Rental costs have been on the rise, outpacing stagnant salaries and widening the affordability gap, according to a new study by DePaul University.
“After the housing crisis, households shifted to renting for a number of reasons,” says Geoff Smith, co-author of a study on the affordability gap and executive director of DePaul University’s Institute for Housing Studies. “The weak economy, homes lost to foreclosure, increased difficulty receiving a mortgage, a lack of confidence in the housing market and flexibility with renting all contributed to a boom in the rental housing market.”
Households that spend more than 30 percent of their monthly income on rent are often considered “rent burdened.”
But with rental prices and home prices on the rise, how are families supposed to be able to save up for a down payment on a home?
“In strong markets, keeping housing affordable is the challenge, while in weaker markets the focus is on community development and rebuilding demand,” Smith says. “In transitional markets, understanding whether the increase in rental demand is short- or long-term will inform the appropriate policy response.”
Source: “Rising rental rates and Stagnant Salaries Widen Affordability Gap,” HousingWire (April 23, 2013)