When rent takes half your income
A quarter of all US renters spend at least half of their paychecks on housing. If you're barely getting by, will you ever get ahead?
Do you make $18.79 an hour? If not, good luck finding an affordable apartment.
One common guideline is that a rental shouldn't cost more than 30% of your income. By that standard, you'd have to earn a minimum of $18.79 per hour to afford a decent place to live, according to the 2013 "Out of Reach" study from the National Low Income Housing Coalition.
Trouble is, the average renter earns $14.32 per hour.
Study authors say these numbers highlight the challenges faced by lower-income renters: "Increasing rents, stagnating wages, and a shortage of affordable housing."
How much are they spending? Too much.
A second study, from the Center for Housing Policy, shows that 26.4% of working renters are spending more than half their income on rent.
"Working renters" means households with incomes less than 120% of the median for their areas. That works out to more than 13.5 million U.S. residents, based on data from the U.S. Census.
This group's rent has risen 6% in the past three years but their incomes have dropped by 3% -- a trend that lead study author Janet Viveiros calls "unsustainable."
"Spending most of your paycheck on rent means cutting back on other necessities, including health care and even food," she says.
Viveiros didn't mention financial planning or eventual homeownership. But it stands to reason that if you're barely getting by you'll never get ahead, let alone be able to buy your own home or retire.
Why is housing so expensive?
According to the U.S. Census, 33 million U.S. residents live alone. That means plenty of competition for available apartments, even though not all 33 million are renters.
Some are ditching their roommates, or are finally moving out of Mom and Dad's place. Others are former homeowners who lost their homes or walked away from mortgages and need places to live.
Not everyone who wants to buy is ready to pull the trigger: They're gun-shy about the recent housing bubble or they can't get enough loan to pay for a place now that prices are rising. This group constitutes 2 million more tenants since before the housing bust, according to MSN Money Real Estate.
No wonder vacancy rates haven't been this low in more than a decade. It's a landlord's market, and low- to moderate-income workers often struggle to find a decent place to live near the workplace.
You expect high rents in places like Los Angeles or Manhattan. But half of the 18 metro areas with the largest share of cost-burden households are in the South. In fact, Miami has the highest percentage (41%) and Orlando-Kissimmee weighed in at 35% -- the same as New York City.
Demand -- and rents -- will continue to grow in the coming year, according to a study cited by Rent.com. Seven in 10 landlords surveyed report at least three tenants clamoring to lease as soon as an apartment is listed.
Rent.com's advice: When viewing apartments, take a couple of forms of ID and a checkbook so you can put down a deposit on the spot. Otherwise you "run the risk of losing (out) to one of the many other people looking at the space."
That is, if you can afford the rent.
Readers: What percentage of your income goes to housing costs?
More on MSN Money
People need to learn to pay their dues. When you don't have a decent income, you don't have a decent apartment--cause and effect.
I remember living in a really crummy basement flat when I was a kid...no closets, only hooks on the wall for clothes...there wasn't even a tub or shower and a former closet had a toilet installed (my knees touched the door even though I was not in kindergarten yet--don't know how the parents managed--especially dad being 6'4"), but you had to walk to the kitchen sink to wash your hands as there was no bathroom sink. Once a week we were allowed to go upstairs to the landlords' unit and use their tub for a bath. Both my parents worked full-time and after a year of living like that, saved up enough money to buy a nice duplex in a better part of town.
Mom hated living with others, but put up with the duplex for about 6 years--enough time to save up to build a brand new single family in the suburbs.
Sometimes, you just have to suck it up and do what's necessary to climb the ladder. Whining doesn't solve anything.
My mortgage payment is 9% of my income. Last year, I bought a home WAY below my means--and with extra principal payments, I will have the home paid-in-full in less than two more years. I sometimes get teased about my humble-n-plain lil' house, but I'll be laughing soon when it's paid-in-full and those around me still have a few decades of $1,500-$2,000 a month payments to go :) There are cheap rentals out there if you look around--it's just that a lot of people are too uppity and the places aren't "good enough"....the same goes for homes.
Pretty much the US economy is on the fast track to complete collapse
Which is ok with current leaders as they want the system to collapse so that you will have to take the mark so you can buy food. Given the choice between becoming a slave or straving to death they figure most will choose to become a slave.
Welcome to the Brave New World. -- 1984 was just delayed by 30 years .
I wonder how many of you "woe is me, life is so hard" types have ever lived in a van while working three jobs, ate handpicked dandelions/purslane/plaintain, washed clothes on a washboard, used oil lamps, made your own soap, etc.
It's your victim mentality that's holding you back, not "those crooked bankers".
The assumption is I make a lot of money or had stuff handed to me...I certainly did not. I made my plan and then did what was required to achieve each goal along the way...and it's a long time coming before it's really now paying off.
Anyone who thinks housing is going back down has not studied economics in depth.
Home builders have almost stopped building entirely
Harder to build in metropolitan areas (LA, NY, IL) due to high permit rates and little land to build on.
As China wages increase, US wage will decrease as they will equalize across borders.
US government pumped some much money in the economy it will cause inflation that housing will not go down.
China is has been buying 15% of our real estate property since the recessions.
Cheap rates will place long term pressure for family’s to stay in the house due to low interest rates. As interest rates go up people will opt to say with the old loan and not move up. Sounds good, but as families buy in they will have to pay high prices to have the seller leave their 2.9% loan.
Since the economy is still 35% down from its peak, I think it is a good time to buy. US is going to become the country of “have and the have not”. Today’s world we are not only competing with our neighbors but it now goes across boarders.
Mansion shortage for the rich.
Sound like more government success stories.
Having been in the military ,I have rented in maney places,99.9% of places take both income in consideration (if married). I am not a rocket scientist,but 18.79/2=$9.39. Does this blow MSN theory out the window? Something to think about.
Rent is relative to what people will pay, but as with anything subsidized, section 8 housing bumps the prices up more.
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