The State of American Renters
As home prices are rising, more and more Americans are turning to the rental market. The average annual growth rate has increased in the rental market since the 1990’s. The growth in the 90s was about 274,000. In 2000, it was 507,000 and over the last three years it has grown $1,250,000. According to the studies, the gap between rents and income continues to grow. As the median gross rent increases by 6% in 2012, the median renter income dropped by 13%. This means more renters live in housing they cannot afford.
One in two households are paying more than 30% of their income on rental payments. And one in four households are paying more than 50% towards rent when any banker will tell you they should only be paying 30%.
Predictions for the Future
A healthy economy and strong job market means prices will naturally increase. Interest rates will continue to collect and still remain steady under the 5% mark. Changes in mortgages and real estate applications in 2014 may make it more difficult for the self-employed to obtain a home loan. Also, expect applications to get longer and lenders to become more strict.