(NewsReady.com) – The housing market is starting to cool and stabilize for buyers. But the rental market is still out of control. It’s so expensive that housing is now unaffordable for half of renters across the country.
A new study from the Joint Center for Housing Studies at Harvard University revealed the shocking state of rental costs in the country. It found that as rents increased in 2022 during the national health emergency, half of the country was paying more than 30% of their incomes for utilities and rent. Nearly half of those people were paying more than 50% of their income for rent and utilities. To put that into perspective, financial experts recommend a person only spend 30% or less on those costs in order to remain financially healthy. The government also uses that guideline for its definition of “affordable housing.”
The study found that the biggest increase in unaffordability was for households that were making between $30,000 and $74,999 annually. Approximately 83% of those making under $30,000 a year are cost-burdened.
That is hurting people who are looking for new houses or apartments in places where the rent has increased dramatically in more than one way. Not only do they have less money for necessities, but landlords are asking tenants to prove their salaries are three or four times higher than the annual cost of the rent. For example, if a person wants to rent an apartment that costs $2,000 a month, they have to show that they are earning between $72,000 and $96,000 per year. For a person only earning $12/hr (roughly $23K per year), that is impossible.
There is some good news. Rental prices did slow in December 2023 from their peak in February 2022, according to Zillow. The asking price of rent was down 0.2% from November to December, but the average rent across the US is still very high at $1,957.
Unfortunately, the prices aren’t dropping fast enough, and the US is now also dealing with a homeless crisis.
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