More people underwater in rental agreements: report
As the economy continues to sag like a braless Jane Fonda, there’s at least been one silver lining about housing.
Namely, that we don’t have to buy it. If there’s been any solace to the downturn, it’s that many more have taken comfort in renting. Not the finest investment, sure, but it’s (generally) less expensive than buying a home and about fourteen thousand times less responsibility.
Of course, the “renting is safer in times of turmoil” theory only works when our incomes stay flat. Which, at least in some places, they’re not.
According to a new report out of the U.S., rent has stayed flat but incomes have shrunk – meaning, quite literally, people are drowning under their rental agreements now, too.
By 2010 Census data released this week, median rent remained stable in the U.S. ($855 per month) from 2009, though median household income, adjusting for inflation, fell about 2.2 per cent.
The result? Now, the share of renters spending 30 per cent or more of their household income on rent has shot to 53 per cent of Americans, from 50 per cent just two years earlier. Worse, the share of renter households spending half or more of their income on housing raised a full percentage point to 27.4 per cent last year, compared to 2009.
We won’t pretend to dive into the “rent vs. buy” debate just now, but the Yankee data does give us to pause to wonder what percentage of income should be devoted to rent in the first place.
By the estimates of a few, we’re talking in the 30 per cent range, anyway. CNN Money says 25 to 40 per cent is accepted, while BetterBudgeting.com notes 35 per cent ought to be the absolute max, and that’s accounting for hydro, utilities, maintenance and everything else.
If you rent, or you rented, what’s a good earmark as a percentage of income to spend on housing? Is 50 per cent way, way too much, or simply the norm for people that live in cities where rental prices continue to soar?
By Jason Buckland, MSN Money