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  • Writer's pictureMichael Hays

What’s Up With the Rental Market?

To be a renter in Montgomery County these days is to wage battle against math and economics – without any real assistance from the government.

Studio apartments regularly go for over $1,000 (and we’re not talking in Bala Cynwyd and Conshohocken). I remember about a decade ago when I rented a 1-bedroom for $450 per month in sleepy Spring City (Chesco). Now granted, my landlord was a rare gem because he didn’t raise the rent once between 2008 and when I moved out in 2014.

Getting even more nostalgic – and dating myself a bit – I also recall the Grand Canyon, Ariz., duplex that my employer rented to me for $50 per month in 2005. I can’t believe I left that deal to become a newspaper reporter!

Back to my original point of this post … Let’s say you are a service worker and gross $28,000 per year (or about $2,300 per month). If your rent is somewhere between $900 and $1,200 – which most people without roommates/partners are paying – that’s between 39% -52% of your monthly income. What is left over goes toward all the other bills, food, hopefully a little fun, and savings. The New York Times recently profiled individual struggles with this reality.

That’s why the federal government (HUD) sets a 30% figure for housing to be deemed “affordable” for someone. It’s a relative figure, based on your net income. Spoiler alert: It's been rising.

Possible solutions to this burdensome situation:

1). Rent Control – House Bill 506

HB 506, whose main sponsor is one of Montco’s state representatives, Nancy Guenst, would limit rent increases across Pennsylvania. If approved, it would limit annual rental increases on apartments and other residential units to 5% percent, plus inflation (up to a maximum of 10%). Newer apartments, with occupancy permits issued within the last 15 years, would be exempted.

The PA House returns to session Sept. 26, and we will have more actions and requests surrounding legislation this fall.

2.) Build More Affordable Housing!

If each of Montco’s 62 municipalities followed Upper Gwynedd’s example of leadership and took steps to approve multi-family housing for low and middle-income earners, that would go a long way to solving our shortage of units.

One of the primary policy tools for accomplishing this is the President Reagan-era LIHTC (Low Income Housing Tax Credit). The Tax Policy Center writes, “Since the mid-1990s, the LIHTC program has supported the construction or rehabilitation of about 110,000 affordable rental units each year (though there was a steep drop-off after the Great Recession of 2008–09)—over 2 million units in all since its inception.

Meanwhile, inclusionary zoning – which is typically passed at the local level – can make a difference as well. Two local examples are State College and Ferguson Township, Pennsylvania.

Essentially, the 2011 State College law requires that new construction set aside 10 percent of total units as affordable for those living at low to middle income levels. This ordinance applies only to new construction of 6 or more units. If you look across the country, there is broad variation in the details of inclusionary zoning ordinances. Typically, affordability is determined as a percentage of the area median income (AMI). Additionally, the federal government uses a housing affordability standard of 30 percent – meaning that families or individuals should spend 30 percent of their income or less on housing.

So while the rent is due for many today, Sept. 1, if we work toward policy changes in Harrisburg and municipal government, we can improve the situation over the long-term.

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