Renting might be an unbearable burden with rising rents and stagnating income.
While homelessness may not be seen as a pressing issue among the wealthy, it is not as far away as some may believe.
With rents growing faster than salaries, the financial strain of paying rent is becoming increasingly burdensome for many Americans, and in some cases, impossible.
79 percent of renters who relocated in the previous 12 months saw their monthly rent increase before moving. Over half (57 percent) indicated the increase influenced their decision to move out of their current rental and into a new one. Only 21% of renter families said they had not seen a rent hike.
Nearly a third (30%) of families in the United States, or around 73 million persons, say they are struggling or just scraping by financially. It’s no surprise: Americans spend a median of 29.1% of their income on rent, with many people spending a larger percentage yet having lower wages.
Major urban regions are becoming increasingly out of reach for individuals earning less than minimum wage, and this is happening even in markets that have traditionally been more inexpensive.
Consider Houston, where the median low-income person spends 65.1 percent of their salary on the lowest-tier rent. Then there’s New York, which, like San Francisco and Los Angeles, is notoriously costly, with the median low-income pay not even covering a low-end apartment. Renters in New York alone must pay 111.8 percent of the typical low-income earnings to afford apartments with median bottom-tier rentals.
Saving for the future is less of a priority — and a possibility — when such a big percentage of household income is spent on rent. According to a Zillow study of the Federal Reserve Board’s 2016 Survey of Household Economics and Decision-making, more than half of Americans (51%) believe they don’t have enough money saved to last three months.
Millions of people are unable to get stable homes.
According to the Zillow Group’s 2017 Consumer Housing Trends Report, today’s typical household income for renters is $37,500, or $18 per hour – 2.5 times the statutory minimum wage of $7.25. According to the US Bureau of Labor Statistics, 2.2 million persons nationwide lived on income at or below the federal minimum wage in 2016.
According to the National Low Income Housing Coalition, there is no state where a 40-hour minimum salary is enough to purchase a two-bedroom apartment.
While renting is growing more challenging, purchasing a house is becoming a faraway dream.
“Honestly, if you make $37,500 a year and have no savings, it’s definitely not realistic for you to purchase in most markets,” says Eyal Pasternak (Real Estate Investor and Founder of Liberty House Buying Group)
The median renter in all 50 states can expect to pay $1,430 per month in rent. It’s no surprise that many Americans are struggling financially, especially in cities like New York, Los Angeles, Washington, D.C., and Seattle, where rising rents are also linked to an increase in the homeless population.
The social mobility geography
Currently, renters in L.A. pay $2,707 per month for the median rent, which is about double the national median rent and nearly half of the metro’s median family income. It’s no wonder that the metro has an estimated 59,508 people without a house, given the amount of money spent on rent each month.
However, rentals haven’t always been that high. Three of the top 20 metros were rent-burdened just 17 years ago, meaning renters spent more than 30% of their income on living expenditures. However, the number of places that have become expensive has increased dramatically in recent years.
Renters in nine of the top 20 metros may currently expect to pay 30% or more of their income on rent. The city with the highest percentage of income spent on rent is Los Angeles, where renters pay nearly half (49%) of their income on rent.
The costs of home insecurity aren't only monetary.
Unfortunately, for far too many people, a shortage of affordable housing may wreak havoc on other important elements of their lives, such as their health and future prospects.
When compared to the general population, those who live in shelters are more than twice as likely to have a handicap. According to the US Department of Housing and Urban Development, this includes major mental diseases, ailments connected to persistent drug misuse, diabetes, heart disease, and HIV/AIDS.