If you want to find a place to rent, make sure you earn at least $18.92 per hour. Or so says the 2014 “Out of Reach” study from the National Low Income Housing Coalition.
That amount represents the “housing wage,” the hourly amount a full-time worker needs to earn to afford a two-bedroom rental at HUD-estimated fair market rent, while spending no more than 30 percent of salary for lodging.
That wage is more than two and a half times the federal minimum wage – and 52 percent higher than it was in 2000. As study authors note, “in no state can a full-time minimum wage worker afford a one-bedroom or a two-bedroom rental unit at fair market rent.”
Think that’s depressing? According to the Center for Housing Policy, 25.4 percent of working renters spend at least half their income on housing.
The phrase “working renters” refers to households where members work at least 20 hours per week and whose total income of less than 120 percent of the median area income. Currently that’s about 23.3 million households in the United States, according to the CHP.
(They’re not alone: Some 21.8 million “working homeowners” are similarly burdened.)
Good news and bad news
First, the good news: The number of working owners who spend more than half their income (“severely cost burdened”) on mortgages went down for the second year in a row, from 20.9 percent to 18.6 percent. This is likely due to refinancing and the drop in house prices allowing lower-income families to buy.
Working renters got some good news as well: Their incomes grew, slightly outpacing (by 1.1 percent) the rise in housing costs. The bad news? They’re competing for “a constrained supply of rental housing” because the foreclosure crisis turned homeowners into renters.
Bonus bad news: In a weak economic recovery, wages may not continue to outpace rents.
“Unless the availability of affordable rental housing increases, it will be difficult to make additional progress in reducing the number of severely cost burdened working households,” study authors note.
In the short term, high rents mean less available cash for food, clothing and other necessities. As for the long term – saving for homeownership, helping kids through school, planning for retirement – well, good luck with that.
You must pay the rent! (But you can’t pay the rent!)
If you’re a landlord, you’re probably delighted. Rent.com’s 2014 Property Owner and Manager Report indicates that rents are going up and concessions (move-in deals et al.) are going away. With competition like this, who needs to lure prospective renters?
(Quick aside: Since I used to manage an apartment building, I know it costs a lot to maintain rental units. But this time around I’m reporting on how much it costs to live in them. Don’t kill the messenger, landlords.)
Almost six in 10 say “no concessions or compromises” are needed to attract renters, even though 85 percent of them have raised rents in the past year. Rental vacancy rates in the first quarter of this year were 8.3 percent nationally.
Landlords can also be choosier about their tenants. Obviously they want a good income-to-rent ratio, but they’re also looking harder at credit profiles/scores, a good rental history, a strong employment record and maybe even personal references.
Between the competition for vacancies and the potentially stricter standards, it’s no wonder that some renters are staying put. Almost three in 10 of those surveyed report that tenants are either renewing their leases or requesting longer ones. (Hint: When I was managing an apartment building some potential tenants didn’t want to sign even a six-month lease.)
This is what you’re up against if you’re planning to look for a place of your own. Better pay down any consumer debt, boost that credit score and line up some good personal references. It would also help if you earned at least $19 an hour or more.
Readers: What’s the rental situation in your area? Here in Anchorage, the average one-bedroom goes for $1,000. Scary.
Related reading:
- Need a job? Go west, or at least midwest
- Toward a care-free retirement
- Wealthy people think you could live on less
- Why you need renter’s insurance
In my area, 1 bedrooms apartments basically don’t exist – there are only a couple of small buildings, with 1 bedroom units – any other 1 bedroom units are converted garages, “granny units” behind a house, or some other portion of a house that has been converted usually into a makeshift rental unit to assist the homeowner with making their mortgage payments.
A quick search on craigslist shows rents of #1200-1500 for a one bedroom place.
Two bedrooms, again, not a lot of apartment buildings, so mostly houses and townhomes – $1600-2400/month.
For the first 12 years of living in this area, I couldn’t afford to live on my own – I rented a 2 bedroom townhouse, and had a series of housemates renting out the second bedroom. The first place I lived was $1250 for a 2bedroom/1bathroom unit, and the second place (which was MUCH nicer as it was a 2 bedroom 2.5 bath unit, with a washer/dryer in the unit!) was $1600-1700 a month.
Thankfully, I was able to purchase a house a few years ago, and I’m TOTALLY enjoying living on my own now!
I pay $600 a month for a 1bd/1ba, 800 sqft apartment on the 2nd floor in an older but quiet complex in Hurst, TX.
My daughter and her husband paid $1750 for a 3-bedroom apartment (2 are tiny for her children.) in NYC. Water was included in rent. When the dishwasher broke, the landlord refused to fix or replace it. Only the handle was broken. When her washer hose flooded the unit below where the owner lived, the landlord told her she could not use a dryer again and was screaming about ruining her things. All was replaced my the insurance. When the light bulb over the common entry door blew out, the landlord refused to change it or allow her ex-husband to change it. So, they go and come at night in the dark. AND, the landlord went up on the rent to $1850.
It seems as though that the landlord has found a way to up profits by not fixing a water user or allowing her to use an appliance that uses water.
My daughter works, but she is not able to afford this without child support. She says the landlord does not have to supply her with a dishwasher or allow her to use her own washing machine even though she rented with the understand both these (dishwasher and washer hookup) were part of what she was paying for. These things were what she was paying for when she signed the lease!
She make much than twice minimum wage, but she would not get enough space to live in NYC on her salary alone unless it were in a dangerous area, shabby, and roach infested.
Around here, women are the only ones who cannot afford housing. They usually live with parents, maybe in a trailer on parent’s property, with bf. Sometimes, sisters live together. Or, maybe it is a single, older parent who allows women and their children to live with them. Some women are subsidized by a bf who does not live with them.
There is lots of rural areas around here, so sometimes a ratty, cold, house with no heat source is all people can afford. Then, there housing projects and apartments that are rent subsidized.
Of course, I spoke only of women, but usually they are the ones with children. Men sometimes share residences, too. But, their needs are not as high as women’s. Men can work double shifts and work late and at job’s not open to women. Plus, they rarely have children living with them if they are single.
Still, around here, it takes two people working for minimum wage, plus food stamps, WIC, and other forms of help to be able to rent at all.
$1750 for a 3 bedroom apartment in NYC? I doubt this 1000%. I think this is a typo. If this is true, your daughter should kiss her landlord on the lips and then kiss the ground he walks on.
She should be thankful her worst complaint is the light bulb. And she’s not paying for water? Do you have any idea what water costs in NYC? The landlord is right not to let her use a dishwasher.
My daughter lives in NYC and pays $4000 a month (you read that right!) for a 2 bedroom, 925 sg ft apartment. She and her husband and 1 child are squashed to the bone!
Give me a break!$1750 is the going rate for a studio in NYC.
1 bedders (apartments,units, granny flats etc) here – you MIGHT find one for $250 a week ($1000) but more likely $300-400.
Due to a house fire last month, I quickly found out that around here (western pa), a 1 bedroom apt goes for about 4-500 dollars a month. A 2-3 bedroom house goes for about 5-800 dollars a month. And a small hotel room that we were able to find that accepts pets negotiated a rate of 99 dollars a day for a 3 month minimum stay. I would have rather found a house or apartment but most want yearly leases or don’t allow pets. There were some furnished efficiencies but they were way out of the way and were still 4-600 a week. At least here, there is free breakfast, free coffee all day, a pool, and fitness center and maid service. It all helps to make the best of a sad situation. My daughter bought her home after enlisting in the army. It was A fixer upper and with dad’s help, she has a nice quaint home with not having to worry about rent. I hope my son heeds the same advice when it comes time. I sure wish I would have not spent so much time and money renting and would have bought a home sooner.
Sorry about the fire. How disruptive to your life. I hope you get things settled quickly.
An entire house for $800 a month? Wow. I know someone who’s renting a house for $2,000 a month.
A one bedroom apartment here in Ireland costs anything from $500 to $1000 depending on city or town. Outside Dublin they are mostly at the lower end. The minimum wage here is $11.04 per hour. Families on unemployment benefit or on a low wage get a rent supplement from the government.
…and it’s gonna get worse. As a loooong time Landlord I have seen this biz change and not for the good. In this neck of the woods the rental applicant pool is “shallow”. A 2 BR unit in a “unique” neighborhood goes for $1K. And with increased government regs and fees I look for less and less available inventory of rental property as more leave the industry…which means rents are going up. BUT collecting rent has become difficult as no one seems to have the funds.I for one am amazed at the applications I recieve….cell phone bills of +$200…student loans…$+3-400 car payments….no verifiable incomes….variable incomes. This isn’t going to get any better…
No, it won’t get any better until there’s more housing stock — and as you say, some people are getting out of the business because it’s too much for them. When I managed a building in Seattle people would call to see a unit and I’d ask them to bring ID because the owners would run a credit check. Some would immediately say, “Never mind” and hang up, and others would say stuff like “I’ve got a lot of credit card debt — does that matter?” or “I’m paying off a lot of debt but I’ve cut up the cards.”
My favorite: An 18-year-old who was working at Arby’s for minimum wage, had never rented before and had no references, yet she wanted to apply for a $725-a-month apartment. I was probably that naive when I was her age, too. Although when I think about it, I had at least saved up a month’s rent in advance and a month as security when I moved into a West Philly dump with my daughter.
That is funny….One of my most recent memorable experiences was with a couple viewing my very first rental home where DW and I began “our journey”. Hour and a half of my time looking…. asking all the right questions. Then I asked the gal how she liked being a “charge nurse” (as disclosed on the phone) to which she replied she wasn’t really a charge nurse but rather “a nurse in charge”. Turns out she is a “nurse’s assistant” at a nursing home making about $9 an hour versus a “charge nurse” who would bring in $50-60K a year. Ever the optomist… I turn to the husband for “help”..”and what do you do for a living sir?” …Him… “me?…OH…I’m unemployed right now…but I’m optomistic”…. Turns out he’s been unemployed couple of years trying to “find himself”. ME.. Yeah..”good luck with that, let me walk you to your car”…Such is the life of a LL….
California…$1200 for a studio, at least $2500 for a house. Back in the days when I was renting, my rent was always 1/2 of my income except for the year I rented in subsidized housing. Then I bought a house and got roommates. What a nice price relief! What bothered me when I was renting is that most landlords insisted that you had to have a 2BR if you had a child. ??? Yet a couple could have a 1 BR. Were they condoning a home business of having men over for the night? A special tax on single moms.
Susan, I couldn’t agree more! Plenty of children in the world live in one room with their entire families, and they turn out just fine! Glad you get to make your own rules now, way to go!
Friends of ours, a two-income professional couple in Los Angeles, recently made the decision to look for a roommate to share their second bedroom (and only bathroom). They are a one-car couple, living modestly within their means. If people living solidly in the (lower) middle class are struggling, my heart goes out to those living so much closer to the edge.
We just moved to Austin TX, and were surprised to see how high the rents were… We’re actually paying more for a 1-bedroom apartment than we did in Los Angeles! We’re also paying more than the advertised rent, as they’re tacking on fees to keep the “rent” low, but still generate more revenue. Things such as “pet rent” for each of our two cats, an extra premium for a carport (not a garage!), and– get this– a $2.75 non-optional monthly fee for generating a statement to tell us how much to pay each month (hint: it’s always the same). They’ve recently begun a “valet garbage collection service:” instead of us walking 50 feet to the dumpster, workers now collect the trash that we leave outside our door. That “service” comes with an obligatory $30 monthly fee, set to begin at the end our lease next year.
We hope to be gone by then. We’re saving as fast as we can to buy a home of our own, which will come with its own annoying expenses, I’m sure, but we’re looking forward to having different problems, at least!
You won’t have a landlord to blame, but at least the payments will be going for something you get to keep.
I’ve lived in Texas my whole life. The cost of rent and owning a home in or near a major city is much lower than comparable areas in most other states. Austin, however, is the exception. In the last couple of decades, Austin has become a very, very hip and trendy place to live. This has really spiked the cost of living there.
I recently visited Austin for a conference and a young woman asked me about living in Alaska. I mentioned that housing was expensive, with the average one-bedroom costing $1,000. She said that sounded like Austin — and she was working at a drugstore, so I know she wasn’t making a whole lot.
I did enjoy my visit there. In fact, I wish I could have stayed longer.
My husband and I currently pay 1195 a month for a 2 bedroom 2 bath in Atascadero, CA. That’s actually reasonable in this area. The apartment complex unfortunately doesn’t show that the money goes for upkeep.
Teresa we’re in Morro Bay! We’re practically neighbors! We pay $1650 for a small house built in the 1930s and upgraded (somewhat) in the early 1980s. The fireplace has been sealed for decades and is beginning to fall apart, and there are other issues as well, but we have a view to the ocean from our kitchen windows, front porch and back deck. It’s a quiet neighborhood. We do a lot of our own upkeep and repairs. DH just replaced a light socket in the kitchen over the weekend. We feel very blessed.
I consider myself blessed to have found a 1bd/1ba, 600 sq ft apartment (including balcony) on the 3rd floor of an older building for $455 in a college town in SE MN. Includes a laundry room on the first floor.
Previously I was paying $530 for a 1bd/1ba in a 100 year old house where in rained in the kitchen sink when it rained outdoors and it rained over the refrigerator when the upstairs tenant used their bathroom sink. Found out after I moved in the that the wiring for the kitchen lights isn’t legal either. Thrilled to be out of there.
You are blessed. Enjoy the balcony. (In the summer, anyway.)
We live in Indiana and own two rental homes in my hometown. I know that rents have gone up considerably, but I have not raised the rent in either property for five years.
I would like it if the current tenants stayed as long as possible so I don’t want to give them any reason to leave. I am also willing to miss out on some additional profits in order to save myself the hassle.
That is probably the worst rental business plan you’ve ever heard, but it’s all I got. =)
I live in student housing in a 1BR/1Bath in Fairbanks, AK. $925/month, $600 deposit for me, $300 non-refundable deposit for pooch, $1000 refundable deposit for pooch. The day I moved in was expensive, for sure, but I’m super glad to be in this place.
Heat and hot water are included, as well as security (police station/firehouse are a block away), high speed internet, basic TV, and a land line. Oh, and it’s furnished! Parking is extra, but the fee includes a plug in for the winter (and if you live somewhere where you don’t have to plug your car in during the winter, just be very, very grateful!).
It’s a really good deal – especially the heat/hot water thing – and my commute to class is about 10 minutes.
Another Alaska reader! Greetings from the banana belt that is Anchorage. 😉
Immediately after college, my son and his best friend decided to live their dream and move to the Santa Cruz, California area. Their first shock was finding out that they couldn’t afford a two bedroom apartment. They are sharing a 600 square foot 1 bedroom/1 bath apartment. My college educated son has been sleeping on a mattress in in the living room for two years. His roommate doesn’t get any privacy either because the bathroom is in the bedroom For this they pay a total of $1500 a month in an apartment complex that caters to Section 8 housing tenants. They are now contemplating moving at the end of this lease. Their first clue that this wasn’t the most desirable of locations was a stabbing in another apartment. Now they are seeing some nefarious activity in the complex. He said that they are talking about renting a house, but I don’t know how that is going to happen when they can’t even afford a two bedroom apartment.
Santa Cruz is the classic example of what happens when they don’t build any new housing stock. You can thank the local anti-growth enviro-nazis for that.
My husband and I have a rental house in a commercial area in Salt Lake City. It’s three bedroom, two bathroom and has a basement. No garage, but enough parking. We charge $1000 a month and pay for the water. It’s a good deal but the neighborhood isn’t great (three houses among a bunch of commercial buildings). Also good access to freeway and public transportation.
The biggest challenge we have is getting good renters. It’s been 50% good, and 50% sketchy. Newest renters have each been at their jobs just two months. I’m keeping my fingers crossed….
I’m glad I’m not renting, but being a homeowner is far from ideal. Ugh, we spend a huge portion of our income on the payment and then a huge chunk goes to repairs. You just can’t win.
Rents are horrible here in the SF Bay Area. You’re lucky to get a studio for $1000, let alone a 1BR. Here’s the problem I have with groups like the National Low Income Housing Coalition. They do NOTHING to push areas like mine to build more housing. In many areas of California, there are tons of restrictions and red tape in place that makes building new housing difficult and expensive. If we would just build more housing, the rents wouldn’t be so darn high….but that part of the story gets scant mention in media reports.
This is murder right now for my younger brother. He has been living at home with our mother since graduating from college, 6 years ago. He has been unable to find a job in his chosen field (graphic design) and has been working retail jobs just to pay for health insurance and his car plus some small savings. (Mom pays for his food and helps with the health insurance bills.) He has been trying to move out and start fresh in a new city where cost of living is lower and his field is more available. The problem: no one will rent to him because he does not have enough income. They won’t even allow my mom to co-sign. As a catch 22, he can’t get any additional retail employment in the new city until after he is already living there. How does anyone get ahead when you need a home in order to work and work in order to have a home?
You’re playing my song! Some people don’t want to believe that a whole bunch of young people are really hosed right now.
My husband and I pay $2475/mo for a large 2 BR 2 BA apartment in Beverly Hills, CA. “Large” meaning nearly 1500 sf including our semiprivate enclosed patio.
Looking around the city periodically, we see that in decent locations (neighborhoods with trees, a block or two off a major commuter thoroughfare, and not too remote from things like grocery stores) rental prices have crept up from $1000 per bedroom to closer to $1300 per bedroom. Last time we were sick of our old building and looking around, we didn’t find *anything* remotely comparable in square footage – our place is larger than the houses of our friends.
We’ve been in our apartment for 11 years. We do have a “top” rent beyond which we’d choose to move, but we’re hoping that, as slowly as our rent has increased, we’ll still be under the ceiling by the time we leave L.A. altogether.
This rent represents about 25% of our annual income. To buy comparable square footage in a comparable neighborhood would cost roughly 3x as much, so buying is not an option.
I live in NJ, about a mile inland from where Superstorm Sandy hit in 2012. Even though most of the people living in this area are solidly lower middle income, the rents are ridiculously high. This is a direct quote from our local paper: “In 2013, an estimated 67 percent of renters living in Ocean County and 64 percent living in Monmouth County could not afford to rent an average two-bedroom apartment, according to the Housing and Community Development Network of New Jersey. Average costs for two-bedroom apartments in both counties were about $1,410 per month, meaning a family would have to earn $56,400 to make the apartment affordable, according to the network’s figures.”
The current minimum wage in NJ is $8.25/hr.
This. Regular people are spending more and more of their paychecks on shelter, which means less and less to set aside for the future (EF, college fund, replacement vehicle, retirement). I don’t know what the answer is, but what we have is not working.
I am a nurse (LPN full time) that cannot afford real housing in Castle Rock, CO. To make matters worse, I still have student loans to pay off (five more years to go). I live in what is like an office (its part of a storage unit complex). I have no stove, no washer and dryer, and no bathtub. My landlord was able to put in a simple cabin shower. I have a refrigerator/freezer and microwave. However, I have no kitchen counter. My place is terribly depressing, dusty, and cold. The bottom line apartment in Castle Rock has now risen to 1300/month. It used to be 1000. I wouldn’t even qualify on my salary. My siblings were gifted enough to go to Harvard and MIT. I am a nurse with learning disabilities. I am just doing the best I can, but feel like giving up. I worry about my cousins that also have disabilities and wonder how they Will survive. There is no affordable rent anymore.
People who make jokes about young people living in their parents’ basements need to take a look at the reality of the situation: high rents, starter salaries and possibly student loans.
Something has to give.