Real Estate Market

Retail holiday workers find little joy in housing costs

by Broderick Perkins

(12/19/2011) - Christmas just wouldn't be the Christmas without the workers we love, but many worker essential to the holiday shopping season can't afford to buy a home where they work and others stretch to make ends meet for rental housing.

Housing costs are down substantially from the peak of the market five or six years ago, depending when your market peaked and in some locations home prices are as affordable as they've been in the past 10 years, but some working stiffs still have a tough time putting a decent roof over their heads, according to a special edition of "Paycheck to Paycheck" by the Center for Housing Policy.

With editions dating back to 2003, the report looks at the cost of housing for a host of working class Americans. The current 2011 edition focuses on workers essential to the holiday season -- delivery truck drivers, mail carriers, retail salespeople, retail assistant managers, and stock clerks -- and what they need to earn to afford to buy or rent a home in 209 metropolitan areas.

You can check how workers in your are fared with an interactive data base at the bottom of the Paycheck to Paycheck home page.

"Despite marked and well-publicized declines in housing prices, many workers cannot afford to live in the communities they serve," the Center reports.

"With rents actually increasing, these workers face considerable difficulties affording their housing costs," the report summarized.

For home buying affordability, the Center used data on the median-priced home from the National Association of Home Builders' Housing Opportunity Index for the third quarter of 2011. The annual income needed to qualify for a mortgage was calculated using the average prevailing interest rate, assumes a 10 percent down payment and the use of private mortgage insurance, and includes principal, interest, taxes and insurance.

Rental data are from the U.S. Department of Housing and Urban Development's (HUD) report on Fair Market Rents for the year 2011 and are based on a survey of recently occupied units. The income needed to afford the rental is the annual income that must be earned so that the rent does not exceed 30 percent of income, a standard measure of affordability.

For both home buying and rental affordability, wage data are as of August 2011 from a proprietary database of salary information by geographic location maintained by Salary.com.

Key findings include:

• Nationwide, of the five retail-season jobs highlighted, only mail carriers earn enough, on average, to afford mortgage payments at typical prices nationwide. Only mail carriers and retail assistant managers can afford typical rents on a two-bedroom apartment. However, in some more expensive housing markets, even a mail carrier's salary won't cover rent on a typical two-bedroom apartment or a mortgage payment on a median priced home.

• For nearly half of the metro areas studied, the income needed to buy a median-priced home dropped by at least three percent, due to a combination of lower home prices and falling mortgage interest rates. However, many workers face additional obstacles to ownership, including access to credit and saving for a down payment.

• Many markets run counter to the trend of homeownership becoming less expensive. In 24 percent of the metro areas studied a median priced home became more expensive for buyers between the fourth quarter 2009 and the third quarter of 2011. In seven of those, the income needed to afford a median priced home rose by more than 10 percent over that period. Increases in qualifying incomes in Atlantic City, NJ; Ann Arbor, MI; Syracuse, NY; Beaumont, TX; Wheeling, WV; Monroe, MI; and Ithaca, NY far outpaced typical wage growth.

The report said the still high cost of housing for some can still mean long commutes from more affordable housing markets to a workplace with extended holiday hours.

"It could also mean cutting back on other household expenses and scaling back holiday activities to make ends meet," the Center reported.

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