The lack of affordable housing in Rhode Island is not new. What is new, local advocates say, is the number of people who stand to suffer because of the shortage.

Rising house foreclosures and proposed state budget cuts that could slash $26 million from the homeless and affordable-housing programs are raising new fears among local housing advocates that the lack of affordable rental housing documented in a new report by a national nonprofit group is about to get worse.

Nationwide, as many as 100,000 renters with annual incomes of less than $20,000 are expected to lose their homes to foreclosure within the next year, according to the National Low Income Housing Coalition, which yesterday released its latest report on rental housing affordability, Out of Reach 2007-2008.

In Rhode Island, more than 2,100 houses last year were advertised for foreclosure, according to Rhode Island Housing. And the foreclosures are rising. In January, the number of houses advertised for foreclosure climbed to 323, up from 36 in January of last year. “There’s already a shortage of rental housing at the lowest end,” the coalition’s president, Sheila Crowley, said, “and it’s now going to be flooded, so there will be even fewer options at the lower end.”

Rhode Island ranks among the 10 least-affordable states in the country, according to the report. Massachusetts is the least-affordable state in New England, followed by Connecticut and then Rhode Island. (Roughly the same rankings were reported in the coalition’s 2006 report.)

The national report, based on data from the U.S. census and the federal Department of Housing and Urban Development, shows how rents have outpaced wages, especially among middle- and low-income households.

In Rhode Island, the cost of renting a two-bedroom apartment is $1,029, according to the report. For a household to afford that rent and utilities — without paying more than the recommended 30 percent of income on housing — requires an annual income of $41,162, the report said. Based on a 40-hour workweek, that represents a wage of $19.79 per hour. The estimated average wage of renters in the state, the report said, is $11.61 per hour. To afford a two-bedroom apartment, a renter earning the average wage of $11.61 an hour, the report concludes, would have to work 68 hours per week, 52 weeks per year.

(The report uses “fair market rents,” which are based upon a federal HUD rental survey. The rents based on the survey generally tend to be lower than the survey of classified newspaper ad rents reported by the state housing agency.)

“This report verifies what we are seeing day to day here in our state,” said Brenda Clement, executive director of the Statewide Housing Action Coalition. “What we fear is that the lack of affordable housing situation will only get worse … and that the average Rhode Islander’s ability to find affordable housing will continue to diminish.”

Nationally, an estimated 30 percent to 40 percent of the people who are losing homes to foreclosure are renters, said Crowley. Renters who lose their homes to foreclosure will now be competing for affordable housing that is already in short supply, she said.

The shortage of affordable rentals is not always apparent in the data. For example, the vacancy rate for the Providence Metro Area, which includes Fall River, last year rose to 9.2 percent, up from 8.6 percent in 2006, according to Rhode Island Housing. Rhode Island’s vacancy rate remains lower than the average vacancy rate of the 75 largest metro areas last year, which was 9.8 percent, the agency reports.

Yet, the vacancy rate can mask the shortage of affordable rental housing, said the coalition’s Crowley, because it may reflect growth in the number of higher-priced rentals. A 2005 report by the coalition found that Rhode Island faced a shortage of 11,000 housing units for residents earning 30 percent or less of the statewide median income, or $19,397 a year, according to the study, “Housing at the Half: The Mid-Decade Progress Report.”

“In the short term, the foreclosure crisis will add to the demand for rental housing,” said Nicolas P. Retsinas, director of Harvard University’s Joint Center for Housing Studies. And that demand is “more likely to impact the low end (of the market) because foreclosures generally disproportionately impact the low-income homeowners.”

And as “any Economics 101” text will tell you, he said, as demand for rental housing increases, unless supply does, too, that “leads to price increases.”

RENTAL COSTS

The hourly wage a full-time worker requires to afford a two-bedroom rental apartment calculated to the fair market rent:

* The affordability standard assumes the worker pays no more than

30 percent of income for housing costs.

SOURCE: National Low Income Housing Coalition

larditi@projo.com