- This story is part of South Carolina Public Radio's continuing coverage of the eviction crisis in the Palmetto State. For additional stories, click HERE.
In the South Carolina Housing and Finance Authority’s 2021 Housing Needs Assessment report, agency Executive Director Bonita Shropshire writes that almost a quarter of the state’s renters spend more than half their income on housing, and that the average renter (someone earning the median or average local wage) cannot afford a fair-market-priced two-bedroom apartment in nearly all of South Carolina’s 46 counties.
The state’s rental market, which is on the verge of seeing the last of its tenant eviction protections lifted, is a complicated ecosystem. It factors in jobs, rent prices, growth, and an understanding that removing eviction protections does not just put things back to what they were before the coronavirus pandemic. Too much wage money has not been made by tenants, and too much rent money has not been collected by landlords for anything to be considered normal.
At it’s most basic, of course, stable housing is a matter of affordability. Which sounds (and is) obvious, but what does that mean? If so many renters spending so much on housing is such a problem, then the first question to ask is, what percentage of income should a household spend on housing?
The 30 Percent Solution
A long-ago-established guidepost is that no more than 30 percent of a household’s income should be spent on housing expenses – rent, utilities, and taxes, for example.
Where did that number come from?
“It’s a number that Congress picked in 1981,” says Bryan Grady, chief research officer at SC Housing. “It’s more of a rule of thumb, but because it’s a government number, it has this sort of halo effect that ‘This must have been determined through some elaborate analysis,’ and the short answer is, no.”
Do a search on Google and the first page of results will be rich with finance websites extoling why you shouldn’t pay more than 30 percent (or, if you want to really drill down to it, 28 percent) on household expenses.
Dig a little deeper, though, and the problems with relying on the 30-percent rule start rising to the surface.
For one thing, reducing all housing markets to one blanket number like 30 percent fails to account for the subtleties in markets.
Quick math break: In Pickens County, the U.S. Department of Housing and Urban Development set fair market rent for a two-bedroom apartment in 2021 at $826 a month. The U.S. Census set the county’s median household income in 2019’s American Community Survey (ACS) at $49,573 – meaning net $4,131 per month, or, realistically, after taxes, about $2,700 a month actually coming into the household. That’s just about 30 percent spent on rent every month, but that’s only the rent. This arithmetic does not factor in heating, water bills, trash pickup, property taxes, etc. It also doesn’t factor in travel to and from work, which, for a hefty number of residents in Pickens County and Easley, involves working in Greenville, where wages tend to be higher. Lastly, the math only holds up if you earn $49,573 a year while living in Pickens County. Plenty of jobs in the county don’t even come close to that, as we’ll see below.
Viewing all markets through the 30-percent prism also doesn’t take into account the differences in markets, some of which are growing fast (like York County and the Charlotte metro area, or the coastal metros of Charleston and Beaufort), and some of which are losing residents (like Allendale County, the poorest in the state, and where a two-bedroom apartment at fair market value runs $515 per month, but work is hard to come by).
“There’s definitely a need to think a little more holistically [rather than focus] on that single percentage,” Grady says.
SC Housing’s Needs Assessment report breaks out the concept of ‘shelter poverty,’ which calculates essential household expenditures in relation to where a residence physically is. The agency calculates that 31 percent of South Carolina residents are affected by shelter poverty to the tune of $1 billion – which, the report finds, cost the state as a whole $9.4 billion in 2019.
Those numbers include 51 percent of nearly 570,000 renting households in the state, which contributed $5.1 billion towards that overall shelter poverty drain on the state, according to the report (issued in March).
Rent and Income in South Carolina
Some bullet points:
· South Carolina is one of 20 states where the minimum wage is $7.25 per hour (Wyoming and Georgia have minimum wages of $5.15 per hour).
· The overall statewide fair market rent for a two-bedroom apartment in South Carolina, according to HUD’s numbers, is $940.
· The median hourly wage for all occupations in South Carolina, according to the U.S Bureau of Labor Statistics, is, as of May, 2020, $17.36 (which is about $35,000 a year).
So how does all of that add up? Well, for one thing, 198 occupations broken down by BLS do not make even $17.36 an hour. And those are jobs that tend to have the most employees – office, transportation, restaurant, hospitality, and tourism, which account for half the jobs in the state.
Caveat: The data don’t show multiple jobs. A person could be, say, an office clerk making about $14 an hour, full-time, but also have a side job as a bartender, making another $9.50 an hour. So take the raw numbers with an appropriately sized serving of salt.
But overall, the effect is the same – hundreds of thousands of jobs in South Carolina pay less than $18.08 per hour. Why is that number so important?
Because the Low Income Housing Coalition’s 2021 “Out of Reach” report sets $18.08 an hour as the minimum amount of money needed (over 40 hours a week for 52 weeks a year) to afford that $940-per-month two-bedroom apartment.
According to BLS data, about 333,000 jobs in South Carolina make less than $10 per hour. None are identified at the state minimum wage, but someone earning between minimum wage and $10 per hour would need more than two full-time jobs to be able to afford $940 in rent every month.
That translates to close to 100 hours per week worked per household. Whether that’s split between two or more adults or is carried by a single parent who needs a second bedroom for a child, that $940-per-month apartment will consume a lot of hours for lower-wage workers.
And that’s just looking at the averaged-out fair market rate for a two-bedroom apartment for all of South Carolina.
Things get more expensive the closer a renter gets to certain areas of the state. That $18.08 figure jumps to $22.13 an hour if you want to live in York County, for example; and to $23.21 if you want to live in Charleston, because two-bedroom apartments in these areas will almost certainly cost more than $940 per month.
According to HUD data, fair market rent for a two-bedroom apartment in the Charlotte metro area, which includes parts of York County, is $1,151 per month in 2021. That’s about $200 per month more than in 2018.
The Charleston and Beaufort markets have seen similar jumps in per-month rent since 2018. Rents in Greenville and Spartanburg have increased more than $100 per month since then.
At the other end of the spectrum, a fair market two-bedroom apartment in Darlington County costs $596 per month in 2021 – just $9 more a month than in 2018.
The difference is, Darlington County lost more than 2,000 residents between 2010 and 2019, according to the ACS, whereas York County gained more than 60,000 residents.
SC Housing’s Bryan Grady calls the trend a “hollowing out” of the state’s poorer counties.
“Even though the state as a whole is growing pretty substantially,” Grady says, “most counties in South Carolina are losing residents.”
And as the state’s metros and coastal markets keep drawing new tenants, rents go up – typically faster than local wages will can say with.
So How Does This Tie Into Evictions?
South Carolina has almost 600,000 renter households (about 1.45 million renters). Not all of them will lose their residences once the CDC’s eviction moratorium ends on July 31, of course – the moratorium does not cover all renters anyway, only those in units covered by federal regulations.
But the combination of so many renters and so much rent uncollected, plus the state’s higher-than-everybody eviction rates make most housing advocates nervous.
So does the way rent prices are escalating in the most moved-to areas of the state.
In 2018, only one county, Beaufort, had a fair market rent for a two-bedroom apartment listed above $900 a month, according to HUD. In 2021, there are five counties with these rents above $1,000 a month.
Specific metro areas are a little more consistent than county averages, but still more expensive than they were a year ago. Compared to 2018, when two metros had fair-market-rate two-bedrooms above $1,000, now there are three, plus another three above $900 per month, plus one, Myrtle Beach, just $2 shy of $900 a month.
The nutshell version of why this so worries housing advocates, now that the state is at the brink of no more eviction moratoria, is: A lot of people financially affected by the coronavirus pandemic have less money now, they might be out of work, they might owe a lot of back rent, federal rental assistance money might not get to landlords in time to save renters from being ejected from their homes for not paying that rent, a lot of renters have not saved any money over the past 18 months, and finding new places to live is more expensive than it was when the pandemic started.
Grady refers to the “three-legged stool” of housing, transportation, and economic development. One weak leg creates issues with the other two.
“If people can’t afford to live in your community, they’re going to have to drive in,” he says. “That’s going to cause traffic. And if businesses can’t find the workers that they need, that’s obviously a challenge for the state. Local officials need to think about how the people who make communities what they are [can] afford to actually live in those communities.”
South Carolina Public Radio has been reporting on the pending eviction situation in the state. To follow our coverage, visit these links:
The Eviction Crisis, As Seen Through Lancaster's Social Services Agencies
When Epidemics Collide: Evictions and COVID in South Carolina
The Landlord's-Eye View of Eviction Protections in South Carolina
‘Normal's Already a Crisis’: Why South Carolina’s Appetite for Eviction Scares Housing Advocates
