Rent Wars: How to Survive When Rents Keep Going Up
NEW YORK ( MainStreet) The news about rents is bad, and it keeps getting worse.
In a recent study of apartment rents by real estate website Zillow for the New York Times , the disheartening news is that average rents are outstripping the ability of the middle income earners to pay them - and the forecast is for rents to keep going up at a much faster rate than income.
That means the middle income earners are getting priced out of many housing markets - Zillow found 90 such across the U.S. - or they have to make deep cuts in personal spending to get by.
The rule of thumb is that rent plus utilities are not supposed to exceed 30% of household income. In the Zillow study, rent alone often exceeded 30% of income and not just in Manhattan and San Francisco where that has been the norm for years. Now it also is true in New Orleans where a typical rent is 35% of household income. In Chicago it is 31%. In Los Angeles it is a numbing 47%. In Miami it is 43.2%.
Even Flagstaff, Ariz. clocks in at 37.8%. Hattiesburg, Miss. is 35.8%.
Among a very few affordable cities in the Zillow study are Detroit (23.9%), Phoenix (25.8%), and Washington, D.C. (27.2%).
Researchers accordingly have declared a rent affordability crisis.
They also say that because vacancy rates in much of the country are low, rents will continue to edge up.
Don Harkins, a realtor in Orlando, Fla., described the stark reality renters face: "In today's markets when a rental home is in good condition and priced fairly, a landlord will have a plethora of potential tenants to choose from."
That landlord also will be able to nudge rents up every year, and there is nothing a tenant can do, except pay the increases or move.
"We receive a lot of stories of renters having their rents increase by 20% to 35% at their end of their lease," said Phillip Lee, CEO of RentMatch, an apartment review site. "In a landlord's market like the one we're currently in, there's no room for negotiation."
"There is no easy way out for renters," said Albert Lu, managing director of WB Wealth Management in The Woodlands, Texas. "They must cut back somewhere to accommodate the new price structure."
Then there is a human face on this. Freelance writer Anne Violette, sole support for a family of five including three toddlers, said that she is getting priced out of the rental market in her present residence Delray Beach, Fla. "I am going to have to move somewhere else simply, because finding a place at the current rate of $1,500 that I pay now is near impossible unless I want to live in a terrible, crime-infested neighborhood with bugs and crime," she said.