The Morning Report
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Tuesday, Jan. 9, 2007 | The invisible prankster that Adam Smith conjured juggling the fortunes of nations seems to have dropped the affordability prop for San Diego’s middle class. In 2006, I watched with some glee as home prices fell, hoping that our middle-class renters would have a better shot at homeownership. However, profit-seeking developers destroyed any inkling of hope for the middle-class by putting the brakes on construction. All of a sudden, the building permits dropped, the cranes became silent, and the median-price of a home clutched onto the half-million dollar mark.
Market fatalism is the idolized dependency on invisible conjurations to solve our real problems. Last year, even with record profits in the building industry, housing affordability fell by 8 percentage points (CPI Housing Brief). Our analysis of the latest Census data reveals that almost half the households in San Diego County lived in housing they couldn’t afford in 2005. The so-called “naturally affordable” rates established by the market are out of reach for our middle-class, regardless of whether you own or rent.
Market-driven unaffordable housing is prevalent all across California, and San Diego is no exception. A common barometer of affordability is that housing should cost no more than 30 percent of income. Data recently released by the National Low Income Housing Coalition shows that in San Diego County, the Fair Market Rent for a two-bedroom apartment is $1,205. In order to afford this level of rent, a household must earn $48,200 annually. Assuming a 40-hour work week, 52 weeks per year, this translates into a Housing Wage of $23.17.
The market does not work for us, we work for the market. Even with the new increase in minimum wage to $7.50 an hour, a minimum wage worker in San Diego County would need to work 124 hours a week, 52 weeks a year, to be able to afford a two-bedroom home. San Diegans are having a troubling time making ends meet. Our research on self-sufficiency shows that a single person without dependents would need to earn $12.48 an hour at a fulltime job to meet the basic needs of living in San Diego. Furthermore, our analysis of the 2005 Census data shows that more than one in every five San Diegans working full time and year-round (204,624 people) earned less than the self-sufficiency wage
Can you squeeze anything more out of somebody who works FULL TIME and YEAR ROUND? This housing crisis squeezes the middle-class and the dignity of working. I would caution against such market fatalism that would make even Adam Smith turn in his grave.