A report suggests that the state must both provide subsidies and encourage the construction of many more housing units.

01:00 AM EDT on Friday, August 20, 2004

BY RANDAL EDGAR
Journal Staff Writer

PROVIDENCE -- Machinists, nursing aides, preschool teachers and those in dozens of other occupations can't afford to buy a house or rent an apartment in 34 of Rhode Island's 39 cities and towns.

Or, if they do buy or rent, they are probably spending a larger chunk of income on housing than they should, according to a study released yesterday on affordable housing in Rhode Island.

The study says that more than 75 percent of all jobs in the state pay wages that are not high enough to buy a home at the state's median price, which in 2002 was $197,814.

And, unless the market changes dramatically, the situation is going to get worse.

Even if housing prices rise at half the current rate, the number of households unable to afford a two-bedroom apartment without experiencing financial hardship will grow from 155,000 to 273,000 households by 2010.

The state needs to address this situation by encouraging massive construction of housing units -- increasing production by more than four times the current rate -- and by providing housing subsidies or higher-paying jobs, the study said.

In sheer numbers, the state needs to add 37,000 houses or apartments by 2010, and also help 50,000 households with subsidies and better jobs, the study concluded. Half of the new units should be affordable, half available at the market rate.

The study -- 98 pages long, and perhaps one of the most in-depth looks at the state's housing needs -- shows, by region and community, how many housing units are needed to meet the job and population growth expected in the next six years.

One region, for example, which covers Providence and East Providence, needs 10,142 housing units, it says. Another region, which includes Coventry, Cranston, East Greenwich, Warwick, West Greenwich and West Warwick, needs 11,644.

The report was produced for the Woonsocket Neighborhood Development Corporation and the Housing Network of Rhode Island, an association of nonprofit developers, by Eric Hangen, a consultant from Cranston.

"We're trying to answer, how much housing does Rhode Island really need to meet population and job growth," Hangen said.

"Is Rhode Island going to hit these numbers? I don't know," he said. "The real core lesson that you can take away is that, if you don't do anything, the affordability crisis is going to worsen very dramatically."

Among the findings:

More than 97,000 of the state's 408,000 households are paying too much for their houses or apartments.

Most of these, about 59,000, are renters who pay more than 30 percent of their income for housing. The other 38,000 are homeowners who pay more than 35 percent of their income toward their mortgages and related housing expenses.

The conventional rule of thumb is that households should not spend more than one-third, or 33 percent, of their income on housing.

More than 48,000 households -- 30,000 renters and 18,000 homeowners -- are "severely burdened," because they are spending more than half their income on housing.

The state's home-ownership rate, 59.6 percent, is the fourth-lowest in the country, and it is going down.

Though incomes grew faster than rents and housing prices during the 1990s, the trend has reversed dramatically since 2000. According to a survey of newspaper ads, the average rent for a two-bedroom apartment grew 49.2 percent between 2000 and 2003, from $663 to $989. Housing prices rose 45 percent during the same period. Median household income, meanwhile, rose 8.4 percent between 1999 and 2002.

Of the 20 occupations projected to add the most jobs between 2000 and 2010, only four -- registered nurses, computer support specialists, secondary school teachers and elementary school teachers -- pay enough for a median wage earner to afford a two-bedroom apartment at the state average rent.

The study lists the median wages for more than 90 jobs and occupations, and then shows, community by community, whether people in those jobs could afford to rent or buy a home.

For example, mechanics and truck drivers could afford the rent in Woonsocket, but they couldn't buy a house there, and they couldn't afford to rent or buy in the surrounding towns of Cumberland, Lincoln and North Smithfield.

A medical secretary couldn't even afford the rent in Woonsocket.

In Charlestown, carpenters and prison guards could afford to rent but they couldn't buy a house; computer support specialists, construction laborers, counter clerks and customer-service representatives were among those who couldn't even afford to rent.

Joseph Garlick, executive director of the Woonsocket housing development group, which helped obtain the $9,500 in grants that paid for the study, said he hopes the numbers will shift the focus from talk about housing to action.

"There's always a lot of talk, and generally it's that we don't need more housing, so we wanted to look at some hard numbers," he said.

Garlick and Hangen said it is a coincidence that the report, begun last fall, does the same thing that communities and the state are doing under the state's newly revised affordable-housing law: provide tangible housing-production goals that move beyond the old requirement that 10 percent of each community's housing be affordable.

"We hope that people will use these as a real planning tool," Garlick said.

John O'Brien, chief of the Office of Statewide Planning, said he hadn't seen the report but welcomes the information as his office works with communities on their goals. "It certainly would be something that we'd be interested in," he said.

One thing the study does not do is provide policy suggestions for creating housing, but Hangen said the point was to look at housing needs.

The study, unveiled yesterday at the State House, also lists more reachable goals -- such as the number of affordable units each community and region needs to get to 10 percent -- but Hangen and Garlick said anyone who focuses on 10 percent misses the point that it isn't enough.

"We're trying to answer a much more basic and, I think, much more important question," Hangen said. "Just how much housing does Rhode Island need?"