Make Ends Meet: When rent prices rise faster than wages
LOUISVILLE, Ky. (WAVE) - Families are facing record high prices on about every item they need in their day to day lives. That includes rent or mortgage.
There is less housing available for rent or sale now than any time in the past 30 years. Supply shortages are increasing, which in turn, contributes to a depleted number of homes to buy and a lower number of new rental units.
Americans may be making more money for many jobs now, especially since we are in an employee’s market, but you put that up against inflation and supply shortages and it wipes out those wage gains.
Low-income Americans are finding it harder than ever before to keep up with the rising cost of rental prices and new home ownership.
Danetha Doe, an economist for real estate data company Clever Real Estate, points out U.S. rent prices are rising four times faster than Americans paychecks.
“I don’t think any of us could have prepared for the astronomical increases in home prices and rental prices,” Doe said. “None of us could have prepared for the pandemic as well.”
The national median rent price rose 149% from 1985 to 2020, according to Clever Real Estate, while overall income grew just 35% in the same time period.
If rent prices grew at the same rate as income since 2000, the median rent in 2020 would cost $586 per month instead of $894, which is about 34% less.
“The rental price increase was 149%, and to give context to that, income has only increased 35% over the same time period,” Doe said.
In most places, there is no limit on the amount your property owner can increase the rent. However, they must abide by the terms of your lease or rental agreement.
Doe said renters must do more than complain about the hike in rent prices.
“Get really clear on where your money is going,” Doe stressed. “Sit down. Look at your expenses. Financial awareness is the first step. Know exactly how you’re spending your money and how much money you’re bringing in.”
If the money coming in does not match what must go out to pay the bills, a renter should look at whether they need to move or what other course of action can help them pay your bills.
Consider asking for a raise at work or looking for different ways to earn a little extra money outside of your day job.
“It’s really tough for folks to be able to afford the basic comforts that previous generations have been able to afford,” Doe said.
If someone finds their rent is rising:
- Talk to a property owner. Discuss what can be done to keep the payments low and to also make sure renters are not locked into a high-priced rental agreement that may be long in length.
- Look at ways to cut back on other expenses in life.
- Be aware of entitled rights in the city and state a renter resides.
- Think about whether a renter should stay or go if rent is increasing. The cost of the move could be more than someone imagined, and there is no guarantee someone will find a safe, comfortable place lower than the one someone has now.
To view Clever Real Estate’s published report on rent prices versus income, click or tap here.
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