High Rent Burden in Maryland Puts Families at Risk for Economic Ruin

April 6, 2015 by Kathleen Algire-Fedarcyk in Blog

Just about half of Marylanders who rent are paying so much for a place to live that they’re in danger of not being able to afford other necessities.

Prices for rental homes in Maryland have increased annually while wages for most Marylanders have remained stagnant and unchanged for years. These two factors combine to force families to pay more of their income for rent. It’s a dangerous situation, making it hard for families to afford basic necessities like food, transportation, or medical care. The federal Department of Housing and Urban Development understands how a high rent burden can put a family in economic trouble and advises that families not pay more than 30 percent of their income in rent. However, because of high rental prices, most families have no choice but to dedicate a greater share of their income to putting a roof over their head.

Today, 49 percent of Marylanders pay more than 30 percent of their income in rent. As bad as it is in Maryland, it is still better than our neighboring areas. Approximately half of renters in Virginia and Delaware are paying more than 30 percent, right around the national average. Unfortunately, this isn’t a new trend in Maryland, high rent burdens have been consistent for the past years.household rent

Not surprisingly, places with the highest concentration of people who struggle to make ends meet have the highest share of people spending more than 30 percent of their income on rent. As the graphic above shows, Somerset and Talbot Counties and Baltimore City have the highest shares, and in several other counties over half of renters are facing this problem.

The combination of low pay and high rent means many families have no chance to save enough to buy a home of their own.  That helps make the problem multi-generational.  Home ownership is a leading factor in wealth accumulation and likelihood for children to have greater economic success than their parents. Affordable housing has health and education benefits too. For people to move out of poverty, affordable housing is necessary.

Maryland has had some success in helping people find housing they can afford. The Rental Housing Works Program, for example, provides grants to help enable construction of housing projects, lending the difference needed to break ground and begin building.

But the demand is greater that RHW can meet. Strengthening RHW would help increase the number of units but it wouldn’t address the problem of a high rent burden if rents continue to increase while wages stay the same. Maryland passed a much needed increase in the minimum wage over the next three years to $10.10 an hour. But the incremental nature of the wage hike means that when it finally reaches $10.10, it will be worth less than originally intended. Maryland has the opportunity to speed the increase so it would take effect in July of this year, through House Bill 4. That would be a step forward in helping people who work hard for low pay to afford rent and other necessities.

Affordable housing is an essential part to helping all Marylanders achieve their full potential. We should strive as a state to increase affordable housing and stop putting families at risk for economic disaster.

Today’s blog post continues our State of Working Maryland series looking at demographic and economic trends in the state. Look for more occasional blogs and research briefs on topics affecting working families in Maryland.