It’s a good thing that Rhode Island home sales, both single
and multi-unit, continue to inch up each month (they have been doing so for
over a year now), but the situation for the renting segment of the state’s
population – which is some 40 percent - isn’t improving.
Aside from the challenges these days to quality for a home
loan, one needs to earn over $75,000 to even consider owning a home. With the
median household income in our state at around $55,000, that leaves a lot of
people forced into renting. It costs
about $1,500 a month for a family to rent a three-bedroom apartment; costs for
a two-bedroom apartment are over $900 a month. Rental costs on average have
gone up 75 percent in the state since 2001.
The problem for renters in the Ocean State is two-fold: many
of them don’t make enough to balance the required rental cost against their
monthly income because the cost of renting is so high. Renting shouldn’t be
more than 30 percent of one’s total income, but the median household income for
a renter in Rhode Island is just under $30,000, with the income needed for the
average two-bedroom rental at $46,000, according to HousingWorksRI.
The other problem for renters is the amount of affordable
rentals on the market at any time. Rhode Island, in part because of its
smallness and lack of open land to build rental units on, lacks adequate
affordable income rental units. Unlike
other states, Rhode Island lacks vast tracks of open land to build upon. The
dearth of affordable rentals statewide certainly drags down our economy and
forces more mobile, younger works to leave Rhode Island for more affordable
destinations. There are the people we most need to keep.
Compounding the problem even further is the fact that a
number of the state’s more suburban municipalities still haven’t met their
legal obligation to provide a sufficient percentage of affordable housing
units, both for sale and for rent. With construction of new homes all but
custom builds in recent years because of a lack of demand for new homes and the
sheer amount of unsold properties (as well as foreclosed properties) crowding
the real estate market, builders want to build what the market needs, which is
rental properties. But getting anything built in this state except a luxury
property runs up against municipal resistance and the usual swamp of
regulations which frustrate builders into giving up.
That’s why clearing out the regulatory mess in this state is
so important not only to the housing market and the home construction trades
but also to improving the state’s overall business climate, which universally
places us close to last in national rankings. It is positive to see everyone
from the Governor on down getting on board, at last verbally, in support of
finally streamlining business regulations –aiming to reduce the number of
agencies involved, the amount of filing and paperwork required, and the
timeframe for permitting and other approvals.
This is one area we can certainly
make progress. Regulatory hurdles have long been known to pose an unacceptable
burden on businesses, but there’s been a lot of talk about this but little
concrete action. If there had been action we wouldn’t still be dealing with the
problem. Hopefully, as the state digs in and really examines its economic
malaise in light of the 38 Studios and RI EDC collapses, this time will be
different.
Renters will be assisted by passage of Question 7 on the
upcoming November 6 ballot, which calls for $25 million in new bond spending to
finance the construction of about 600 new units. Most of these units – again
because of current market conditions – will probably be rentals. That’s a smart investment in the state’s
future.
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