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Why You're Spending More on Rent

By Amy Patterson

It’s not just you – American’s today are spending far more of their incomes on rent than ever before, according to a recent Washington Post article. The article details the drastic changes for renters that have transpired over the last few decades, and the predictions for future renters.

When it comes to answering the question of why our rental cost is so high, the answers are in a variety of places.

  1. Location – Kind of like the old real estate adage, the amount of people who desire to live in a few locations (that are already heavily populated), for example: New York City, Los Angeles and Washington D.C., keeps growing. These places are go-tos for many new college grads chasing a career dream, but often, there are too many renters and not enough rental property.
  2. Inconsistency – It’s no secret that wages have been pretty stagnant in the U.S. for the past few years. But meanwhile, the cost of living has continued to increase (rent included), making it harder for renters to afford the same apartments.
  3. Lack of expansion – For whatever reason – cost, zoning laws, lack of space – rental supply has not been able to match rental demand for some time.

In an economy where nearly half of all renters spend more than 30% of their incomes on housing (30% is widely thought of as the cut off for affordability), we may begin to see a rise in homeownership and a decline in renting soon.

Tags: Homeowners, Home Loans, Renting, Housing, Rental Market