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How do people /families make it with a low income in an area with high housing costs? For example someone that makes $15-$20 an hour but rent is $1500-$2400 a month.
The cost of living is shocking in my town for those of us that do not commute to high paying jobs in DC. Most of my peers make $30k-$40k per year, but single family homes are $350k-$650k. I paid $290k and my house did not even have running water at the time of purchase. I certainly could not afford to rent it today.
I have a friend, (family of 5, three kids) that has desperately been looking for a house under $300k for over a year. Everything is needs lots of work to make it livable in that price. She ended up putting a contract in on a new build, 3 bedroom on an acre for $375k. They will be stretching their $80k annual income for sure.
How is this happening? How do people make it work?
I know for me, moving is not an option because I grew up in this town, do not want to move away from my family and I am happy with where I live. It is home...
I don't know if you consider me low income or not. But I made about 51K last year from my job. That is below average for my area. My rent is just under $1k per month, but I am fortunate to have a merciful landlord who could have raised the rent more than they have. Market rate for my (studio) apartment is ~ $1400 a month. I am not broke. I have significant savings and investments and could live my current lifestyle for quite a few years (but not indefinitely) if I lost my job.
Here's how I've been doing it for the last 20 years:
--I don't have kids. (I'm gay and never wanted them, so that was easy).
--I rented rooms for 8.5 years instead of getting my own apartment. Then I upgraded to a studio (not a 1BR). For most people, keeping housing costs low is where the biggest savings are. It's much easier to do if you don't have kids or pets.
--I buy good used cars and drive them until they're worn out. My last one was 20 years old when I got rid of it.
--I walk to work and drive sparingly. I realize this is tough for most people to do. It took me 11 years to get this setup. But as I look back, I am sure I could have done it sooner if I hadn't just accepted that daily car commuting is inevitable. I think other people (not everyone) could do this, too. Most people underestimate the value of a short or non-existent commute.
--I don't have any pets. Never wanted any and it's a lot easier to not have them especially if you are a renter in an area with a perpetually tight rental market.
--I eat out, but like 2x a week, not all the time. I shop sales at the grocery store.
--I don't have cable (or Netflix) and am fine without them. YouTube and videos from the library are fine with me. I occasionally go out to see movies, but not every weekend.
--I drink alcohol sparingly. I never buy it at bars or restaurants and don't drink it regularly at home, either.
--I don't smoke or use recreational drugs.
--I don't have tattoos.
--I wear clothes for years, until they're worn out.
--My cell phone and internet cost me $83 a month between the two. Some people pay more than that just for their cell phone.
--I don't upgrade to the latest & greatest cell phone every year, or even every 2 years.
--My haircuts cost $18 every 2 months, including tip.
In general, I always advise people in my area who want kids and single family homes to move elsewhere. That math simply doesn't work for people at median income who want those things--not even close.
Last edited by mysticaltyger; 02-23-2017 at 02:11 PM..
I would say $51k is the median income. If two earners make $50k than $2k for housing is well within a comfortable budget. A one bedroom apartment in the nearest town to me is $1500.
Now what if you made $20k and apartments were $1k.
I would say $51k is the median income. If two earners make $50k than $2k for housing is well within a comfortable budget. A one bedroom apartment in the nearest town to me is $1500.
Now what if you made $20k and apartments were $1k.
Prices are so high in my area and I don't understand how people who earn less than me, have nicer houses!!!
I have heard that a lot of people have roommates. Or rent out a spare room. Take in multiple family members, parents, cousins, siblings ... Then there are people who get monthly money from their parents. Or they just live well beyond their means and wait until they get kicked out ....
Rent stabilization is great! Maybe not for the market, but I'm not giving it up! That being said, I could afford market rate, but I prefer to live below my means.
yes , rent controlled apartments in nyc are almost a thing of the past , it is down to about 8% of housing units . rent conntrolled apartments are usually a fraction of market .
Rent control in New York City started in 1920 — just after World War I when a severe housing shortage led to high rents and rent strikes. To help remedy the problem, the New York State legislature “…passed a rent-control program designed to keep costs down and limit baseless evictions.”
Since 1920, many other laws and acts were passed to both regulate rents and decontrol units. Rent control is now defunct and the only people living in rent-controlled apartments are able to do so if it is inherited from a family member.
Essentially a form of nepotism, rent-controlled apartments can be passed down within a family from one person to the next whenever the existing tenant of the apartment vacates or dies. It’s worth noting that the inheriting family member must live in the apartment for two years prior to the previous tenant’s vacancy or death.
According to the New York City Rent Guidelines Board, rent-controlled apartments currently number about 38,000 units and are occupied largely by an elderly, low income population who have been in occupancy since July 1, 1971 or by their lawful successors.
What is a rent-stabilized apartment?
Rent-stabilized apartments occupy buildings that were constructed before 1974 and have more than six units; they usually lease for less than $2,700/month. The perks of rent-stabilized apartments include limits on how much your landlord can increase your rent each year and a guaranteed right to renew your lease. It’s important to note that a listing will not necessarily advertise that it’s rent-stabilized unit. However, it’s often possible to tell if it is based on the listing price and age of the building.
If you score a rent-stabilized apartment, make sure the lease indicates as much. You should have the option to sign a one- or two-year lease and usually you’ll also receive a rider to the lease from the landlord as well. The rider is essentially an amendment to the lease stating a financial concession to the rent. For example, if a rent-stabilized apartment is listed at $1,850/month, the lease would contain a rider for $850 to cover the discrepancy between the ostensible market value and the rent which the tenant will actually pay on a monthly basis. You are not responsible for covering the rider but the total monthly rent (rider + base rent) will be used to calculate 4 percent increase your landlord can issue the following year if he does minor renovations to the building or unit.
How do you find a rent-regulated apartment?
Although there are more than one million rent-regulated apartments in New York City, landing one can be tough because once a tenant moves into a rent-regulated place they are unlikely to want to leave anytime soon. (Note: Just because one unit in the building is rent-regulated does not mean that all units in the building are. A unit can become deregulated if the monthly rent rises above $2,700/month.)
I would say $51k is the median income. If two earners make $50k than $2k for housing is well within a comfortable budget. A one bedroom apartment in the nearest town to me is $1500.
Now what if you made $20k and apartments were $1k.
51K is the US national median income. But it isn't in the San Francisco Bay Area. The median household income for Santa Clara County, where I live, is over $101,000, and the cost of living reflects that. The median income is double the national median but the cost of housing here is more like triple or quadruple the national median.
If I only made 20K and apartments were 1K, I would do one or more of the following: rent a room/move somewhere cheaper/work a 2nd job/find a better paying job.
Your definition of "comfortable budget' and mine are much different. With a $50K income, no way in hell I'm paying 2K in rent. I'm outta here.....maybe not immediately, but I'm making plans to do so within a short period of time. That is the problem with poverty that I have noticed. It's like if you're poor your inner "emergency siren" doesn't go off until you're about to be put out on the street. People who have a "get ahead" mindset wouldn't pay almost half their gross income in rent. They know doing so puts them only one mistake or mishap away from disaster.
By your definition, I could have gotten my own apartment when I moved here at age 26. But because of high rents and my desire to pay off debt and save money, I actually took a step down in housing when I moved here (I had an apartment in the previous city where I lived). If I had gotten my own place right away, I would have much less financial flexibility today. As it stands, I'm much less worried about losing a job, etc. I actually have the option of quitting and moving somewhere cheaper and working part time--basically semi-retiring. It's an option I wouldn't even be able to even consider if I hadn't rented a room for 8.5 years and saved the difference.
Even many banks won't lend and landlords won't rent to those if they'd be paying more than 1/3 of income on housing. Back in the 50s and 60s, they said you shouldn't pay more than 1/4. And gee, guess what? Back in the 50s and 60s people lived in smaller houses, saved a higher percentage of their incomes, and had less debt. Hmmmmm.
Last edited by mysticaltyger; 02-23-2017 at 05:02 PM..
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