High rent driving middle class out of cities
Financial experts say housing costs should be around 25 to 28 percent of a person's income.
Those experts probably do not live in a city like Miami Beach, Fla. where, according to a New York Times article by Shaila Dewan, average rents chomp 43 percent of typical household incomes. And it is bad all around, she writes: "An analysis for The New York Times by Zillow, the real estate website, found 90 cities where the median rent — not including utilities — was more than 30 percent of the median gross income."
A Harvard study found that "nearly half of moderate-income renters … pay more than 30 percent of their incomes." The study says, "Excessive housing costs strained the budgets of more than half of all renters (in 2012), or 21.1 million households — a slight increase from the year before."
Dewan says the culprit is "simple demand." According to Zillow stats, from 2007 to 2013, the U.S. added about 6.2 million tenants.
So people are getting roomates, and poorer people are paying less for other essentials such as food or medical care. And, Dewan points out, savings gained by moving to outlying areas are eaten up by transportation costs.
Hamilton Nolan at Gawker says building more units may not help because the profits are not at the lower end of the scale. "How many of those do you think are targeted to the bottom half of earners?" Nolan asks. "Not any more than the developer has to include in order to get their permits. New construction is not easing demand where most people need it: at the lower half of the rent spectrum. High demand. Rising rents. And a development industry without any real incentives to address the problem. So where, pray tell, is affordable housing supposed to come from?"
Joe Anuta at Crain's New York Business writes about how higher rent has people in the Bronx packing their bags and head to homeless shelters. That higher rent came from people fleeing rent in Manhattan. "The percentage of (Bronx) residents with a bachelor's degree did shoot up by nearly 40 percent, indicating a greater presence of young professionals and/or those with higher earning potential," Anuta writes.
But maybe all the increases are nothing new. A Huffington Post article by Amanda Scherker points to an 1853 article complaining, "Then comes the great expense of New York — Rent."
Email: firstname.lastname@example.org Twitter: @degroote