As home values rise, many prospective homebuyers are being squeezed out of the market in many areas across the nation. These increasing home prices seriously affect the rental market by causing rents to go up dramatically as well.
For example, a new report by the National Low Income Housing Coalition (NLIHC), Out of Reach: The High Cost of Housing, shows that rental housing is simply unaffordable in every state in the country to the point that even those states where the minimum wage has been set above the federal level, no minimum wage renter in the U.S. who works an average 40-hour work week can afford a decent two-bedroom rental unit.
Currently, people who earn the federal minimum wage of $7.25 per hour would need to work 117 hours per week for 52 weeks of the year (or nearly 3 full-time jobs) to afford a modest two-bedroom rental home and 94.5 hours per week (2.4 full time jobs) to afford a modest one-bedroom apartment.
The NLICH report stated that on average, a full-time worker must make $21.21 per hour to afford a modest two-bedroom apartment and $17.14 to afford a one-bedroom apartment which makes housing costs “out of reach” for both for the average renter and for millions of low-wage workers, seniors and people with disabilities living on fixed incomes, and other low-income households.
The five states with the highest Housing Wages are:
- Hawaii, with a two-bedroom Housing Wage of $35.20
- District of Columbia, with a two-bedroom Housing Wage of $33.58
- California, with a two -bedroom Housing Wage of $30.92
- Maryland, with a two-bedroom Housing Wage of $28.27
- New York, with a two-bedroom Housing Wage of $28.08
“Out of Reach 2017 shows why millions of low income renters are struggling to afford their homes,” said NLIHC President and CEO Diane Yentel. “We have the resources to solve the affordable housing crisis in America by rebalancing federal housing expenditures to serve our country’s most vulnerable households. We lack only the political will to do so.”
ApartmentList.com recently released their May 2016 rental data showing rents increased by 1.6% over the course of last year, but are now up by 2.1% compared to their December 2016 level. Rents up year-over-year in 88 of 100 largest cities and are increasing in most of the nation’s biggest markets. As we head more into the summer home buying season, they predict that rents could increase by another 1.5% by the end of the summer.
I’m LoanSafe.org’s mortgage expert and a senior loan officer with Prime Lending. If you need a live rate quote, or need help getting a new mortgage, please call me direct anytime at 619-379-8999.