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Iowa's affordable housing struggle

Housing costs are rising much faster than wages

Oct 25, 2018 at 1:32 pm
    A home that will soon be torn down is seen in Centerville on Wednesday, Sept. 12, 2018. The city has been behind several efforts to revamp lots around town, from tearing down dilapidated houses to constructing a senior living center close to the town square. (Rebecca F. Miller/The Gazette)

    Demetrius Cuevas is a Navy veteran suffering from PTSD and with an aging mother in need of care.

    But those were the least of his problems when his Quad Cities home flooded this past February and he needed to find a new, affordable place to live.

    “I had gone through some hardship already once before with my divorce, and having that (flood) happen right as I picked up and got back up on my feet, it’s just another pitfall I wasn’t expecting,” Cuevas said.

    His journey to find an affordable home on two fixed disability incomes — his and his mother’s — in Iowa’s most expensive housing market — where renters must make $18.38 an hour to reasonably afford a modest two bedroom apartment — took four months before they settled into a new place this past August.


    When it comes to housing wage — the wage needed to afford a modest two-bedroom apartment — the Iowa City metro is the most expensive in Iowa, followed by the Omaha-Council Bluffs area and then Ames and Des Moines, according to the National Low Income Housing Coalition’s Out of Reach 2018 report.

    Cuevas’ search led him to a local not-for-profit that has a program called Operation Home, which helps homeless and near-homeless veterans find housing. The family ultimately landed in a two-bedroom Coralville town house, where the landlord had to knock rent down to $950 per month to make it affordable for the new tenants.

    “We pooled our resources together so we could make it happen. It’s not anywhere I thought I’d ever see my myself in life, but I’m maintaining and I’m able to get by,” Cuevas said. “If I didn’t have my service connection I don’t know where I’d be. I’d probably be out like some of these people sleeping under trees. It’s sad.”

    Cuevas isn’t alone in his struggle to afford housing in Iowa.

    The U.S. Department of Housing and Urban Development defines an “affordable” home as costing no more than 30 percent of gross income on gross housing expenses. Spending more than that would make a homeowner or renter housing-cost burdened, which means they will have to sacrifice on other items such as transportation, medicine or food.

    “In people’s minds, when you say affordable housing, it conjures up images of public housing in Chicago or some decrepit building somewhere. And affordable housing truly is housing that people can keep by paying less than 30 percent of their income,” said Jerry Anthony, associate professor in urban and regional planning at the University of Iowa.


    The biggest need in housing comes in the form of what Anthony deems as “responsibly priced” rental housing in the faster growing areas of the state. About 140,000 Iowans, or 40 percent of all renters, are housing-cost burdened, according to the Out of Reach Iowa 2018 report.

    The reason some Iowans struggle to secure affordable housing is because rents have increased far more quickly than wages in recent years. Since 2008, Iowa’s housing wage has risen 26 percent, according to the report.

    Compare that to actual wages, the average renter is making just 16 percent more than a decade ago. Today, nobody working a minimum wage full-time job can afford a studio apartment — a self-contained efficiency apartment — in any Iowa county.

    “That’s so much higher than what people are making in jobs that are really valuable, valuable services that need to be performed in our community,” said Sara Barron, executive director of the Johnson County Affordable Housing Coalition, referring to the housing wage. “The Affordable Housing Coalition believes that everyone deserves to have housing and that there should be plenty of housing options that are affordable for someone who is working full time.

    “That’s a pretty low bar in my estimation.”

    Lisa Weiss, a 32-year-old single mom of three, knows what it’s like to be a housing-cost-burdened renter. An entire paycheck from her job as a supervisor and baker at Bruegger’s Bagels goes to the $800 rent for a two-bedroom townhome in Coralville without any housing assistance.

    Weiss has been at her current home since 2011 and hopes to be able to find a three-bedroom place. She said she could maybe manage another $200 in rent, but it’s “scary to think about” — and rent prices made her consider moving to another area, despite having grown up in Johnson County.

    “It’s frustrating. It’s a lot of emotions, being hopeful and defeated,” Weiss said. “It’s pretty much the check that comes around that time, comes and goes.”

    Even workers making more than the state’s minimum wage are struggling to find affordable housing. In Iowa’s most populous county, workers making between $10 and 13 per hour are the most affected by stagnant wages and increasing housing costs.

    Eric Burmeister, executive director of the Polk County Housing Trust Fund, said Des Moines and the rest of Polk County are about 7,000 affordable units short, and many of the affordable housing options have disappeared because of going “up market” — having been refurbished and given an increase in rent.

    “The group that is most adversely impacted by that are what I call the service workforce, so households that are making less than about $12 or 13 an hour. And those folks are finding that the number of units that are available, and now we’re talking about rental units at that wage, to them are actually shrinking, so they’re competing for a smaller pool of affordable units,” Burmeister said.


    In rural Iowa, the biggest concern about affordable housing may not be about providing more reasonably priced rental units. It’s simply building more housing.

    Anthony said the existing housing stock in rural and smaller Iowa communities is about 50 to 60 years old. So while these houses are run down from age, they’re far more affordable than buying a plot of land and constructing a new house, which means building in these communities isn’t lucrative for developers.

    “There is no new housing supply happening and yet there is a need for new housing supply, both ownership and rental,” Anthony said.

    The southern Iowa town of Centerville, in Appanoose County and with a population of fewer than 6,000, not only suffers from a shortage of housing but a shortage of the right housing, said Jason Fraser, city administrator.

    The houses that were built more than a half-century ago tended to be two-bedroom, one-bath, which is smaller than most homes today. So as the oldest generation passes away, their aging homes aren’t appealing to new buyers

    “I know an issue that we suffer from here is a really high-rate of rental properties versus homeownership, and I think that’s a factor of the size of the houses that we have,” Fraser said.

    To create more housing stock, the city began partnering with the Chariton Valley Regional Housing Trust Fund and Indian Hills Community College to acquire abandoned houses and reconstruct them as part of an trade education program.

    “It really take an outside developer to have four or 5 million (dollars) to put into a building to do something big or the federal government to really be a part of that. I don’t think most cities have that much capital laying around to invest into properties,” Fraser said.

    “So I think for us we attack the problem as we can, with that being our goal of making affordable housing.”

    ‘A lack of housing’

    To provide more affordable housing, a city has a number of federal resources such as Community Development Block Grants and the Low Income Housing Tax Credit. However, federal investment in programs such as these has declined in recent years, Anthony said.

    “There’s a huge need for state and corporate dollars to step into this game of building more reasonably priced housing because federal allocations for affordable housing have gone down sharply in the last 15 or 20 years, and yet the need has increased significantly,” Anthony said.

    Baron said affordable housing can have a positive impact on the physical and mental well-being of residents.

    Invest Health, a national initiative to leverage public and private partnerships to help neighborhoods facing barriers to health, selected two Iowa cities to study some of their lower-income neighborhoods. Des Moines and Iowa City studied [articular neighborhoods that could negatively impact health, such as not feeling safe to walk in neighborhoods or being able to easily access healthy foods.

    The answer to improving the health of low-income residents and providing more affordable housing in a city may be inclusionary zoning ordinances, which scatters affordable housing in market-priced neighborhoods.

    Iowa City and Ames were some of the first communities to adopt an inclusionary zoning ordinance. In a neighborhood just south of its downtown, Iowa City requires all new developments to provide 10 percent of their units as affordable or pay a fee that goes to other affordable housing projects in the district. Anthony, the University of Iowa professor, said more than 500 communities across the United States have implemented similar ordinances.

    He added that a developer could increase the cost of the other 90 percent of units just slightly to compensate for the affordable ones.

    “A lack of housing, we often see as a social service thing. It isn’t. It’s actually an economic thing, primarily, more than a social service thing,” Anthony said.

    However it comes about, Scott Fitzpatrick, based in Des Moines and a founding member working to establish the Iowa Housing Partnership, a statewide advocacy group, said building more affordable housing is an “integral part” of economic development, in addition to improving the lives of those who live in affordable housing with impacts such as better health and school performances.

    A lack of affordable housing can cause absenteeism or a lack of productivity at work, as employees must commute in from farther, more-affordable communities.

    It also can cause a higher turnover as people look for jobs closer to home, Anthony said, so employers want communities with affordable housing because they can only pay workers a certain wage and still maintain profits.

    “We know that when households in our community can afford their housing, that benefits every single person who lives here,” Barron said.

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    Affordable housing — When residents, either renters or owners, pay no more than 30 percent of their income on housing costs.

    Fair market rent — A fair price for a given unit. The U.S. Department of Housing and Urban Development calculates this as the 40 percentile of the gross for a typical rental unit.

    Modest apartment — An apartment at fair market rent.

    Housing wage — What a resident must earn hourly, at 40 hours per week for 52 weeks per year, to afford a two-bedroom apartment at fair market rent.

    Housing-cost burdened — Paying more than 30 percent of a monthly income on housing costs, which may lead households to struggle with other necessities.

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