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26% of (US) renters are paying more than half their pre-tax income for housing (rent plus utilities). This is the highest in over 50 years.
I have been predicting an "affordable housing crisis" of unprecedented proportions, although I thought that was about 3-5 years out from today, so it's getting worse faster than I expected.
Renters tend to be lower income; median renter income is about 40% of median homeowner income.
Some people in this forum have suggested that poor and low income Americans aren't paying enough taxes.
In the context of the high housing costs they face (see above), this is a good place to ask:
Exactly how much should lower income Americans pay in taxes?
that's correct people..stop the liberals from taxing us to death..lower all taxes starting with the unconstitutional property tax
26% of (US) renters are paying more than half their pre-tax income for housing (rent plus utilities). This is the highest in over 50 years.
I have been predicting an "affordable housing crisis" of unprecedented proportions, although I thought that was about 3-5 years out from today, so it's getting worse faster than I expected.
Renters tend to be lower income; median renter income is about 40% of median homeowner income.
Some people in this forum have suggested that poor and low income Americans aren't paying enough taxes.
In the context of the high housing costs they face (see above), this is a good place to ask:
Exactly how much should lower income Americans pay in taxes?
Why are they renting above their means? No one who cannot afford to should spend more than 1/3rd of income on housing.
Perhaps they should move to part of the country where housing is cheap.
Ok. Now what percent of homeowners are doing the same thing?
Rental market is unique in that no one has to pay more rent than what the going rate is. And the going rate is affected by supply and demand.
Not only that, I know several renters who prefer to rent simply because they can actually get more house/apartment that way without having to invest in the property.
So how much of this expenditure is voluntary?
It is very unusual for a homeowner to be paying more than 50% of income for housing...simply because LENDERS won't give applicants a mortgage big enough to require 50 percent of income for housing. That's why people have to go through the "how much house (or how big a mortgage) can I afford" when buying a house.
Since Google is my friend, I found this from the HUD website:
"An estimated 12 million renter and homeowner households now pay more then 50 percent of their annual incomes for housing, and a family with one full-time worker earning the minimum wage cannot afford the local fair-market rent for a two-bedroom apartment anywhere in the United States. "
Since the WaPa article cited above says that 10.1 million renter households [the quote above (from someone else) says 10.1 million renters, but this must be 10.1 million renter households, since there are slightly less than 40 million renter households] pay more than 50% for housing, it appears that an estimated 2 million homeowners pay more than 50% for housing. I'd estimate this to be about 5 percent of all homeowners.
The going rate is affected by supply and demand, but supply is often kept artificially low by local zoning regs, and supply of low-end rental housing is restricted more tightly, because homeowners and NIMBYs don't like low-rent housing in "their" neighborhood.
Yes, there are voluntary renters, and it's unclear how many are voluntary and how many are involuntary. I've long believed that statistics about renters should break them out into two groups - volunrary and involuntary - but apparently I am asking too much.
Because voluntary and involuntary renters are lumped in together, and voluntary renters have greater income than involuntary renters, statistics for "renters" are more optimistic than statistics for involuntary renters would be if they were grouped separately.
Why are they renting above their means? No one who cannot afford to should spend more than 1/3rd of income on housing.
Perhaps they should move to part of the country where housing is cheap.
Easier said than done for many people... School, jobs, family and many other things can play into a decision to move. Plus, when moving to a 'cheaper' area many times the wages are depressed as well, so you would be stuck in a cheaper area with a lower wage... Not super helpful. I looked into moving and found that percentage wise I would be in the same situation I'm in now but in a crappier area.
Whenever I need data on rental housing, I run to the National Multi Housing Council (nmhc.org), a nationwide organization of apartment owners and managers.
According to their website, there are approx 38 million rental units in the US, of which 24 million are in structures of 2 or more units, and 13 million of which are single-family homes. (The remainder are mobile homes or 'other' whatever that means.)
While there are approx 7.5 million structures of 2-4 units, the website gives no clue as to how many are duplexes and how many are 3 or 4-plex units. I could guess that perhaps one-third of these 7.5 million units are duplexes, and the other two-thirds are 3 or 4-unit, but really I have no way to know for sure, and I think my guess isn't atrociously off the mark.
I would make a ballpark guess (how's that for vague uncertainty) that approx half the single family rental houses are occupied by families and half are occupied by roommates living together. Families tend to strongly prefer houses over apartments, and would rather rent a house than an apartment.
So out of 38 million rental units, I'd ballpark estimate about 21 million are apartments in buildings of three or more units.
So 34% live in single family homes, and 43% live in apartments with 5 or more rooms, just as good as a home.
Again, it seems to me that the people you are talking about are living in places that are just to big, and cost to much for them.
This isn't a political or government problem, its a social problem created by people who want to live better on less money.
It also doesn't go into square footage of the apartments. 5 or more rooms are going to be very good sized.
Why are they renting above their means? No one who cannot afford to should spend more than 1/3rd of income on housing.
Perhaps they should move to part of the country where housing is cheap.
BZZT! Understanding FAIL.
Most renters do not CHOOSE to spend half their income on housing. The problem is that renters tend to have MUCH LESS INCOME than homeowners. Median renter income is about 40% of median homeowner income. Rents are high because demand for rental housing is inelastic - people gotta live SOMEWHERE and when faced with a choice between paying 50% for housing and being homeless, most people will pay up.
I pay half my income for rent and utilities, and I'm renting a 12 x 10 ROOM in a crowded house (5 people, 1,200 sf - and the person I'm renting from has 500 sf all to himself, leaving the rest of us with single small rooms).
Certainly I cannot afford to MOVE to a cheaper area, and even if I could, I wouldn't be able to save much. (How much cheaper does it get than $450 a month for rent and utilities?)
It's easy to say I shouldn't pay more than 1/3 my income on housing, but I can't find a deal that good.
I paid $550 a month plus utilities sharing a room. 4 guys 2 bedrooms, 1 bath. It depends on where you live. The coasts are more expensive. I got in state tuition so it was cheaper than moving out of state to a comparably ranked school.
The 18 to 26 crowd pays A HELL of a LOT more in tuition than in the 1990s btw. We aren't all drowning in debt because of penthouses and BMWs.
True. When I first moved to Orlando I paid $375 for a bedroom in a 4 bedroom/2 bath. Right now that same bedroom is renting for for $580 a month. And even in the college area it's hard to find roommates because no one wants to sign a lease with a stranger who might decide to drop out and leave you stuck with the rent. I don't know how the kids are managing to pay for school these days.
I could have found cheaper housing but it would have been further away from the school, my job and in an undesirable area.
It is very unusual for a homeowner to be paying more than 50% of income for housing...simply because LENDERS won't give applicants a mortgage big enough to require 50 percent of income for housing. That's why people have to go through the "how much house (or how big a mortgage) can I afford" when buying a house.
Since Google is my friend, I found this from the HUD website:
"An estimated 12 million renter and homeowner households now pay more then 50 percent of their annual incomes for housing, and a family with one full-time worker earning the minimum wage cannot afford the local fair-market rent for a two-bedroom apartment anywhere in the United States. "
Since the WaPa article cited above says that 10.1 million renter households [the quote above (from someone else) says 10.1 million renters, but this must be 10.1 million renter households, since there are slightly less than 40 million renter households] pay more than 50% for housing, it appears that an estimated 2 million homeowners pay more than 50% for housing. I'd estimate this to be about 5 percent of all homeowners.
The going rate is affected by supply and demand, but supply is often kept artificially low by local zoning regs, and supply of low-end rental housing is restricted more tightly, because homeowners and NIMBYs don't like low-rent housing in "their" neighborhood.
Yes, there are voluntary renters, and it's unclear how many are voluntary and how many are involuntary. I've long believed that statistics about renters should break them out into two groups - volunrary and involuntary - but apparently I am asking too much.
Because voluntary and involuntary renters are lumped in together, and voluntary renters have greater income than involuntary renters, statistics for "renters" are more optimistic than statistics for involuntary renters would be if they were grouped separately.
It's a simple matter of WWNMD ---- What Would Neandthal Man Do?
Neanderthal Man would pack up the family and move to a city with cheaper rent.
It's a simple matter of WWNMD ---- What Would Neandthal Man Do?
Neanderthal Man would pack up the family and move to a city with cheaper rent.
Thats exactly right.
I tell people that I support a 30,000 dollar a year tax free amount, with a flat tax on every dollar earned above that.
It never fails, someone responds "but I live in New York City...."
You don't have to live in New York, other places have businesses and need you to work there. The weather may not be as good, there may not be as much to do, and you may be away from family, but you can make ends meet.
So 34% live in single family homes, and 43% live in apartments with 5 or more rooms, just as good as a home.
Again, it seems to me that the people you are talking about are living in places that are just to big, and cost to much for them.
This isn't a political or government problem, its a social problem created by people who want to live better on less money.
It also doesn't go into square footage of the apartments. 5 or more rooms are going to be very good sized.
Um, not quite...apartments with 5 or more UNITS, as in a building with 5 or 20 or 50 apartments.
Apartments are usually MUCH smaller than houses - apartments with more than 2 bedrooms are rare - and there is a historical reason for this.
While zoning was created in the 1920s, it became nearly universal in the years after World War II.
There was an old rule of thumb widely used in (local government) approving apartment construction: Studio apartments were considered desirable because they generated property tax revenue without generating the costs associated with kids in school. 1BR apartments were also considered good for revenue, 2BR apartments were on the bubble, and 3 or more bedrooms were considered cost generators (too many kids in school) and thus undesirable.
So there was a strong historical bias against allowing large apartments.
I just looked it up and found stats from 1993 and 2001. It appears that single-family houses are about 2.5 times larger than apartments! SF houses have avg 2500 sf, apartments a little more than 1000 sf. The largest apartment buildings (more than 5 UNITS) have the smallest apartment unit size, 847 square feet.
Houses and apartments have been getting larger, with houses enjoying greater size expansion than apartments.
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