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Why Is Renting Difficult To Afford?

Home security is important. As Maslow’s Hierarchy of Needs indicates, if a person does not have safety and security in their housing, it will be difficult for the person to be able to reach their full potential. Unfortunately in the U.S., it seems that the security of having a home is not a guarantee. Most people are aware that having the finances to purchase a home is challenging. But the reality is that on top of it being difficult to purchase a home, it is also difficult to afford rent. Studies indicate that being able to afford renting a home in the US is hard. For the majority of residents, there is less than affordable housing.

Why is renting difficult to afford? The main reasons behind it being hard to rent housing in the US include: high rent, a low minimum wage, an insufficient number of apartments, an increased demand for renting, and an inability to afford purchasing a home. With each of these factors affecting one another, the challenge to rent is real.

The effects of high rent and low minimum wage. The National Low Income Housing Coalition seeks to fight on the behalf of low-income families. They conducted a study to determine how much a person in the U.S. would need to make in order to be able to afford an average two-bedroom apartment. The results were that a person would need to work a full time job that makes around $19.35 an hour. That amount would provide an individual with a two-bedroom apartment, and they would not need to spend more than 30% of their salary on their house.

There are 13 states, plus the District of Columbia, where an individual would have to make more than $20 an hour to afford the same housing. The top five areas with the highest wage needed to afford a two-bedroom apartment include: Hawaii, District of Columbia, California, New York, and New Jersey.

California has the third highest wage needed, with a person having to make a wage of $26.65. According to the study, of all metropolitan areas across the U.S., the most expensive area to afford a two-bedroom apartment is in San Francisco, California. To afford a two-bedroom apartment in this city, a person would need to make a little less than $40 an hour.

If it was easy for people in the U.S. to make the needed $19.35 for the average two-bedroom apartment, then housing would be affordable. Unfortunately though, having a full time job that makes around $19.35 an hour is difficult. The minimum wage nationwide is $7.25. Therefore, if a couple was looking to afford a two-bedroom apartment together, including both of their salaries at the minimum wage, they would still be unable to afford the $19.35 needed.

In California, the minimum wage is $9. Here in San Diego, the minimum wage is $9.75. And nearby, in Los Angeles, the minimum wage recently was approved to reach $15 in the next 5 years. But despite a higher minimum wage in California than that of the rest of the U.S., the cost of renting is higher, still making it unaffordable.

The effects of not enough construction of housing. One way to decrease the amount that people have to pay for rent is through providing more places to rent. The fewer homes available for rent, the higher the rent will be because of the competition for those homes. But the more housing available for rent, the lower the price is going to be.

In 2014, people were working at constructing new apartments across the U.S. In fact, in 2014 there were more apartments constructed than there had been since 2001. But the number of apartments constructed was still lower than what was needed, as there were not enough construction workers to be able to keep up with the number of new apartments desired. Therefore, despite the large numbers of apartments that were made, the demand was and is still higher than the supply.

The effects of an increased demand for apartments due to an ability to purchase homes. Between 2013 and 2014, according to the National Association of Realtors, the number of existing homes sold decreased while the prices of existing homes increased. This means that over the span of one year, fewer people were buying homes that had become less affordable.

In addition, in 2014 the American home ownership rate reached its lowest rate since 1994, while the American apartment vacancy rate also lowered more than it has since 1994. This means that over the last 20 years, there has been a decrease in the number of people owning homes and an increase in the number of people renting homes.

People are choosing to rent rather than purchase a home. With high debt from college and the need to make a large down payment in order to purchase a home, it is not easy to be a homeowner. However, as the statistics show, renting a home is not very easy either. If renting a home only becomes more challenging, it is important to do everything a person can to be able to afford rent or be able to afford purchasing a home.

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