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Home / Finances / Housing Crisis Pressing Down On Renters

 

RentingThe financial crisis that lasted from 2008 until 2011 or 2012, depending on what statistics you read, pushed many financially challenged homeowners out of their homes and into rentals. Unfortunately, that has had some dire consequences for all renters.

Fewer Vacancies

Every landlord dreams of zero vacancy. That means they are making as much money as possible. It also means that they can start raising rent. In some metropolitan areas rents now average $1,100 a month, according to the Center for Housing Policy(CHP). The same study shows that many households are spending around 50 percent of their after tax income on rent and utilities. With half of their money going to housing, how is a family supposed to buy anything else. That kind of a burden lowers food budgets, the ability to maintain a vehicle for work, save money, or pay down debt. In fact, that sort of a burden may encourage people to build credit card debt that they will never be able to repay.

Costs Rising, Incomes Dipping

The CHP used census data from 2008 and 2011 to study income and housing trends. The result of comparing that data was a consistent rise of 6 percent in housing costs that was accompanied by a 3 percent drop in average incomes. The six percent increase in rent was a national average, but large metropolitan areas like New York saw an increase of up to 25 percent in some areas of the city.

Potential Fallout

The growing price of rent has ruptured the budgets of most of the affected households. Renters are struggling to make the payment on a monthly basis. Couple that struggle with dipping incomes and fewer available jobs, you may have another housing crisis looming on the horizon. This time there will be nowhere for people to go. As many of us know, once you have been evicted by one landlord for non-payment, you will have a great deal of trouble getting another landlord to trust you.

Another problem that may be on the horizon is the inability of many of these renters to ever buy their own homes. After spending such a large portion of their income on housing, they are unable to save the down payment for a home. It seems like a perfect storm that could restrict new housing starts and force many homes to languish on the market for years.

 

About the author: Jerry Coffey

 

Jerry Coffey spent many years in a debt-riddled gray area somewhere between broke and desperately broke. His seemingly endless need for more and more cash led him to payday loans, repossessions, bankruptcy, and depression. After years of the same financial style, he heard a piece of advice that inspired him to find a way to change. The advice: ''The very definition of a fool is someone who continues to do the same things, but expects different results.'' This led him to a much more frugal lifestyle that sees all of his bills paid on time and a growing savings account. Even the seed of a retirement account has begun to sprout.

 

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