Economics of homelessness: Portland renters walk a precarious road

Spiking rents, low wages and a cutthroat market means thousands of renters in the metro area are at risk of becoming homeless.

When Heather Starr graduated with her associate’s degree in applied science and became a certified paralegal, she didn’t imagine she would become homeless.

But that’s exactly what happened to the 35-year-old mother of four. Starr works as a legal assistant and moonlights as a bartender, has $3,000 in savings, and has been living out of her red Pontiac Grand Am since May, when her landlords sold the home she was staying in and she couldn’t find another apartment to rent.

Her kids are staying with her ex-husband so they can remain in the Hockinson School District in Brush Prairie.    

Every night, Starr searches for safe a place to park her car and sleep for a few hours. Every day, she scours the internet for rentals.

“I never, ever saw myself in this position,” she said and laughed in disbelief. “Not even close.”

Even though she had a decent income and savings, she couldn’t afford most of the market-rate apartments anywhere close to her downtown Vancouver office. And the ones she could afford all turned her away. She didn’t meet the lofty income and credit requirements set by landlords and property management companies.

In the Portland metro area, there’s a growing divide between what people make and what living here costs. That reality is creating a booming new class of residents: The working homeless.

The economics of homelessness

For decades, Portland was one of the most affordable cities on the West Coast. But in the past few years, its popularity soared as its culture, climate and livability made it a darling in national and international media. 

The attention contributed to population growth that’s busting the city’s infrastructure at its seams. As the housing supply runs dry, once-affordable neighborhoods are now out of reach for many residents and even the suburbs and nearby rural areas don’t have enough homes to meet the demand.

The market has responded. The average rent overall in Portland has increased by almost $600 in the past five years, from $1,298 a month in July 2011 to a whopping $1,860 a month in July 2016, according to Zillow. Vancouver, Washington, which has historically been a more affordable option near Portland, saw a spike of nearly $500 in that same time frame, from $1,179 to $1,560.

Unlike some other cities where employers raise wages to attract workers, salaries in the Portland metro area haven’t changed much. Among renters, incomes have remained virtually the same between 2000 and 2013, hovering at around $36,000 per household, according to the 2015 Portland State of Housing report

For people who aren’t white, the reality is even worse. While white people in Portland saw their incomes rise between 2000 and 2013 by a few thousand dollars, African Americans lost about $10,000 in annual wages and now make less than $30,000 a year on average. Asians, Pacific Islanders, Hispanics and Native Americans have also seen their incomes drop. Native Americans on average now make just over $20,000 a year – barely minimum wage.

The reality is that many people in the metro area are at risk of becoming homeless based purely on economics.

The Journal of Public Affairs studied 338 metropolitan areas and found that increased rent is consistently linked to increased homelessness. Specifically, the study determined that for every $100 increase in median monthly rent, homelessness increased by an average of 15 percent.  

The last one-night homeless count in January 2015 found 5,400 homeless people sleeping outside, in shelters or transitional housing in Multnomah County. The next count is in January 2017 and homeless advocates worry that number could rise.

Shelter staff say about a quarter of the people who stay at Portland’s emergency shelters have never been homeless before. Virtually all of the shelters in the metro area are at capacity and for many people who work, like Heather Starr, showing up early to wait for a bed isn’t possible.

Affordable housing options are limited and the area is not building enough housing to get anywhere close to the demand.

If things continue this way, Portland metro area residents should expect to see more homeless people on the streets as more people move here, rents rise and wages stay the same.

The threat of homelessness is looming over many of the area’s residents now. Nearly half of the metro area’s workforce is at risk of becoming homeless if they rent.

Interactive: Can you pay the rent? Click the arrows to see if you could afford an apartment on a $9.75/hr or $15/hr wage.

Why $15 an hour matters

The notion of a $15-an-hour minimum wage has been discussed ad nauseam and for some, that number may seem arbitrary. But in the Portland metro area it’s a vital benchmark for affordability.

At $15 an hour and 40 hours a week, an employee makes $2,600 a month before taxes and just under $2,000 after the standard state and federal taxes.

Based on the three-times-the-rent requirement many rentals have, and what financial experts say is affordable for someone to pay, someone making $15 an hour can afford to pay about $860 a month.

For single wage earners, some landlords will let you in if you have 2 ½ times the rent. For a $15 an hour person, that’s $1,040 a month – exactly what the city says is the average price of a studio apartment in Portland.

But many people make less than $15 an hour. In Oregon, the minimum wage is $9.75 an hour. In Washington, it’s $9.47.

The Oregon minimum wage is set to increase to $14.75 in the metro area by 2022, but if housing prices continue to outpace wages many renters will continue to have difficulty finding a home.

If any single person making less than $15 an hour tried to rent any market-rate apartment in Portland right now, they wouldn’t qualify based on the 2 ½-times-rent requirement.

There are about 475,300 jobs in the metro area that pay less than $31,200 a year, which is a full-time, $15-an-hour job, according to the Bureau of Labor Statistics, out of about 1,088,000 total jobs.

That means about half a million employees don’t make enough money to afford market-rate housing and if they are renters, they could find themselves homeless because the economic reality just doesn’t pencil out.

Jobs that pay less than $31,200 in metro area

Even if they found a place that didn’t stick to the income requirement (nearly all property managers and most landlords do), it would be a nail-biting financial shell game to try to pay for basic expenses every month. If the landlord sold the home, they could find themselves on the street – just like Heather Starr.  

Waiting for a miracle

Heather Starr knows the economic reality of homelessness all too well. Her law job pays $12 an hour. At the bar, she makes minimum wage and tips; a little extra money to get by.

She’s a pro at keeping her expenses low. She spends $53 a month on a prepaid cell phone and doesn’t buy new clothes. Her car is paid off. All things budgeted for, she figures she could afford a three-bedroom home – big enough for her family – that costs $1,300 a month.

“You’re ranging between $1,500 and $3,200, anywhere from Washougal all the way to Longview,” Starr said.  

The few times she found an affordable rental, she was turned away due to income requirements, for not having a 650 credit score, or other reasons she can only guess.

“You always raise an eyebrow when you can afford it but they say ‘No’ and you think, ‘Oh, is it because I have kids?’” She said. “It’s a horrible feeling to know you have the money but somebody else is telling you that you can’t provide for your kids.”  

There are other harsh realities, too. Ones she never thought she’d have to know.

“It’s amazing what I have learned living out of my car,” she said. “It’s strategic to park if it blends in -- then nobody raises an eyebrow to it. Cracking a window is an important thing because then it doesn’t condensate the windows. As long as they don’t think anybody’s in it, they don’t bother it.”

Starr jokes a lot about living out of her car. It’s a coping mechanism she’s perfected over the past few months.

“I have to have a sense of humor about it. Otherwise it’s just too much stress,” she said.

In late September, Starr found a rental she could afford after five harrowing months of homelessness. For now, she has a home for her family. But in the metro area’s cutthroat housing market, Starr and thousands of other renters continue to walk a precarious road between housing and homelessness.

Published September 30, 2016

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