Soaring Rent Prices Cost Burdening Middle Income Earners
It’s not a heyday for the middle class people anymore in the US as paychecks for rents has soared once again. Contrary to what you think, many of these middle income renters who earn about $45,000-$75,000 annually are shifting blame to the poor and not the rich. Most of these renters say they are taxed more so that the government can get money to provide for the poor.
In states such as NYC, Boston and San Francisco, renters spend up to 50% of their annual income on rents. Rents have become a burden for these people and this has forced them to tradeoff things such as vacation, savings and even healthcare for rent. Rents are rising at a higher rate than paychecks, something which is cost burdening the middle income earners.
“The challenge of leadership is to be strong but not rude; be kind, but not weak; be bold, but not a bully; be humble, but not timid; be proud, but not arrogant; have humor, but without folly” ~ Jime Rohn
Rising Rents Is Affecting Everyone
As more and more people forego homeownership in the favor of renting, vacancy rates are soaring high, twice as much as the inflation. This has made renting almost unaffordable as renters of all incomes have to go deeper into their pockets to pay rents. But the middle class people are the ones feeling the pinch the most. Half of the renter households in the US were ‘cost burdened’ in the 2013, alleges a report from Harvard. Out of the burdened renters, 25% were severely burdened as they spend half of their salary on rents. The median income lies around $33,000 a year while rents settle at about $900 a month.
The Rippling Effect of High Rents
The effect of the rising rents is felt most by low income earners who are at the center of this wave of soaring high prices. High income earners don’t feel greater impact than middle income renters. The cost of burden is so high for the lowest-income people that they can’t raise anymore. Across the income scale nationwide, renters who are cost burdened have to spend less on food and luxuries.
What Is Causing Continuous Rise of Rents
People are going for monthly rental paychecks instead of mortgage payments and this has seen homeownership nationally drop from year-to-year. The high income earners, the older as well as families have contributed the most in fueling the rental boom. For the last decade, 55 and older generation made about 40% of the renter household growth according to the Harvard report.
It’s not clear if the soaring rent prices will be stable in the future. The Millennials too are fueling the rental prices as most of them haven’t saved enough to buy a home. Generally across the country, the demand for rental homes is increasing very fast.