The housing market correction or foreclosure crisis has turned millions of former homeowners into renters.
Followed by years of economic uncertainty, which has kept potential buyers from leaving their rentals and making the move into homeownership, the demand for rental housing and has helped push rents up more than 21 percent since the housing market peaked in 2006.
According to a recent study by RealtyTrac, one out of three Americans now live in rentals were the monthly rent consumes more than 30 percent their monthly income which is the traditional measure of affordability. The study also says, many are paying out a much larger percentage of their pay.
During this time renters have been getting squeezed on income after inflation, which has fallen 14 percent over the past six years. The study found that nearly 25 percent of renters were paying more than 50 percent of their income in rent, forcing some to make significant reduction in spending on food, health care and retirement.
I don’t have specific numbers to compare these national studies with our Sacramento area but we do know the level of foreclosures and short sales were high for our area and the demand for rental property has increased. Because our housing has, typically, been more affordable than other urban areas I suspect the number of renters paying over the 30 percent threshold is lower than the national average but still an issue here.
Unaffordable housing or being “house poor” restricts us. When too much of a paycheck is devoted to housing it can reduce or eliminate opportunities including spending money to go back to school or saving for a down payment on a home.
If you have any questions or comments about today’s column, I would love to hear from you. I can be reached at the MagnumOne Realty office in Roseville (916-899-6571) or by sending an email to firstname.lastname@example.org.