Santa Barbara County Renters
As the affordability gap for home ownership increases, more and more individuals and families have been forgoing the dream of home ownership and have turned toward rental housing instead. Currently renters have an even more difficult time in our local housing market. At the time of the 2000 U.S. Census, 40.6% of all county renter households paid more than 30% of household income for housing. By 2008 however, 56.3% of renters were paying over 30% for their housing and 25% were severely overpaying by more than 50% (American Community Survey, 2008). Santa Barbara also ranked 3rd among all 58 California counties for having the most severe cost burden for renters.
By the Numbers:
- Average hourly wage of Santa Barbara County renters: $15.07
- Hourly wage a worker must earn to afford the Fair Market Rent: $25.85
- Percentage of renters spending more than 30% of household income on rent: 56.3%
- Percentage of renters spending more than 50% of household income on rent: 25%
Santa Barbara Rentals: Out of Reach
Out of Reach, a side-by-side comparison of wages and rents throughout the United States, calculates the Housing Wage, defined as the hourly wage a worker must earn to afford the Fair Market Rent (FMR), based on the generally accepted affordability standard of paying no more than 30% of income for housing costs (National Low Income Housing Coalition, 2012). According to the report, in Santa Barbara the FMR for a two-bedroom apartment is $1,344. In order to afford this level of rent and utilities – without paying more than 30% of income on housing – a household must earn $4,480 monthly or $53,760 annually. Assuming a 40-hour workweek, 52 weeks per year, this level of income translates into a Housing Wage of $25.85 per hour, however the estimated hourly wage of Santa Barbara County renters is much lower than this, at only $15.07 per hour.
Rental rates in Santa Barbara have seen an overall upward trend since 1995. Just as an affordability gap exists for home ownership, it also exists for renters as vacancy rates fall and wages remain stagnant. For example, the annual rental housing survey, conducted by the Dryer Sheehan Group, showed that in Santa Barbara’s South Coast the average vacancy rate has fallen to 1.79% in April 2012, down dramatically from the peak vacancy rate of 3.99% in April 2010, which is the highest in the 10-year history of the survey, while most properties maintained, or increased rents slightly, during the past year (Dryer, 2012). However, the South Coast Overall Average Rent of $1,499 ($2.21 per square foot) is still below its peak of $1,517 in April 2009 (Dryer, 2012).
As the Dryer Sheehan Group eloquently explained in their survey commentary:
The continued strength of the rental market is being fueled by a convergence of several different demographic and economic factors that continue to depress home sales, and increase household formation among prime renter cohorts. Given supply constraints, and with continued economic recovery and even modest job growth, the apartment market is set for solid growth in 2012. One of the potential challenges to future rental appreciation in the South Coast market is the relatively low level of wages that are typical for many employers in Santa Barbara. As manufacturing and other higher wage industries relocate out of the South Coast, the balance of jobs is more heavily weighted toward retail and tourism, which generally pay some of the lowest wages of non-farm industries. While the increased demand for rental housing that is anticipated will likely add sufficient pressure to drive South Coast rents up slightly, there may be a limit in actual dollars that local renters are willing, or able, to pay.–Dryer Sheehan Group
Again and again, local surveys and data show that low wages and high costs of living – specifically high housing costs – are driving employers and employees out of the area, further highlighting the importance of developing a local, sustainable fund, through a multi-interest partnership at the intersection of the public, private and non-profit sectors. HTF can serve as a vehicle to achieve the necessary goal of establishing a local fund for affordable and workforce housing.