop into affordable housing. Development projects on the outskirts of the city are many, but also don’t meet the needs of those who need them the most- students, elderly, and low-income or homeless individuals and families who need access to campus, healthcare, social connection, and basic services, respectively.

Policy solutions could do a lot to improve the quality of existing housing, including code inspection programs. However, code inspection programs have been discussed at least six times over the past 35 years, inspiring heated debates among property owners and students, but have largely fallen short in actually being implemented. In fact, in 2011, the city commission voted to repeal a Residential Rental Licensing and Inspection Program, which had been adopted in 2009. Since then, I’m not aware of any policy that has been put forth to address the issue.

What’s next?

To summarize, people in Manhattan are paying more for less. This is due to several market forces, including supply, demand, and lack of housing policy. We need a new model of affordable housing. One that meets the needs of the missing middle, and allows people to live healthy and happily in this great community. In this spirit, I am launching an affordable housing project project. Stay tuned;)

In the meantime, what’s been your housing experience in Manhattan? Are you satisfied? What would you change?

14 Comments Add yours

  1. Livie Olsen says:

    I’ve wondered if we could bring back the boarding house – or if that’s even a viable business/housing model.
    Would people be willing to cohabit with strangers in an environment where meals and cleaning of common areas was provided? What kind of codes would need to be met? Can that even be profitable with MHK real estate prices? There seems to be very little interest in providing affordable housing within the easily walkable districts. I’m interested, but I’m not a developer. If a great idea gets some traction, I’d love to participate in whatever ways I’m able.

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  2. HI Livie. I share your concerns about the potential cashflow of affordable housing within the city. Chances are that property and taxes would be too high to offer cheaper housing that is also high quality. However, people do it. They’re just willing to make a little less money. I’ll keep you posted on my progress as things unfold!

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  3. Deb Nuss says:

    Brandon, the recently completed Riley County Community Needs Assessment identifies lack of affordable housing (coupled with low wages) as a major concern for many in our community. And you’re right, little to nothing is being done to address the issue except state that it IS an issue and something needs to be done. Lots of hand wringing but no action.

    http://www.rileycountycommunityneedsassessment.org

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  4. Meg Harper says:

    Is it possible that federal money funneling into the University and Ft. Riley is skewing the income data? I’m sure that Manhattan mirrors the rest of the country in having a shrinking middle-class, but that median income still looks a little high. I suspect there are more poverty-level incomes that are being offset by some very high Manhattan incomes.

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    1. Hi Deb, I am familiar with the study and, indeed, I cite it in the article. I’ll update it with the info you highlighted here. Thank you!

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  5. Che says:

    I lived in work in Manhattan for 8 years. My best paying job paid a little bit over 42 K per year before taxes. So at about 30% I should have been expected to pay about $1,050 for rent each month. That did not include utilities so once you factor that into the overall amount I should have been looking for a 3-bedroom affordable decent apartment in the mid $700 range. Has anybody seen any of those type of partment or houses for rent in Manhattan?

    The problem is in our housing market it is assumed that anybody who works at K-State it’s making that of a full-time tenured professor or a higher ranking military personnel or that parents are paying for the students’ housing.

    The reality is that people most people working at K-State are support staff or other staff, members or lower wage workers. Most military personnel do not make enough to cover it and not everyone has a high BAH, and the final reality is that most people and parents who are going to send their children to college they can’t come up with additional large amount for housing costs. So the landlord owners in Manhattan to get a serious reality check.

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    1. Hi CHE. Great points here. Of course, nobody pays only $700/month! To my eye, the problem isn’t that property owners assume that people make more money than they actually do. Prices are determined mostly by supply and demand. The fact is, there is very little supply. We have an extremely low vacancy rate, meaning that supply is low and demand is high. Landowners charge more for housing because they CAN. The other side of the equation, of course, is the fact that people in Manhattan, on average, don’t get paid that much. By this logic, it would actually be just as sensible to advocate for higher minimum wages and salaries as it would be to advocate for more affordable housing. Pick your battles!

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      1. Allen says:

        How is the “supply” low?! If you drive around town, all you see is “for rent” signs. Mostly on the slum-Lord ones that nobody wants. I think it’s a greediness issue. We want to live here, they know it, they gouge us.

        Liked by 1 person

  6. Gary Stith says:

    I agree with your great analysis. I am sure you are aware that the new dormitory with 550 units. Also a 620 unit apartment complex is under construction on Marlatt. While this isn’t necessarily the solution, it does increase supply which can lower rental rates. Home ownership on the other hand is limited by the availability of land ( lots). Blue Township is the best option, but will not provide maximized development capacity which will help keep costs down if Pottawatomie County does not plan for the infrastructure needed for the future development of the area.

    Liked by 1 person

  7. Besides limited attractive affordable housing—-the landlord situation—honesty/credibility, property maintenance, and virtually no return of rental deposit of an immaculately cleaned apt.(often citing untrue ‘costs’ per landlord)…. is pretty much a given across Manhattan. Very discouraging for someone really wanting to make a permanent home (rental in Manhattan) especially as an adult.

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    1. I share that sentiment, Pamela. Nobody who is fully employed should be stuck in that situation.

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  8. Jd woofter says:

    Just give it a couple yrs. Once the football team hits rock bottom again, the property value in housing will decrease.

    Liked by 1 person

  9. Kenny Greeley says:

    All I can say is that I find it a little confusing when you go to a larger city in America like Dallas Texas, and have a budget of 150k for a house, you would end up with prime real estate. Most likely a 2 story house, in a gated community, probably 10 years old, and a close drive to everything you need as far as shopping and healthcare.
    However if you are looking for a house in Manhattan ks you are looking at minimum 200k. And if you want a basement, add an extra 30k. Living out of the flood zone and also finding a house that was made within 10 years add another 10-15k.
    so basically you’re looking at the same type of house for almost 100k more. Why!? It makes no sense at all. And on top of that the income we make is not enough to support that kind of living. As you have already mentioned above.

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  10. Mandi says:

    I feel like landlords are pricing their home or apartments for college students that will have roommates. Not for families. For example…when my daughter was 2 I was looking for a 2bd apartment and most of them that I looked at were at least $700. As a single parent that only had a part time job at the time it was totally unfeasible and they were unwilling to work with me. I am now married with 2 kids and our 3bd 2bath 1,400 sqft house is $1200. For a college student that is only $400 a month. It’s ridiculous.

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