Summer’s traditionally when moving vans clog the streets as people try to get settled in new homes and apartments before the school year starts. Renters looking for an affordable lease this year may have a tough time finding one.
Trulia’s Chief Economist Jed Kolko compared newly released wage data to current rents and found that rents increased faster than pay in all of the 25 largest metro areas over the past year. The traditional rule of thumb is that rent shouldn’t eat up more than 30 percent of a household’s income to be considered affordable, and the Trulia data show that in 15 major metro areas the median rent for a two-bedroom unit is now more than 30 percent of average pay.
Affordability tends not to be as much of a problem for homeowners as it is for renters, and that’s become even more so since the Great Recession, when foreclosures turned many owners into renters while walloping wages at the same time. According to a June report from the Joint Center for Housing Studies, about 35 percent of renters now pay more than 30 percent of their income on housing. More than a quarter of households spend at least half of their income on housing.
The report says affordability changes for homeowners generally “reflect the ups and downs in housing costs,” but for renters, “income declines have played a leading role.” Some cities are trying to raise the minimum wage—whether the raises are enough to close the affordability gap is up for debate—but they have struggled to build enough affordable rental housing. Los Angeles alone needs an estimated half a million new affordable units to keep up with demand.