12.15.2011 | As you buy that latest gadget at Best Buy this holiday season, or wait for the new flat screen tv to be delivered, or as the department store elf helps your five-year-old onto Santa’s lap, know this: the person who delivered your tv or stocked the shelf or rang up the sale most likely can’t find a place to live that doesn’t eat up more than about 30% of their take-home pay. Ho-ho-ho.
A recent report by the National Housing Conference and the Center for Housing Policy finds that housing –either owning or renting– is still unaffordable for many of those in the trenches of the service economy. “Paycheck to Paycheck 2011” compares the salaries of delivery truck drivers, mail carriers, retail salespeople, retail assistant managers and stock clerks with the median rent or home prices in the major metro areas.
Among that list, only mail carriers can afford to the national median home price ($176,000), and only mail carriers and retail assistant managers can afford the national median rent on a two-bedroom apartment ($960). In the most expensive markets, like San Francisco, Bethesda, Boston, Boulder, even mail carriers can’t afford the typical rent on a two-bedroom apartment.
“Despite years of falling home prices, many of the workers most visible during the holiday season are unable to afford a place of their own,” said Center researcher and report co-author Laura Williams. “And the problem is not limited to homeownership. In many cities, rentals are also beyond the reach of workers in the jobs we examined.”
Here’s how it breaks down. “Affordable” in this case means the income required to qualify for a mortgage on the median priced home (assuming a 10% down payment plus private mortgage insurance). Monthly payments are calculated to include loan principal and interest (at 4.7%) as well as estimated taxes and insurance. The monthly mortgage payments should constitute no more than 28% of the individual’s annual income. The salaries for each of the occupations are then compared with the “qualifying income” for each metropolitan area.
For renters, affordable is earning enough to not pay more than 30% of one’s income for housing. This wage is then compared to the median wage actually earned by workers in the metro areas.
Given the median home price is $176,000, the affordability cut-off is $50,000. The cut-off for a two-bedroom apartment is $38,400 (based on a median rent nationwide of $960).
And typical earnings of the five jobs are:
- A retails sales job pays $23,400 a year.
- A stock clerk, $28,900.
- A delivery driver earns typically $32,600.
- A retail assistant manager, $39,000.
- A mail carrier, $54,300.
In only 8% of the 210 metro areas that the authors analyzed could stock clerks afford a home, and in only 13% of metro areas could delivery truck drivers afford to buy. In only 1% of metro areas can retail clerks afford to buy a home and in only 16% can they afford to rent even a one-bedroom apartment.
The five least affordable metro areas to rent are:
- Honolulu, HI
- San Francisco, CA
- San Jose, CA
- Santa Ana, CA
- Santa Cruz, CA
The top five least affordable cities to own a home are:
- San Francisco, CA
- Barnstable, MA
- Bethesda, MD
- Boston, MA
- Boulder, CO
The most affordable? Rust Belt cities and a couple of subzero climates in the winter. For housing, the top five most affordable are:
- Youngstown, OH
- Toledo, OH
- Detroit, MI
- Springfield, OH
- Saginaw, MI
The top five most affordable rental markets are:
- Fort Wayne, IN
- Fargo, ND
- Bay City, MI
- Youngstown, OH
- Wheeling, WV
Currently, upwards of 83% of the U.S. workforce is in the service sector, up from 72% in 1979. Not all of these service jobs are low-paid, low-skilled jobs. The service sector also officially includes high-paid professionals like lawyers, programmers, or movie stars. However, this sector has no middle tier. They are either highly paid, like financiers, or they are low paid. And for the majority of those on the low end, owning a home is just a dream, and paying the rent a monthly struggle.