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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?

By Donna_Freedman Jun 17, 2013 9:43AM

Logo: A rental agreement and two keys on a house shaped key ring (Epoxydude, fStop, Getty Images)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.

The construction of 4.5 million housing units would "close the gap between the demand for affordable housing and the supply," according to the Out of Reach authors. The National Housing Trust Fund, a provision of the Housing and Economic Recovery Act of 2008, could potentially provide money for such construction. However, the NHTF is not yet capitalized.

Demand -- and rents -- will continue to grow in the coming year, according to a study cited by Seven in 10 landlords surveyed report at least three tenants clamoring to lease as soon as an apartment is listed.'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.

What percentage of your income goes to housing costs?

More on MSN Money

Jun 17, 2013 10:42AM
Best evidence yet that rising average home prices are unsustainable.  Only our economists and wall-street are delusional enough to believe housing prices will continue to rise when average wages are stagnant or declining.
Jun 17, 2013 10:30AM
"The Rent Is Too Damn High"
 - Jimmy McMillan
Jun 17, 2013 11:55AM

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 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.

Jun 17, 2013 11:18AM
Historically, the "poor" don't have decent places to live.  That's the motivator to work hard to move out of those hell-hole neighborhoods.  Sometimes you just have to move to the unpromising part of town for awhile until you figure out a way to improve the finances and then move to a better neighborhood.
Jun 17, 2013 11:25AM

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 .

Jun 17, 2013 11:41AM
all thanks to uncle Ben re-inflating the housing bubble with insanely low interest rates 
Jun 17, 2013 1:16PM

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.

Jun 17, 2013 10:52AM
The Rent is too dam high yet some folks prefer you not qualify for a HOME, even if the monthly payments are exactly the same as your Rental. Some folks prefer you not make a living wage and care very little if you are wasting money down the Money Pit which is a Rental. This is a hardship that far too many Americans Face. Yet the FED can give away Trillions to the Big Banks while they charge it back to you at Loan Shark Rates. That's the America of Today. Shameful.
Jun 17, 2013 12:17PM
"When rent takes half your income" either move to the el cheapo apartment in the unpromising part of town because you value your freedom and privacy...or you share housing which brings your rent to only 25% of your income...which is affordable and in the recommended expenditure range.  People need to suck it up and stop making life so "difficult".  It's simple math versus lifestyle--pay the full-freight 50% of your income for privacy or just split the rent with someone else to bring the cost in line with income.  Problem solved.
Jun 17, 2013 4:12PM
Rents have increased everywhere for a few reasons. Landlords are being targeted by their municipalities for even the smallest repairs, because cities are broke or bankrupt. And, the Obama spending in the Section 8 category has increased by over 70% since he took office, according to DHS figures. The honest person ends up paying for the gap that these welfare trash create financially.
Jun 17, 2013 12:40PM
Sounds like a deliberate attempt to create a two-class America. Too bad the upper class doesn't have self-sustaining skills. Stoke up the BBQ grills... the rich are tender and juicy.
Jun 18, 2013 2:01AM
Nearly half of my income goes to rent. I live in DC where housing (both rental rates and mortgage prices) is very expensive. However, the plus side of living in a large metropolitan area is that our transportation costs are quite low since we can walk or bike most places or take public transportation for long distances. 
Jun 17, 2013 7:00PM
When housing prices were low in the late 80's in our area banks wouldn't give a loan to buy a 2 bedroom townhouse for $8500. Now that there is an oilboom here, they are charging $2400 a month for 30 yr old apartments. They will give you a loan to pay $275,000 house that's only worth maybe a $100,000 now. Boggles the mind! 
Jun 17, 2013 4:41PM

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.  

Jun 17, 2013 6:12PM
Rent taking half your income.
Mansion shortage for the rich.

Sound like more government success stories.

Jun 17, 2013 7:26PM
After reading this, it's good to know I've got it made.
Jun 17, 2013 5:42PM

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.

Jun 17, 2013 5:22PM

Rent is relative to what people will pay, but as with anything subsidized, section 8 housing bumps the prices up more.

Jun 17, 2013 2:22PM
Hey! look Up Utica, new York.Prices for Homes are dirt cheap.Fastastic Amenities here as well_ Lewis Janus
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