Renting a home proves all the more struggle than paying off a mortgage. In America, renters are struggling to keep up with high costs, the same as their home-owning peers.
Things Are Hard
The United States was struck with a rising economy and an impact of high housing markets in various States.
Renters Aren’t Safe From the Increasing Housing Economy
If you thought that owning a home was difficult, renting a place in America has equally become a struggle.
Can’t Save up for a Down Payment
AP News has reported that the rise in home costs has made it extra hard for renters to save for a down payment on their new home. Monthly expenses take the bulk income of household incomes.
American Housing
Harvard’s Joint Center For Housing Studies published a report about how the cost of living affects the housing industry.
Tax and Insurance on the Rise
Daniel McCue at the Joint Center for Housing Studies said that home insurance and property taxes are key factors affecting consumers’ affordability to own or rent a home.
Property Costs Remain High Since the Pandemic
A graph depicting how housing costs have increased since 2014 shows a slow incline until 2020 and spikes onward till the present. Renters and home buyers are paying nearly equal prices on properties.
Low-Income Homes Are Feeling It the Most
McCue has also noted that low-income homes are the ones most affected by the steep rise of the housing market, with only limited financial leeway.
Property Renters Taking a Harder Hit
The report also showed that rental homes are feeling the worst hit due to a lack of affordability.
Rentals Increase Too Quickly
According to the report, many rentals have a harder struggle because individuals’ salaries and wages haven’t increased as frequently as the rent of the homes. The spike in housing costs during and after the pandemic has become even worse for renters.
Some People’s Living Leading to Beyond Their Means
The Harvard report also mentioned that many renters use most of their salaries to pay property expenses like utilities, taxes, and rent.
Utilities Have Soared on a Massive Scale
According to the report, property utilities have gone up since 2020 and have not dropped since. It showed a consistent increase that rose prominently to $12.5 million in 2020.
Increases Mortgage Rates Are Keeping Buyers Away
CNN reported that housing rates have increased, and American home buyers are less keen than they were to take on debt to purchase. Some buyers are not eager to move because of possible higher expenses.
Government Needs To Step In
“Congress needs to act…,” Lael Brainard, the director of the White House’s National Economic Council, said. She also reiterated that soaring housing costs are a pain point for American families.
Cap On Rental Rates
Brainard explained that the Biden administration is looking into ways to resolve the high housing expenses. For renters, they want to create a cap where increased rent won’t exceed the capped rate set per year.
FHA Saving Nearly $1,000 a Year
For properties under FHA (Federal Housing Administration), Brainard stated that “...700,000 homeowners are saving about $900 per year.”
Affordable Homes Added Gradually
Harvard’s report noted that “the state and local experimentation with regulatory reforms and incentives will incrementally add affordable homes.”
Texas and Houston Do Well
AP News reported that in parts of Dallas and Houston, home prices have been steadily affordable compared to other States. Varying States might have increased jobs, but with that, the housing rates have also grown and remained elevated.
Urban Areas
Urban areas with more booming central business districts are some of the areas richer in jobs and higher paying jobs, too. However, it comes at a price, and it’s here that housing is very unattainable and expensive to rent and purchase.
Zoning Laws Put People at a Disadvantage
It’s not always up to the buyer what they want. In his talk with Harvard University, McCue said, “The current zoning laws that we have don’t reflect the wishes of the people.”
The Law Will Help
According to AP News, each State’s local governing laws and MPs in power would look to find a solution by easing city zoning rules. This way, it can accommodate more families and provide them with affordable homes.
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The post Renting Costs Soar Above Homeownership, Yet Americans STILL Can’t Get on the Housing Ladder first appeared on Liberty & Wealth.
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The content of this article is for informational purposes only and does not constitute or replace professional financial advice.
