Rents are not just eating up a substantial chunk of people’s paycheck, they are actually consuming over half of it in one overwhelming go.
A recent study from the Joint Center for Housing Studies of Harvard University shows a record high of 11 million Americans dedicated at least 50 percent of their income to housing in 2014, whereas about 21.3 million spent 30 percent or more, which is another record in itself.
More importantly, considering the upward spike in rent prices and flat wages, these numbers can actually go higher.
“When you have to dedicate such a high proportion of your income to rent every month, it forces you to make difficult decisions,” said Dan McCue, a senior research associate at the Joint Center.
After spending this much on rent, there is barely enough to cover essentials like clothing and food for most lower-income and middle class families. Proper healthcare and emergency funds have actually become a dream at this point for many renters. In fact, an unexpected trip to the emergency room or a car breakdown can actually land some out on the street.
Interestingly (and sadly) its not just millennials — the most educated yet the worst paid generation — who are feeling the brunt of the crisis. Middle-age renters have it just as bad.
“The shift toward renting has been widespread among age groups, incomes and different types of households,” McCue added.
The median rent for a new apartment, according to the report, was $1,381 in 2015, which means a renter would have to make at least $55,000 a year to be able to afford it.
However, a typical renter only makes about $34,000 a year.
One the other hand, thanks to low mortgage rates, affordability is improving for homeowners.