Jack Sines didn’t think he would be in this position.
With average rents continuing to climb and affordable housing options scarce, thousands of Michigan renters are asking, “Where do we go?”
Rents have exploded across the country, causing many to dig deep into their savings, downsize to subpar units or fall behind on payments and risk eviction now that a federal moratorium has ended. Rental costs rose 0.5% in January from December, according to the U.S. Labor Department.
That may seem small, but it was the biggest increase in 20 years, and will likely accelerate.
Sines, 45, said his work hours have been reduced from 40 hours per week to 15-20 hours per week. This comes at the same time that rent costs for his two-bedroom, two-bathroom apartment continue to climb.
Right now, his rent costs account for 75% of his monthly income. Since 2019, Sines’ monthly rent has increased from $1,025 to $1,440, a 40.4% increase.
“It’s been a struggle,” he said. “My rent has progressively gone up the last couple of years. I’m at a place where rent is going up and I’m working less hours. I would have been financially upside down if not for the state assistance I’ve received to help me out.”
For now, Sines said he’s caught up on his rent payments with the state assistance he has received helping to cover the past three payments. He has applied for and received three payments from the state to aid with rent and utilities.
“Going forward, I want to try to see if I can keep everything back under control with everything starting to go back to somewhat of what you would call normal,” he said. “If not, I might ask for assistance again. I’m hoping this was the last time I apply for assistance.”
According to data from the U.S. Department of Housing and Urban Development (HUD), a two-bedroom rental unit averages $877 per month in Michigan. That’s a nearly 10% increase from 2018.
At the same time, Michigan’s affordable housing stock, rental units that rent for less than $800 per month, have been dropping significantly year-over-year, according to the U.S. Census Bureau data.
Between 2015-2019, the number of affordable housing units statewide has decreased by 18% from 541,677 units in 2015 to 443,079 units in 2019, the most recent data available.
In Wayne County, affordable housing stock dropped by 12% during that time period.
The fair market rent for a two-bedroom unit in Macomb, Oakland, and Wayne counties is $1,084 per month. Median rent for a two-bedroom units is $1,162 per month.
All three counties have also seen significant increases in median rent costs over the past four years as well as government-set fair market rent costs, which are used primarily to help determine assistance amounts for individuals living in Section 8 housing and flat rent for public housing.
This combination of increased rent and scarce affordable housing options has put Michigan’s 1.4 million renters, especially the nearly 700,000 renters making less than $35,000 per year, in a bind as the economy continues its recovery from the height of the pandemic and inflation drives up prices for basic daily necessities.
In February, around 218,000 Michigan renters were not confident at all that they would be able to pay their March rent, while over 283,000 renters said they were not caught up on their rent, of which around 26,000 said eviction was likely by the end of April, according to the U.S. Census Bureau’s Household Pulse Survey. These numbers represent 15% to 20% of Michigan’s 18 and older renter population.
David Allen, chief market analyst at the Michigan State Housing Development Administration (MSHDA), said there seems to be a number of factors at play pushing median rent prices upward.
“One is the fact that the supply of rental units is low relative to the demand for it,” he said. “This reflects the fact that housing production in the state is way below pre-Great Recession levels.”
Allen said another primary factor pushing rent costs higher and higher is the lack of for-sale homes, which is pushing some households who would otherwise be buyers into renting.
“This tends to increase the prices on the rental units being sought in the market,” he said.
According to federal data, nearly 30% of rental units in Michigan are priced between $1,000 and $1,500 per month. And 38% of Michigan renters report their rent is at least 35% of their household income.
In Oakland, Macomb, and Wayne counties, between 15% and 38% of all rental units are priced between $1,000 to $1,500 per month with 35% to 47% of renters reporting that their rent costs total at least 35% of their household income.
Households that spend more than 30% of their income on rent are referred to as “cost burdened,” according to HUD. In 2019, 37.1 million households, or 30.2% of all U.S. households, fit this category.
Although the situation has worsened since the pandemic, Allen said half of the state’s renters pre-pandemic were paying more than 30% of their incomes on housing costs.
He added that the pandemic has exacerbated these affordability issues for renters.
“The effects of this are most felt among lower-income workers and racial/ethnic minorities,” he said. “These are the very households that were already having a hard time making ends meet.”
The financial burden of the increasing cost of rent falls hardest on the half of workers in the U.S. who earn less than $35,000 each year.
After paying rent, about 80% of renter households with incomes under $30,000 have between $360 and $490 left to cover all other expenses, including food, health care, transportation and child care.
Even though the federal moratorium protecting renters against eviction for nonpayment of rent expired last August, a Michigan Supreme Court order continues to require district courts to temporarily halt the eviction process for renters applying for financial assistance through the Michigan COVID Emergency Rental Assistance (CERA) Program.
The CERA program has made $715 million in federal dollars available to renters needing help paying their rent or utility bills. Around 86% to 88% of the dollars are used for rental and utility assistance while the remaining are used for case management and administration.
Michigan renters have received, on average, $4,470 in assistance while the average household has received $5,727.
Over $533 million has been spent on rent assistance while another $86 million has been spent to help renters pay their utility bills.
Over 138,000 Michigan renters have received CERA assistance including over 40,000 in Wayne County, totaling $193 million.
There is still over $90 million in assistance available through the Michigan CERA program with many renters having been approved for financial aid multiple times.
As part of a $4.8 billion supplemental bill approved earlier this month by the state Legislature, $382.9 million in additional federal dollars will be appropriated for the CERA Program.
Once House Bill 565 is signed by Whitmer, the CERA Program will have included $1.1 billion in total assistance.
“With these funds secured, we and our statewide network of housing partners can continue to help thousands more renters and landlords get caught up on their housing expenses,” said Katie Bach, MSHDA spokesperson.
The supplemental bill also includes $100 million for the state’s Housing and Community Development Fund to expand affordable housing options for Michiganders disproportionately impacted by the COVID-19 pandemic and to create the Middle Housing Gap Program.
The $50 million program will seek to increase housing supply for households with incomes between 185% and 300% of the federal poverty level by helping defray costs to nonprofit developers for investing in, constructing, or substantially rehabilitating properties.
Caps on rent increases
Currently, there is no state law that caps or restricts rent charges, but MSHDA does have some ability to impact the percentage of rent increase that can be charged at properties that have a state or federal housing subsidy or housing choice voucher attached to it.
The Housing Choice Voucher Program, which serves 28,000 Michiganders, allows renters to lease a unit of their choice provided that it meets federal quality standards. The owner’s requested rent is then determined reasonable based on HUD and MSHDA requirements.
“If the rent is determined not to be reasonable, based on specified standards, MSHDA must deny the request and the owner must either lower the rent to conform with the requirements or the family must select another unit,” Bach said.
Generally, landlords are being encouraged to charge rent based on the percentage of the home’s market value. Typically, the rents that landlords charge fall between 0.8% and 1.1% of the home’s value.
Landlords also are recommended to consider what other landlords are charging for similar rentals in their area.