Rental Affordability Stable and Outperforming the Region

by Brian Kennedy & Dr. Patrick Jones

There has been a lot of talk within the two counties, as well as across the state, that rents have continued to rise. While that certainly is the case, income in Chelan and Douglas Counties has kept pace; resulting in stable prices within the rental market in relation to household income.

Is housing become less affordable in Chelan and Douglas Counties? Affordability is typically indicated by shelter costs are at or below 30% of household income. Shelter costs cover not only rent but any utilities associated with renting such as water, sewer, or garbage. When rents are in this range, households are able to meet non-housing needs such as clothing, food, or other monthly bills all while still being able to save for a down payment in a future home purchase or other household emergencies. Anything over 30% is considered to be a housing cost burden and anything over 50% is a severe housing cost burden. Trend 6.2.5 depicts these critical cases, where renters are severely struggling to find any disposable income outside of costs of renting.

At first glance, this trend does look like a large increase in the total number of renting households allocating 50% to shelter costs occurred. From 2006 to 2018, the number of renters spending 50% or more of their income on shelter costs grew by just over one-thousand households, from 2,182 to 3,188. Yet a word of caution in interpretation. This finding is based on a survey, and the estimated increase is well within the margin of error. A statistical analysis shows that we can’t say there has been any significant change in the number of renting household with suffering from severe burden due to housing costs. This relationship can be further illustrated when looking at the share of renters falling into this category. While the total number jumped the share of renters stayed relatively stable, only increasing by less than half a percentage point since 2006.

So roughly 1-in-5 renting households is facing a severe housing cost burden, which sounds terrible. But renters in the combined counties are generally better off than state and national averages. The local rate sits 1.6 percentage points under the state and 4 percentage points under the national averages. Those gaps have characterized the three trends over the length of the Trend.

Additionally, to look at renting households less severely burdened but still feeling the pressures of high rents, consider Trend 6.2.4 showing those spending 30% on housing. Here we see that the combined counties are still outperforming the state and U.S. by just over 10 percentage points. Where one in three renting households feel constrained by housing costs locally, nearly half of all renting households are feeling that state and nationwide.

Comparing to the state, which is skewed by the west side, and the national rate, pulling towards the large population centers, aren’t always the best of benchmarks with issues such as rent, a highly localized market. However, when we consider just the Eastern Washington metro areas, a smaller share of renters in Chelan and Douglas Counties seem to be severely burdened by shelter costs.

All other Eastern Washington metro areas display higher shares of renters spending 50% or more of their income on shelter costs in 2018. Chelan and Douglas Counties sit about 2 percentage points lower than in Benton & Franklin Counties and Yakima County. Spokane County and Walla Walla County have the highest shares, roughly 4 and 9 percentage points higher than that observed locally.

To examine this down further using American Community Survey (U.S. Census), we can look at the situation of the “middle renter,” as expressed by median rent as a share of median household income for renting households in Eastern Washington metro areas. Here Chelan and Douglas Counties outperform the rest. At the median, rent takes up a smaller portion of household income, just 24%. The combined counties sit 4 percentage points lower than the next closest metro area, the Tri-Cities at 28%, and 8 percentage points lower than the highest, Walla Walla at 32%.

While the combined counties do have a comparatively low median household rent, median household income for renters in Chelan in Douglas County is the highest among the metros, nearly $10,000 more than Yakima, the lowest, and $3,000 higher than the Tri-Cities, the next closest.

So while this trend is showing growth in the total number of renters paying 50% or more of their income to shelter costs, the share is staying stable. Likewise, the share spending 30% or more seems to support a flat lining trend. While rents are increasing year after year, the comparative growth in median household income for renters in Chelan and Douglas Counties is substantially better than their Eastern Washington counterparts, fending off, thankfully for now, any increase in the share of renters severely burdened by shelter costs.