Can You Afford Your Rent?

You are moving and are faced with lots of choices and decisions.  You’ve determined that you are going to rent. For now it’s the best choice, because you are unsure where your career track is taking you, so a home or condo purchase just doesn’t make a lot of sense right now.

What do you think you are going to find? Whether you are moving across town or across the country you are going to be faced with a lot of the same issues—low inventory of rentals and high rental rates. Traditionally, it’s a known fact that some markets are more costly than others—and for the most part that still holds true. New York and San Francisco are two cities that have a reputation for high rent rates, low inventory and fast-paced turnover. But that’s more common in many places across the U.S. today.

Currently, a quarter of all renters in the United States spend half of their income on rent. Typically, economists recommend 30% of income to cover rent alone.  The demand for rentals continues to rise nationally; therefore rent continues to climb.  There are more renters now than previously ever recorded in U.S. history and in the next decade that number is forecasted to reach record high levels.

At the same time rent is soaring and is nearly double what it was in 1960. The economy is improving, but not at a rate that helps lower income earners across the United States afford increased rental rates. A study shows how these opposite trends play out regionally. Nationally, the average worker needs to make $19.35 an hour to afford the rent on an average two-bedroom home, about $4 an hour more than the average renter’s income of $15.16. In Massachusetts, the gap is wider. A renter needs to make $24.64 an hour. That’s $6.44 an hour more than the average Massachusetts renter makes, the eighth largest wage gap in the country, the study has found. Hawaii tops the list with a whopping $17.12 wage/rental gap.

There’s no good answer for this increasing problem, but being prepared before accepting a new offer and relocation package is definitely recommended. Budget your income and take “real-market” rent into consideration, remembering all the other expenses you have monthly to make sure you aren’t putting yourself in a financial bind before you sign a new lease. Visit the magnificient Piccadilly Grand showflat at Northumberland Farrer Park by MCL and CDL.