Households Severely Challenged by Rental Costs Not Decreasing in Spokane

by Dr. Patrick Jones

At the end of every month, we always hope that there is a little money left in our bank accounts. For many, however, this is rare. For an unknown but likely significant segment of Spokane County’s population, end-of-month balances are often zero or negative.

At the most basic level, this predicament occurs when household costs exceed income. That balance can be due to low income, high living costs or some combination of both. Examining income flows is beyond the scope of this piece, but they are obviously highly important. Instead, we’ll consider household costs, and in particular housing costs. These typically make up the largest single component of a household’s budget. The Consumer Price Index (CPI), for example, places shelter costs (rent or owner-occupied) at 33% of the budget.

What happens then in housing greatly effects household finances. For families with children, childcare is also a large expense, but the category for most households doesn’t loom as large as shelter costs. Spokane Trends tracks housing costs in a couple different ways. In this look, we consider renters and in particular, those renters “severely challenged” by shelter costs (rent and utilities).

For decades, the U.S. Housing and Urban Development agency has set a threshold for shelter not to exceed 30% of income. If greater than this threshold, then shelter expenses do not leave enough to afford other basics of life, let alone any saving. For renters, Spokane Trends tracks this population via Indicator 6.2.2. As one can observe, by this measure many County renters find themselves in this situation; for 2018, Census estimated over 36,000, or nearly half of all renters. This group may include those renters barely spending more than 30% on shelter costs or those spending much more.

As a consequence, Census has developed a measure that tracks those renters “severely” challenged by shelter costs. Here the threshold is 50% of household income. Indicator 6.2.3 shows the recent results. As one can readily see, the number of County renters who found themselves in this category in 2018 was estimated at 18,000, or about half of the more encompassing measure. That translated into a share of renters of 24% of all renters.

One the main aims of Spokane Trends is to track progress over time. For this indicator, unfortunately, there hasn’t been as much progress since the start of the series in 2006. At 23.6% share, it was identical in 2018 to 20065. As the graph shows, in the ensuing years after 2006 the number of severely challenged renters rose by a small amount then fell by a small amount.

Why so little progress? That’s a big question, touching on both income growth and rent growth here. It’s worthwhile noting, however, that the shares of both Washington State and the U.S. show the same flat path. So this community isn’t too different than America writ large.

The Census offers a little more detail in other tables that helps understand Spokane’s standing. In a tabulation looking at rental shelter cost shares of income by age, at least two insights are available. This table cuts off the threshold of shelter costs at 35% of household income, so it is not directly comparable to Indicator 6.2.3. But is still offers insights.

The first concerns the very young renters, ages 15-24. The very young typically have considerably less income than older cohorts. Compared to the benchmarks, Spokane has a higher share of this age group renting: 14% vs. 10% for Washington and 9% for the U.S. Although the Spokane share of young renters spending 35% or more for shelter costs is smaller than those of the state or the U.S., the share of young renters spending 35% or more of their income on shelter cost out of all renters here is slightly higher than the U.S. and about the same for Washington State.

The second concerns senior renters, ages 65+. This age group is, as with the very young, associated with lower (often fixed) incomes. The share of Spokane renters in this age group of all renters is also a bit higher than the benchmarks: 17% here vs. 16% in the U.S. vs. 15% in Washington. Since the shares of all three geographies who pay 35% or more in shelter costs is essentially the same, the total share of seniors in this category out of all renters is slightly larger here than in the state or the U.S.

Another dimension to deciphering the reasons behind the number and share severely challenged renters likely lies with race and ethnicity. There is no readily available Census table that breaks out the challenged renters describe by race/ethnicity by the threshold of 50%. But one table allows us some insights.

It should come as no surprise that non-white households are more likely to be renters. Our county’s people of color simply do enjoy the same incomes as whites (non-Hispanics) do. For 2018, whites were estimated to make up 79% of County renters while all non-whites (including Hispanics) made up 21%. The categorization is based on the head of the household's ethnicity. As Indicator 0.2.3 demonstrates, the non-white share of the county population in 2018 was estimated to be 15%. So 21% of the renter population is made up by groups that, county-wide, comprise 15% of the population.

Another source behind Spokane’s halting progress in reducing the share of the severely rent-challenged may lie with families headed by a single parent. In most cases, these families have low incomes; in most cases, it is also likely that they are renters. And, as Indicator 0.3.4 reveals, the share in 2018 was little changed from 2006 for Spokane families headed by a single parent.

That’s three likely groups of renters who do not enjoy high incomes. Their shares of the population have grown or stayed much the same as a decade ago, helping to keep the size of the severely rent challenged population largely unchanged. There are undoubtedly more contributors to the lack of progress in reducing the severely shelter-cost challenged.

How do 18,000 Spokane renters make ends meet? For students, it could well be mom and dad. For others, however, the burden must be crushing. What will the repercussions of COVID-19 foretell for this measure? We won’t know for at least a year. Let us hope that the any uptick in the numbers is minimal. Given COVID-19’s impact on the local economy, however, that might be wishful thinking.