Severely Burdened Renters Here Shrank During the Pandemic

by Dr. Patrick Jones

In 2022, the number of two-county renters who faced extraordinarily high shelter costs hit the lowest estimate since 2018. At 2,200, this represented 14.5% of all renters in Chelan and Douglas Counties. As Trends indicator 6.2.5 displays, this rate was far below the estimate of Washington state renters in this category (23.5%) as well as those nationwide (24.8%). And over the past 15 years, the rate here has fallen. 

In fact, the share of local renters who fall into this “severely burdened” category has been lower than these benchmarks for all the years tracked. The threshold of income spent on shelter adopted by the U.S. Department of Housing and Urban Development (HUD) for the severely burdened is 50%. Shelter costs include rent, utilities, plus any fees.  

Since there is local concern about renters’ affordability, let’s try to understand why the rate here, at least as of 2022, is as low as it is. To do that, a quick examination of supply and demand factors helps. 

First consider supply. Since the rental market is strongly influenced by the market for single family residences, and vice versa, a look at all units in the two counties in 2022 is warranted. The Census estimated the total to be nearly 57,000.  (About 39,000 were single family residences, while about 8,200 were mobile homes. That left about 9,700 for rental units.) 

On a population basis, that implies about 470 housing units per 1,000 residents. This rate or density is higher than the estimates for the state and the U.S., both of which show 430 housing units per 1,000. In this big picture look, then, the two counties face a relatively more abundant supply. 

On the demand side, consider the population who likely falls into the category of severely rent burdened. We don’t have access to income distribution data among renters. But we do have an approximate measure of the number of “income-constrained” via the two-county population whose incomes are at or below the federal poverty threshold. Most of these residents are likely renters. 

Trends indicator 2.5.1 shows the most recent estimate to be about 7,500, or 6.1% of all residents in Chelan and Douglas Counties. These are the lowest estimates of both total in and rate of poverty on record for the two counties. There simply are fewer income-constrained residents here than ever before.  

A rub in our high-level look at housing supply lies in the number of housing units, in particular single-family residences or condos, that are vacation homes. Unfortunately, there is no way to parse the share of housing units that fall in this category. If we did, it would be appropriate, in a look at supply for residents, to deduct them from the total. 

The evidence suggests that this factor matters, at least for parts of Chelan County. For the two most popular vacation destinations in the county, the cities of Chelan and Leavenworth, housing “density” ratios are much higher than the metro average reported above. For the five-year period 2018-2022, Chelan shows 640 housing units per 1,000 residents while Leavenworth yields 580. (Manson data was unavailable.) 

These are numbers far above the two-county estimate for 2022 of 470. Yet, the presence of a higher number of housing units in these two communities likely exerts only a small effect, since their total count of housing units is about 4,000 over the period, or about 7% of the two-county total.  

2023 estimates on shelter cost burdens for the two counties will not come out for another three months. But another Trends indicator offers contemporary (2024) numbers on the local housing market and these point to rising rental costs and likely declining affordability. 

HUD publishes prospectively an important measure of local rental housing markets, known as the Fair Market Rent (FMR). Its values are based on an assessment of the local rental market, focusing on the costs of modest rental housing and tenant-paid utilities. Fair Market Rents are then employed to administer HUD’s apartment voucher programs.  

Trends indicator 6.2.7 translates FMR values into an annual income number. This is the income required to be able to afford HUD’s estimate of a basic dwelling of the local rental market. The translation is based on the notion that a renting household should not spend more than 30% of its income on shelter costs. For example, if a FMR is $1,000 per month, monthly income required would be $3,333. If FMR is increased, so will the income needed measure. 

In annual terms, Trends indicator 6.2.7 shows a very rapid rise in the income required for FMR in the past two years in the two counties. For 2024, the income required for a one bedroom is $46,120; for a two bedroom, nearly $58,000. These values represent dramatic increases over 2022: 26% for a one bedroom and 29% for a two bedroom. 

Consequently, when the latest round of Census estimates is released in late September, I expect housing affordability in the two counties in general to decline. That will likely mean that the count and rate of severely rent-burdened renters will climb from the 2022 low numbers we now observe.