Renting a house used to be a popular choice over buying because it was cheap. That doesn’t seem to be the case anymore. In fact, 1 out of 3 Americans now live in a housing market where rent for a 3-bedroom home is more than 30% of their monthly median income, according to RealityTrac.
This is especially true in the Bronx, where the typical household spends approximately 66% of their monthly income to rent a 3-bedroom house. Troublesome trends are also taking place in other cities such as Philadelphia, Baltimore and Miami.
So why do people continue to rent, you ask? Years of economic uncertainty have scared many potential buyers. With that, the demand for rentals has skyrocketed, while the cost to rent has done the same. With renting costs so high, people are left having to cut back spending on food, health care and retirement.
Do you think you may be spending too much on rent? For starters, it’s recommended you spend no more than 30% of the total household income. If you’re currently renting and curious as to the average other renters in your area are paying, take a look at RentOMeter.com. All you have to do is type in your address, how much you pay per month and the number of bedrooms. In a matter of seconds, you’ll see what the average rent is within a certain distance from your home, based on the number of bedrooms. With that, you can better gauge how good (or bad) of a deal you’re actually getting.
If you’ve already signed a lease, there isn’t much you can do to get out of your situation. However, if you’re in the process of looking for a new home, use RentOMeter to get a better understanding of what a typical rental costs before you actually look at individual homes. You can try to use the figures as a bargaining piece and possibly lower the monthly payment.
While it’s becoming increasingly more expensive to rent, you could consider buying a home. To get a closer look at what is best for your situation, take a look at this New York Times article about renting versus buying. After punching in a few numbers, your information is calculated and you’ll find out if you’re in a better situation to rent or buy.
Does anyone out there have any tips on how to avoid spending more than you can afford on rent? Let us know in the comments below!