November 25, 2014
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Streamlining regulatory process would help housing
John Hazen White, Jr.

It’s a good thing that Rhode Island home sales, both single and multi-unit, continue to inch up each month (they have been doing so for over a year now), but the situation for the renting segment of the state’s population – which is some 40 percent – isn’t improving.

Aside from the challenges these days to qualify for a home loan, one needs to earn over $75,000 to even consider owning a home. With the median household income in our state at around $55,000, that leaves a lot of people forced into renting. It costs about $1,500 a month for a family to rent a three-bedroom apartment; costs for a two-bedroom apartment are over $900 a month. Rental costs on average have gone up 75 percent in the state since 2001.

The problem for renters in the Ocean State is two-fold: many of them don’t make enough to balance the required rental cost against their monthly income because the cost of renting is so high. Renting shouldn’t be more than 30 percent of one’s total income, but the median household income for a renter in Rhode Island is just under $30,000, with the income needed for the average two-bedroom rental at $46,000, according to HousingWorksRI.

The other problem for renters is the amount of affordable rentals on the market at any time. Rhode Island, in part because of its smallness and lack of open land to build rental units on, lacks adequate affordable income rental units. Unlike other states, Rhode Island lacks vast tracks of open land to build upon. The dearth of affordable rentals statewide certainly drags down our economy and forces more mobile, younger workers to leave Rhode Island for more affordable destinations. They are the people we most need to keep.

Compounding the problem even further is the fact that a number of the state’s more suburban municipalities still haven’t met their legal obligation to provide a sufficient percentage of affordable housing units, both for sale and for rent. With construction of new homes all but custom builds in recent years because of a lack of demand for new homes and the sheer amount of unsold properties (as well as foreclosed properties) crowding the real estate market, builders want to build what the market needs, which is rental properties. But getting anything built in this state except a luxury property runs up against municipal resistance and the usual swamp of regulations, which frustrates builders into giving up.

That’s why clearing out the regulatory mess in this state is so important not only to the housing market and the home construction trades, but also to improving the state’s overall business climate, which universally places us close to last in national rankings. It is positive to see everyone from the governor on down getting on board, at least verbally, in support of finally streamlining business regulations – aiming to reduce the number of agencies involved, the amount of filing and paperwork required, and the timeframe for permitting and other approvals. This is one area we can certainly make progress. Regulatory hurdles have long been known to pose an unacceptable burden on businesses, but there’s been a lot of talk about this and little concrete action. If there had been action, we wouldn’t still be dealing with the problem. Hopefully, as the state digs in and really examines its economic malaise in light of the 38 Studios and RIEDC collapses, this time will be different.

Renters will be assisted by passage of Question 7 on the upcoming Nov. 6 ballot, which calls for $25 million in new bond spending to finance the construction of about 600 new units. Most of these units – again because of current market conditions – will probably be rentals. That’s a smart investment in the state’s future.


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