Can’t find a mortgage to purchase a home? If so, then you may also have a tough time trying to find a place you can rent as well.
According to a report released at the end of last month, a new record high number of renters are spending over 50% of their income on keeping a roof over their heads, says the Harvard Joint Center for Housing Studies. And it’s not just the working class who are feeling the pinch, for many of those struggling are considered middle class.
Approximately 10.1 million households, or one quarter of all renters spend over half of their wages on renting their home, according to the study. And of those households in the predicament, 7.5% of them are middle class families, a figure which has doubled over the last ten years.
The rise in rental costs is in a large part directly attributed to the rise of new renters (those whose own homes were foreclosed), and the general poor performance of property markets over the last few years. Weak income gains are also thought to be a factor.
“Over the last ten years, the costs of renting a home have literally gone through the roof,” says Eric Belsky of the Harvard Joint Center for Housing Studies. “These problems of affordability are steadily rising up the income scales too.”
The study also showed that 26.2% of renters were spending between 30% and 50% of their incomes on rent. Interestingly, an “affordable” rent is described by the center as being under 30% of your income.
Even worse still, the availability of affordable homes for rent has steadily been shrinking over the last ten years. Almost 12% of low cost rentable properties that existed in 1999 are no longer around today, either because they have been lost from housing stock or demolished since then. Meanwhile, very few new family homes are being built right now, due to the poor state of housing markets.
The dwindling supply of low cost homes for rent clashes directly with the increasing demand as more and more people lose their homes to foreclosure. Compared with 2005, and extra four million people were renting their homes in 2010.