Out of Reach

Out of Reach 2002
Appendix A: Methodology and Sources
The analysis is based on FMRs proposed by HUD for fiscal year 2003. The 39 areas at the 50th percentile rent, rather than 40th (see Appendix B for further explanation of FMR) are denoted in the tables with an asterisk (*). Increases to the FMR percentiles are based on criteria established in HUD’s interim rule, published October 2, 2000 (65 FR 58870). State average FMRs are weighted averages for all counties (metropolitan and nonmetropolitan), based on number of renter households reported by the 2000 Census.

State average area median incomes are derived in the same manner from HUD area median income estimates for FY 2002. The Census definition of “family” is two or more persons related by blood or marriage. The “Family AMI” variable relates to the universe of all families and is not intended to apply to a specific family size.

The study estimates affordability based on the 30% of income standard used in federal housing policy subsidy programs. This standard is also a generally accepted measure of affordability in the housing industry at large.

Where a state has enacted a minimum wage that is higher than the federal minimum wage of $5.15 per hour, the state figure is used to calculate wages and hours of work needed to pay the FMR at 30% of income. These numbers assume pay for a 40-hour week for all 52 weeks of the year. In reality, people earning hourly wages often do not get paid sick leave or other paid time off, or they may switch jobs and lose work time. Many also do not qualify for health insurance and must bear the full cost of health care expenditures. Therefore, the wage levels cited are the lowest at which the FMR could be paid at 30% of income.

Conversely, the numbers do not include other sources of income such as the Earned Income Tax Credit (EITC) or child support payments that supplement reported wage income. The FMRs and AMIs used to calculate the Housing Wage are based on HUD’s systematic approach to setting payment standards for its subsidy programs, however, and NLIHC has determined that using this data is the most consistent way to calculate affordability each year. These are the only data that are available annually on a jurisdiction by jurisdiction basis.

It is also worth noting that HUD’s FMR and AMI numbers are open to public comment each year. Communities can challenge HUD’s estimates, and Out of Reach is one source of data that can be used in those challenges.

Out of Reach addresses affordability for the rental housing market, not the home ownership market. This is not meant to imply that housing affordability problems are unique to renters. Harvard University’s Joint Center for Housing Studies’ State of the Nation’s Housing: 2002 (http://www.jchs.harvard.edu/publications/markets/Son2002.pdf) includes an analysis of the affordability problems of homeowners.

The Out of Reach methodology was developed by Cushing N. Dolbeare, founder and Chair Emeritus of the National Low Income Housing Coalition. Ms. Dolbeare is a housing policy consultant, and a senior scholar at Joint Center for Housing Studies of Harvard University.

What’s New in This Edition

  • Data included in print version. In an effort to present the most important information in Out of Reach clearly, the number of data columns for each jurisdiction has been reduced significantly this year. All of the data fields included in last years’ edition are available for this year as well, online at http://www.nlihc.org/oor2002/.
  • New England states. In past years, towns, rather than counties, were used as the local jurisdictional unit for metro areas in New England states. Data for each town within an MSA or nonmetro county were the same, however, and in the interest of saving space this year, data are listed only for MSAs and counties, with lists of towns within each on each state page.
  • Trending data for state-level two bedroom Housing Wage calculations reflect some corrections to 2001 state level two bedroom Housing Wages, as follows:
    • Alabama: $9.06
    California: $18.34
    Georgia: $13.33
    Maine: $11.99
    Minnesota: $13.99
    Missouri: $10.71
    Tennessee: $10.13
    Texas: $12.66


Sources

Fair Market Rent data are proposed FY 2003 FMR levels from the HUD web site, at: http://www.huduser.org/datasets/fmr.html. Median income data are based on HUD estimates of median family income for 2002, also from the HUD web site, at: http://www.huduser.org/datasets/il/fmr02/prts801_02.pdf.

2000 Census data are from Summary File 1 (SF1) 100 Percent Data, at: http://www.census.gov/main/www/cen2000.html.

SSI information is from the Social Security Administration’s website, at: http://www.ssa.gov/.

Information on statewide minimum wages is from the Department of Labor’s website, at: http://www.dol.gov/esa/minwage/america.htm.

Consumer Price Index figures are from the Bureau of Labor Statistics, at http://www.bls.gov/news.release/pdf/cpi.pdf.

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