A new study of affordability and availability of rental housing in this region of the Federal Reserve shows how the stagnant economy and housing crisis combined to make life especially tough for low-income earners.

The research also suggests, at first glance, that Cape May County is a good place to live for people with the lowest incomes.

The Community Development Studies & Education Department of the Federal Reserve Bank of Philadelphia studied rental housing in 2010 throughout its Third District, which includes southern New Jersey, eastern Pennsylvania and Delaware.

In a period largely coinciding with the housing crisis and severe recession, the study found an increase in renters earning 30 percent or less of the median family income, and a decrease in housing units affordable and available to them. For purposes of such studies, rents that consume more than 30 percent of household income are considered a burden, and of more than 50 percent a severe burden.

By those measures, in 2005 there were 40 affordable units available for every 100 extremely low-income renters in the district. By 2010, that had fallen to 34 per 100.

Foreclosures and other financial setbacks turned homeowners into renters during the recession, taking up units and increasing rents.

A U.S. Census study showed the number of renting households grew nationally by 4 million from 2005 to 2011.

The district study found rents increased 18 percent from 2005 to 2010. But at the same time, median income for rental households in the region grew only 2 percent.

The result is that, as of 2010, there was a shortage of 266,000 rental units in the Third District that were affordable and available to renters with extremely low incomes.

As a consequence, three quarters of extremely low-income households were spending more than half their earnings on rent and utilities alone.

Renters in Atlantic, Cape May and Cumberland counties fared slightly better than the districtwide average.

In Atlantic County, 66 percent of extremely low-income renters spent more than 50 percent on housing. In Cape May County, 61 percent did, and in Cumberland County, 63 percent.

The study figured there was a shortage of 2,637 rental units affordable to extremely low-income households in Atlantic City, and 1,718 in Cumberland County.

In Cape May, however, there was essentially no shortfall — 99 affordable units for every 100 extremely low income households.

But, as the study points out, there’s a big difference between affordable and available.

“A unit is considered ‘affordable and available’ to a household in a particular income category if it is affordable at that income and is either occupied by a household in the same category or vacant,” the study says. “By excluding affordable units that are occupied by higher-income households, some believe that this statistic is a better representation of the gap between the supply of and demand for affordable units in a specific income strata.”

So when the study added availability as a factor in Cape May County, it found 1,329 of the rental units that are affordable to those with extremely low incomes were already in the hands of people with higher incomes. Only 48 units were affordable and available for every 100 households.

The message to those with the lowest incomes is, yes, Cape May County would be a good place to rent, if one of those affordable units becomes available.

Landlords might figure the message is: Hey, some of my renters can afford to pay more.

Fed fiction

This newspaper, like other media, reported recently that the Federal Reserve made $89 billion on its Treasury debt purchases and paid the money to the U.S. Treasury.

Bob Eisenbeis says this is “a total misrepresentation and a fiction.”

Eisenbeis should know. He was director of research at the Federal Reserve Bank of Atlanta, and now is vice chairman and chief monetary economist for Cumberland Advisors in Vineland.

He said when the Fed buys Treasury debt, it’s just an accounting change from one’s books to the other’s. Likewise, interest payments are just an intergovernmental transfer of funds.

“If I wrote a $100 check and gave it to my wife, who used $10 to buy groceries and gave back to me the remaining $90, no one would say that I made a profit on that transaction or would fail to understand that all we had actually done, as a family, was to spend $10 on groceries,” he wrote in a commentary.

So when the Fed returns to Treasury $89 billion in interest it earned from the Treasury, the real story is not what’s being returned but what is not.

Before giving the money back, the Fed takes out some money for itself and its member banks — funds “to pay its bills without seeking congressional appropriations,” Eisenbeis said.

That’s one tiny sip of the money flood for the Federal Reserve, and tens of billions of dollars a month to support the markets and economy.

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