last updated on Tuesday, July 2, 2024 in Affordable Housing

A new annual report by the National Low Income Housing Coalition (NLIHC) that highlights current trends in rental housing and average wages across the country echoes similar dismal findings of a housing needs assessment conducted by the Federal Home Loan Bank of Indianapolis in 2023.

Titled "Bridging the Gap: Housing and Community Needs in Indiana and Michigan," the FHLBank Indianapolis study conducted by an independent third party found that while hourly wages in Indiana and Michigan rose an average of 11% between 2019 and 2023, average rent costs increased at a higher rate of 30%. Notably, the average home purchase price saw an even greater increase of 48% during that time, highlighting the increasing difficulty in affordable housing solutions for low- and middle-income households.

The NLIHC's report, titled "Out of Reach: The High Cost of Housing," once again calls attention to disparities between the rapidly rising cost of rental housing and comparatively stagnant wages earned by a significant portion of renters across the country. The annual report has been published annually for the past 35 years.

The NLIHC's report highlights a central statistic: the Housing Wage, which estimates the hourly wage required to afford a modest rental home at HUD's Fair Market Rent levels. Industrywide, the standard for what constitutes "affordable" housing is generally accepted to be no more than 30% of a household's total monthly income.

In Indiana, where minimum wage is set at the federal rate of $7.25 an hour, the NLIHC reports the estimated number of work hours required to afford a modest one-bedroom unit at Fair Market Rent is 101 hours a week. The estimated housing wage necessary to afford a modest two-bedroom apartment is $22.07 an hour. "Out of Reach" further estimates that over 350,000 renter households, or 44% of Indiana renters, earn less than 50% of the local Area Median Income.

In Michigan, where minimum wage is set above the federal minimum at $10.33 an hour, the NLIHC reports the estimated number of weekly working hours required to afford a modest one-bedroom unit at Fair Market Rent is 72 hours a week, and the necessary housing wage to afford a two-bedroom apartment is $23.16 an hour. Per the report's findings, nearly 500,000 households - 45% of Michigan renter households - earn below 50% of the local Area Median Income.

Click here to read more from the NLIHC's annual "Out of Reach" report.

Also, see the Community Programs page on fhlbi.com for more on how FHLBank Indianapolis is working to support middle- and low-income renters by increasing and improving the available housing stock and supporting affordable housing development across our district of Indiana and Michigan.

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