Cities where rent eats up over half the paycheck
More people than ever are renting instead of buying homes, but being a renter isn’t getting any easier.
In many households, the monthly rent eats up the majority of take-home pay — and the burden is growing. Some 20.7 million rental households — or about half of all renters — spent more than 30 percent of their income on housing in 2013, according to a report from the Harvard Joint Center for Housing Studies. About 11 million of those households spent more than half of their paycheck on rent and utilities, up 37 percent from 2003. (Financial advisers typically recommend that people spend less than a third of their pay on housing costs.)
As the map shows, renters in cities that people expect to be expensive, such as New York, San Francisco and Washington, aren’t the only ones struggling.
“The rental housing crisis is everywhere,” says Angela Boyd of Enterprise Community Partners, an organization that advocates for affordable housing.
Take Miami, where close to 36 percent of renters spent more than half of their pay on rent and utilities in 2013, the highest of the 100 metropolitan areas studied. Someone earning the median household income of $32,000 and paying the median monthly rent of $1,100 would spend 39 percent of their pay on housing.
Even in cities where housing is less expensive, wages are often not high enough to make the rents affordable.
In New Orleans, for instance, 35 percent of renters dedicate more than half of their pay to housing. Many people working in tourism and hospitality, a major industry for the area, might have low-paying jobs that make it harder for them to afford the median rent bill of $900, Boyd says.
Middle-class families are among those struggling the most. The number of people making $45,000 to $75,000 who spent more than 50 percent of their income on housing increased by 72 percent from 2003 to 2013. For people making $30,000 to $45,000, the number of renters in that position increased by 69 percent.
The cheapest apartments are snapped up quickly. The number of available units that cost less than $800 a month fell by 12 percent in 2014 from the year before. In many metropolitan areas like Washington, much of the new rental housing created consists of luxury apartments, Boyd says.
Those higher rent costs make saving for a down payment difficult. “You’re looking around and saying, ‘I can’t afford to buy a home, and I also can’t afford to rent one of these luxury apartment buildings,’ ” she says.
But for people with sufficient savings, it’s a great time to be a homeowner. About 19 million homeowners — about one in four — spent more than 30 percent of their income on housing in 2013, the lowest share in a decade.