Chris Shirley, Marketing Specialist
Marketing@NavigateHousing.com
New data shows the number of cost-burdened renters in America is reaching new records. Inflation sent rental prices soaring, and now many renters are spending more than they should. Financial Experts often refer renters to the 30% rule. This rule suggests Americans should not spend more than 30% of income on rent. However, Moody Analytics found Americans are spending more than 30% on rent for the first time since data collection began.
According to the latest U.S. Census Data, more than 40% of households fall into the cost-burdened category, including nearly 19 million rental households. The National Desk spoke to Dr. Sean Snaith, director of the Institute for Economic Forecasting. He says inflation is only part of the problem.
Food costs are extremely high. The very basic things that households need have seen much higher rates of inflation than this overall inflation rate.”
Snaith also says limited supply and increasing demand during the peak of the COVID-19 pandemic is “a surefire recipe for rising prices.” Snaith says wages and salaries are also not rising fast enough to keep up with the market and the rising cost of living. A recent study by Zillow also points to wages as a huge driver of cost-burdened renters in America.
Cost-Burdened Renters and The Pay Connection
The Zillow data shows people making the Federal Minimum Wage are the most cost-burdened renters. Surprisingly, the data shows it would take three roommates or four full-time, minimum-wage-paying jobs to afford a reasonable two-bed, two-bath unit. Based on HUD occupancy guidelines, two people per bedroom is the standard guidance for occupancy rules. However, Zillow reports in cities like Atlanta and Austin, both set to the federal minimum wage, the typical rent on a one-bedroom rental requires four full-time minimum wage workers — twice the HUD occupancy guidance for a rental of that size.
While the cost-burdened numbers vary on location, housing affordability remains a major problem across America. Rental Assistance programs started in the COVID-19 pandemic are reopening to help struggling families. Click here for a link to Rental Assistance programs now available.