Paycheck to Paycheck 2012:
Can veterans afford housing in your community?
By Laura Williams
July 2012
Overview
As veterans return home from service, many transition to civilian life through job training
programs that aim to provide the assistance and support they need for success. But do the jobs
veterans are entering allow them to afford the costs of housing? This edition of Paycheck to
Paycheck1 focuses on housing affordability for five of the jobs targeted by training programs
sponsored by the Department of Labor in partnership with the military and other organizations:
carpenters, dental assistants, electricians, firefighters and truck drivers.
The salaries presented here reflect workers with a few years of experience, not entry-level
employees, so affordability challenges may be greater for veterans who are just entering the
civilian workforce. In addition, it’s important to underscore that many returning veterans are
struggling with unemployment. For post-9/11 veterans ages 18 to 24, the unemployment rate is
30.2%.2 Housing costs are obviously even more challenging for the unemployed than for the
workers discussed here.
Housing Affordability for Returning
Service Members
Despite sizable declines in home
prices since the peak of the housing
market in 2006, veterans working in
some of the main jobs available
through the Department of Labor’s
specialized training programs do
not earn enough to afford to buy a
median-priced home in many
markets. Only one of these five
jobs—electrician—earns enough to
afford to buy housing at typical
prices nationwide.3 Rents were
more affordable for veterans
coming out of job training
programs; only dental assistants were
unable to afford a two-bedroom apartment at the national average fair market rent (FMR).4
The complete Paycheck to Paycheck database can be accessed at www.nhc.org/paycheck. It includes wages for 74
occupations compared with home prices and rents in over 200 metropolitan areas.
2 U.S. Bureau of Labor Statistics (BLS). Employment Situation of Veterans, 2011. Current Population Survey. Table 2A.
3 Homeownership affordability is based primarily on monthly mortgage payments. Calculations assume a 10 percent
down payment, but do not account for utility or maintenance costs. These calculations do not take into account the
difficulty of securing a loan due to poor credit, which can be a significant hurdle to homeownership.
4 The national average fair market rent was calculated by the National Low Income Coalition’s and included in their
publication, Out of Reach, 2012.
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Housing Affordability for Other Working Households
Since the first quarter of 2011, the income needed to purchase a home at the national median
has fallen by nearly six percent, with 70 percent of the metro areas studied seeing declines of
three percent or more. These declines are likely due to a combination of large numbers of
foreclosed homes hitting the market after long delays, low interest rates and other local factors.
They might also signal that home prices have not yet stabilized in many areas. However, in 20
percent of the communities examined, the income needed to purchase a median-priced home
held relatively steady, and 21 metro areas, or 10 percent of the areas studied, saw increases of
three percent or more. These variations make it difficult to predict future housing affordability
patterns, but it is clear that we cannot necessarily count on further home price declines to bring
prices to levels veterans and other working families can afford in all communities.
Despite declines in the income necessary to quality for a median-priced home in 70 percent of
the markets studied, homeownership remains unaffordable to most of the 74 occupations
included in this edition of Paycheck to Paycheck. Indeed, workers in only about one-third (23) of
the occupations studied were able to afford the nationwide median-priced home.
Renters were better able than owners to afford their housing costs, but many occupations still
paid workers too little to afford their rental costs. A two-bedroom unit was too expensive for
workers in 34 of the 74 jobs studied at the nationwide average. Even the most affordable metro
area, Youngstown, Ohio, was only affordable to 64 of the 74 occupations studied.
Analysis
Where do returning service members face housing challenges?
The affordability of housing for returning service members graduating from job training programs
varies from city to city. The chart below shows the share of markets where housing is affordable
for workers in five occupations targeted by job training programs for veterans. (The percentages
reflect the share of affordable markets out of more than 200 metropolitan areas that were
analyzed.)
SHARE OF METRO AREAS STUDIED WHERE HOUSING COSTS ARE AFFORDABLE TO WORKERS IN OCCUPATIONS TARGETED BY
VETERANS’ JOB TRAINING PROGRAMS
Occupation
Long-Haul Truck Driver
Firefighter
Electrician
Dental Assistant
Carpenter
Salary Range
Median Priced
Home
1 BR Apartment
FMR
2 BR Apartment
FMR
$30,798 to $46,602
$33,776 to $51,108
$39,930 to $60,421
$26,532 to $40148
$35,387 to $53,547
38%
51%
72%
22%
58%
88%
93%
98%
75%
96%
70%
81%
93%
47%
84%
Source: Center for Housing Policy analysis of data from the National Association of Home Builders’ Housing Opportunity Index, National
Association of Realtors and Salary.com.
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Which metro areas are more affordable or unaffordable for veterans?
Veterans working in some of the main jobs available through the Department of Labor’s
specialized training programs do not earn enough to afford to buy a median-priced home or
rent a home at the fair market rent in many markets. In more expensive metro areas, even
electricians, carpenters and firefighters earn too little to afford a median-priced or FMR home.
Long-Haul Truck Driver A median-priced home is affordable to a long-haul truck driver in only 38
percent of metro areas studied. These cities are geographically diverse. However, even
affordable homes require down payments, and saving $7,000 to $10,000 can be difficult on a
salary hovering around $37,000.
Renting is a more feasible option for truck drivers in most metro areas, but in 12 percent of metro
areas, even a one-bedroom unit would be too expensive. These include traditionally pricey
markets such as Washington, D.C., Honolulu, San Francisco and New York City, as well as Edison,
New Jersey; New Haven, Connecticut; and Virginia Beach, Virginia, among other metro areas
around the country. A few parts of Florida are notable for having affordable homeownership
opportunities, but not affordable rental units. This might be due to the foreclosure crisis reducing
sales prices and pushing former owners into the rental market, raising rents.
Firefighter Firefighters generally had a better affordability outlook than truck drivers, being able
to earn enough to own a home in just over half of the metro areas studied. Saving enough for a
down payment could still be a barrier, however, as could access to mortgage credit, which
continues to be very tight.
Furthermore, the most expensive metro areas, concentrated in California, but also parts of New
York State and Washington, D.C., remained too expensive for firefighters to afford even a onebedroom apartment. The high costs in these metro areas can prevent these essential
community workers from living and working in the same community they serve.
Electrician Electricians fared the best of the jobs studied. They were able to afford the median
priced home in 72 percent of the metro areas, and rents in more than 90 percent. However,
many likely still face barriers to ownership related to obtaining credit and saving for a down
payment. Increases in interest rates or a rebounding real estate market could also lead to
reductions in affordability for electricians, as, on average, they only earn about $3,000 more
than the qualifying income for ownership.
Dental Assistant Veterans working as dental assistants face the toughest housing challenges of
this group. Ownership was an affordable option in only 46 metro areas (22 percent). In onequarter of metro areas even a one-bedroom apartment was unaffordable and in more than
half of all markets, dental assistants could not afford the rent of a modest two-bedroom home.
Carpenter Carpenters’ salaries are sufficient to afford typical housing in many markets;
however, there is still room for improvement. Homeownership was only affordable in 58 percent
of metro areas, and in eight metro areas even one-bedroom apartments were too expensive to
rent for those working in this trade.
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How has housing affordability changed
since 2011?
Since 2011, the median home price has
declined in about 61 percent of markets
studied. Since mortgage payments are
affected not just by price but also by
falling interest rates5 and other factors,
the income required to purchase a
median-priced home has declined by
three percent or more in a somewhat
higher share of markets—70 percent.
However, as noted above, prices are still
not at affordable levels for many workers,
including returning veterans finding work
through job training programs. In
addition, other barriers—including heightened down payment and credit requirements—pose
significant obstacles to homeownership for these workers.
Because the methodology for HUD’s fair market rents changed in 2012, it is not possible to
compare 2012 rents to rents in previous years.6 Even without trend data, it is clear renters face
many challenges as demand for rental homes increases in many markets.
Homeownership
Although the majority of metro areas saw a reduction in the income needed to buy a medianpriced home, some markets ran counter to the trend of more affordable homeownership. In 21
of the metro areas studied, or 10 percent of the total, the income needed to buy a medianpriced home increased by three percent or more between the first quarters of 2011 and 2012. In
eight of those, the income needed to afford a median-priced home rose by 10 percent or more:
prices in Akron, Ohio; Miami; Washington, D.C.; Cape Coral, Florida; Ocean City, New Jersey;
Lima, Ohio; Salisbury, Maryland; and Syracuse, New York, far outpaced typical wage growth.
Even where home prices are affordable, workers may face substantial obstacles to ownership.
Paycheck to Paycheck assumes a 10 percent down payment, but actual down payments can
vary widely from five percent (FHA insurance) to 20 percent or more with some lenders. Building
the savings needed for a down payment can be very difficult on a modest salary, particularly as
households struggle to meet basic needs in the current economy. Tightened credit standards
are another substantial barrier to homeownership. If a homeowner has a poor credit score, past
foreclosure, or has ever declared bankruptcy, a willing mortgage lender is even more difficult to
find. Worries about price volatility or meeting the costs of major repairs can also keep families
from becoming homeowners.
According to the Federal Housing Finance Agency’s Monthly Interest Rate Survey, the effective interest rate on a 30year fixed rate conventional mortgage went from 5.09 percent in February 2011 to 4.51 percent in February 2012.
6 To improve the accuracy of its estimates, HUD began using the American Community Survey for data on base rents
beginning in 2012. Previously, FMRs were calculated using the Decennial Census. Differences between the 2011 and 2012
estimates, therefore, do not necessarily reflect actual market changes.
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4
Veterans can face special problems. While they benefit overall from the availability of mortgage
loans from the Department of Veterans’ Affairs, nearly one million veteran homeowners face
severe housing cost burdens, paying half or more of their income for housing.7 Many of these
have service-related disabilities or special needs.
Rental Housing
While we were unable to identify trends from 2011 because of changes to HUD’s Fair Market
Rent methodology, the data show that many renters face problems finding an affordable place
to live. In the nine most expensive markets, fewer than 10 (out of 74) of the jobs we examined
were able to afford a two-bedroom rental unit. There were no markets where every job studied
could afford a one- or two-bedroom apartment at the local fair market rent.
What does this mean for communities?
Despite marked and well-publicized declines in housing prices, many workers cannot afford to
live in the communities where they work. For veterans returning from service and entering the job
market, this can be an added burden in the transition to civilian life. For all families, this can
mean difficult choices between paying for housing and paying for other essentials, from food to
medical care to school supplies. For communities, it can mean pushing key members of the
workforce to live far from their jobs, resulting in long commutes, additional transportation costs
and increased stress.
This edition of Paycheck to Paycheck demonstrates that having a job is not enough. For our
returning veterans, and workers generally, state and local governments need policies that
expand the supply of affordable housing and create higher-paying jobs.
7
2010 American Community Survey Analysis.
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