Depending on where you live, one-in-four U.S. renters reports spending at least half of their pay on monthly housing costs. Not only is that bleak news, especially when taking into consideration rising utility, food, and fuel costs, but the outlook for a turnaround does not appear in the future. Furthermore, this can make cash-strapped tenants more likely to skip purchasing renters insurance.
A recent analysis finds there has been a 26 pct. surge since the Great Recession of 2007 in U.S. families who face burdensome monthly rents. According to Census data by Enterprise Community Partners, a nonprofit that helps finance affordable housing, the growing trend of devoting at least half of their family income to housing and utilities, is not only happening in places like Los Angeles and New York. It’s occurring in a number of major cities.
The total of such households has jumped 26 percent to 11.25 million since 2007, a sign that the recovery from the recession has given scant relief to much of the country and has actually gotten worse in many parts. Ironically, the government defines housing costs in excess of 30 percent of income as burdensome.
In order to make ends meet, many individuals are forced to choose between the rent and buying necessities, such as groceries, gasoline, or paying the utilities on time. Forget about going to the doctor or paying for health insurance.
One of the glaring shortcomings of the recovery resulting in the growing crisis is that wages have failed to match rising rental prices. Average hourly wages have risen just 2.1 percent in the past 12 months, according to the Labor Department, while rental prices have climbed 3.7 percent.
At the same time, construction has failed to keep pace with demand from renters. While single-family housing is for the most part back on track, new apartment buildings have been given less emphasis. This is despite the fact that the recession pushed more millennials, many of them former homeowners who faced foreclosure, as well as low-wage workers priced out of the home market into rental housing. An unfortunate by-product is that 2.3 million more families face pressures that leave them perilously close to homelessness.
Waves of foreclosures and layoffs caused by the Great Recession pushed Americans into renting. Statistics show that more than 36 percent of people now rent, compared with 31 percent before the recession began in late 2007. What stands out is the increased demand has yet to be evenly matched by new apartment construction and renovations of older ones.
According to the Commerce Department, construction firms are building apartment complexes at an annual pace of roughly 321,333 this year. It’s clear from the rising rental prices, say economists, that overall construction hasn’t kept pace with demand. Although others believe landlords are simply charging what the market will bear – without regard to the financial crunch it places on renters.
As tightly as tenants are being squeezed by the high and rising rents, the closer they come to homelessness should they lose their jobs. And, that is something more renters live with every single day.
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