If You Plan on Renting a 2-bedroom Home, This is What Your Hourly Wage Should Look Like
In the picture below, everything is calculated as if 30% of renters’ income is spent on housing (which, by the way, is a complete fantasy). In order to be able to afford renting a 2-bedroom unit, here is the hourly wage you’d need to make, in every state:
Bottom line: If you don’t want to starve – don’t live near rich people.
Out of Reach is a program from the National Low-Income Housing Coalition that has focused on the problem of rent affordability since 1989 and put out a detailed report of what you’d need to earn in order to really be able to afford living in the U.S. Unlike them, here is a different approach. That is how many hours you’d need to work (LOCAL MINIMUM WAGE!) to afford a place:
If we were to single out large cities like San Francisco, the numbers would be even crazier, but this is a state-by-state map. This is clearly a direct hit to low-skilled workers and their families, but also an issue for other fixed-income earners and retirees. The thing is, economists would normally hope time will solve this market issue, but rents just keep increasing in price.
The Dollar and Hours
A table illustrates the big gap between what renters earn and how much they would actually need to earn in order for their rent to be 30% of their monthly paycheck.
In Economy 101 this would be refereed to as a market failure.
An ‘into’ to the report was given by Oregon Governor, Kate Brown:
“In my home state of Oregon, and in communities across the country, working families searching for affordable rental units find little to nothing in their price range. There simply isn’t enough reasonably priced, decently maintained housing to meet the demand, and rapidly rising rents outpace wages. As a result, one out of four households spends more than half their income on housing costs. People with low or fixed incomes face even bleaker situations.”
Apparently, since the housing crash of 2008, American has been facing too many rental-related problems. One would assume that many excess housing built in the mid-to-late 2000’s would have turned to rentals, but that is wrong.
It’s a slippery slope. Many unsold or foreclosed homes were left vacant by banks or are occupied by debtors. On the other hand, many wealthy families have done well since 2009, so when for-sale projects start, and new houses are build – catering the wealthy families’ needs is the top priority, over others. This is why many families who are not wealthy enough to buy, decide to compromise and rent instead, but those who rent are lower-income people who don’t have any other option but to rent.This results in many renters but fewer rentals available, with for-sale homes which will not be converted to rentals by their owners, because they hope some rich people will pay cash for them.
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