By Ruanda McFerren, Cookingham-Noll Management Fellow, Office of the City Manager
Food, water, clothing, shelter. These are the basic needs for human survival that we learn as children. As children grow into adults, we further learn how to stretch a dollar to ensure that we can also afford transportation, insurance, and maybe a bit of entertainment and savings. Unfortunately, for many Kansas City residents the dollar doesn’t go far enough and housing costs make up an outsized percentage of one’s budget. The July 17, 2018 KCStat meeting discussed issues related to housing and affordability.
A standard definition of affordability in the United States is that no more than 30 percent of a household’s income should go towards housing costs. Housing costs include rent or mortgage, utilities, taxes, homeowner’s or renter’s insurance, and HOA or other fees. This means that if your household’s annual income is $48,000, Kansas City’s median household income, then you should spend no more than $14,400 per year, or $1,200 per month, on housing costs. If a household spends more than 30 percent of their income on housing, they are considered to be “cost burdened”. Looking at rent and mortgage costs in KCMO without factoring in utility costs, nearly 28 percent of homeowners and almost half of renters in the city are housing cost burdened. Across the state of Missouri, a similar proportion of the population is housing cost burdened. This is a national trend as well: nationwide 38 percent of renter households are cost burdened. It is also important to recognize that lower income households and senior households are more likely to be cost burdened.
In order for the City to meet its Objective to “increase accessibility to socially and physically diverse quality housing throughout the City for all income groups,” as outlined in the 2017 Update to the Citywide Business Plan, the importance of housing cost and affordability must be fully recognized.
In the 2018 Housing Survey, 96 percent of respondents identified Affordability as being an important factor when selecting housing. This was second only to Safety, which was selected by 98 percent of respondents. Despite this, the 2017-18 Resident Survey found that only 57 percent of residents were satisfied with the availability of affordable housing and 17 percent were dissatisfied. This difference in satisfaction reflects the gaps that exist in the housing market. There are simply not enough units that are affordable across all income ranges. This is particularly true for renters who earn less than $20,000 per year and often find themselves paying much more than 30 percent of their income on housing costs. The Strategy to “ensure that City housing policies encourage the creation and retention of housing units at all levels of affordability and emphasize mixed-income housing” seeks to close these gaps.
The preservation of existing affordable housing units is one way the City is seeking to reduce the number of cost burdened households. The preservation of affordable units is particularly important in the Downtown area, which has seen a great deal of redevelopment in recent years. Currently, there are 2,759 subsidized affordable units in this area. Many of these units were developed with Low-Income Housing Tax Credits. Over the next five years, over 40 percent of these units will be exiting the affordability period dictated by the tax credits, and thus could become market rate and would potentially no longer be affordable to those earning lower incomes. Maintaining these existing units as affordable as well as the development of mixed-income housing in Downtown and other areas with strong real estate development are important efforts to meet the City’s housing related goals.
As efforts are continually made to close the gaps that exist in the housing market and the numbers of cost burdened households decrease, residents across the City will benefit. Households will have more to spend on food, clothing, and transportation and have more surplus funds to enjoy all that KC has to offer.
To stay up to date on what the City is doing regarding housing and affordability be sure to check out this information on the City’s development of a Five Year Housing Policy.