Can you still even afford to rent? A new survey sheds light on the current housing situation among renters across the country.
Nearly one in every five renters is struggling to pay their monthly housing payment. This is according to a recent survey conducted by rental listing site, Apartment List, involving 41,000 responders from the site’s pool of 8 million users.
As the rise in the number of rental households outpaces the number of new housing units, rent prices continue to increase. This is putting a strain on affordability for many renters across the country. But while there is no reported shortage in tenants who can afford the current rental rates, it may also be possible that the rise in housing costs is making it more difficult for some renters to continue to afford their housing.
Renters’ Pain is Getting Worse
According to the survey, 18 percent of the responders couldn’t afford to pay rent that is due in at least one of the previous three months. 3.3 percent of those who registered in the listing site this year said they have been evicted in the past, which is up from just 2.8 percent in 2015.
When categorized and distributed among income tiers:
- 27.5% of households earning up to 30,000 annually failed to pay rent in full in at least one of the past three months;
- 14.8% of those who earn $30,000 to $60,000 annually are in the same predicament; and even
- 8.8% of renters who earn $60,000 annually are also finding it hard to keep paying rents.
Eviction rates are also observed to be higher in metro areas hard-hit by the foreclosure crisis and among renters with less education.
Ironically, eviction events are lower in more expensive coastal areas where typically stronger job markets allow landlords to select renters that are more affluent. This observation persists in coastal metros despite the cost of rent rising faster than the changes in income.
According to the site’s spokesman, majority of their listings lean towards more expensive properties, though they still attract lower-income tenants. It’s believed that lower income renters have a tougher time finding places to live in the first place in the large coastal metros. These people often must simply find a single room or sub-lease which might skew the data too.
Using previous renting data as basis for comparison, the study postulated that the housing situation in the country may be getting worse.
Per the American Housing Survey conducted by the Census Bureau in 2013, 7 percent of renter households failed to pay all or part of the rent in the preceding three months. Although the number of households that spend more than 30 percent of their monthly income on debt decreased in 2015, it remains historically high. Furthermore, an August report published by Freddie Mac revealed that 41 percent of renters said it was hard to find affordable housing near their work.
Limited choices for renters
Home prices are increasing twice as fast as the increase in wages. This is becoming one of the major barriers to homeownership today. These homes are even more expensive in the country’s major cities especially those located near the coast. To give you a better idea, an individual carrying a mortgage in New York would have to work for more than two weeks just to afford his or her monthly home loan payments.
Understandably, those who can’t afford the hefty mortgage costs or those who don’t have the down payment money to get a mortgage are left with no other choice but to rent. Yet it looks like that option is becoming more and more difficult to afford as well. Some markets are now more affordable to buy in than to rent.
Affordability, of course, is relative. The average cost of rents depend largely on the location. Mortgages, on the other hand, depend not just on location but on the borrower’s creditworthiness. Deciding whether to rent or buy depends entirely on your current living situation, your mortgage qualifying, and your plans for the future. The down payment obstacle can be overcome often through a grant or 100% loan program.
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