With increased competition for units, rents are shooting up, and the increases are biting renters’ wallets as they find themselves increasingly getting priced out of the market, with wages failing to keep pace.
Nationwide rents have risen about 6 percent from a year ago, due to rising demand and still-limited supply, CNBC reports. Renters in many areas are paying more than 30 percent of their wages on a two-bedroom rental, according to an analysis by Trulia. Financial experts often recommend spending no more than 30 percent of wages on housing expenses (mortgage interest, principal, taxes, insurance).
Rental demand is strong and likely will remain so for the foreseeable future, analysts note. Apartment vacancies rose slightly in the third quarter for the first time in four-and-a-half years, but was mostly attributed to more rental supply coming on the market, according to Reis analytics firm.
“Units brought online during tight market environments have a tendency to actually push rents upward, not downward,” says Ryan Severino, economist at Reis, told CNBC. “So landlords should still be able to push asking rent increases on to their tenants.”
Source: “Rents Skyrocket Well Beyond Wages,” CNBC (Nov. 6, 2014)