How much do you need to be making to rent a two-bedroom unit? For the longest time, it was recommended you didn't spend more than 30 percent of your income on housing. But with home prices soaring, rents have increased as well. The "30 percent rule" is no longer viable.
Using the "30 percent rule," this is the hourly wage required to rent a two-bedroom unit in the United States.
This is assuming you work 40 hours a week and 52 weeks a year.
These numbers are provided by Out Of Reach, a program from the National Low-Income Housing Coalition. They release a report every year to show how much you would need to be making to afford the current Fair Market Rent.
What's scarier is if you consider the hours required for minimum wage workers.
This is the number of hours you would need to work per week to afford a one-bedroom unit at minimum wage.
There is no state where you can work one job, full-time at minimum wage and afford a one-bedroom unit at the fair market rate.
These are only the figures for entire states. If you were to go by large cities like San Francisco, the numbers would be even greater.
Almost all economic calculations of inflation, poverty and government benefits include the "30 percent rule." This estimates that each household spends 30 percent of their income on housing.
But using those calculations, you'll see that there is a huge gap between how much renters are earning, and how much they need to make the "30 percent rule" work.
Any economist would classify that as a market failure.
In the report, Oregon Governor Kate Brown gave this forward:
In my home state of Oregon, and in communities across the country, working families searching for affordable rental units find little to nothing in their price range. There simply isn't enough reasonably priced, decently maintained housing to meet the demand, and rapidly rising rents outpace wages. As a result, one out of four households spends more than half their income on housing costs. People with low or fixed incomes face even bleaker situations.
After the housing crash of 2008, this is what the situation looks like.
Since 2009, the real estate market has been catered for the needs of wealthy families looking to buy and sell, and not so much for the renter.
The average family didn't have any option except to rent. But that created a large number of people looking to rent, but fewer rental properties. Nobody wanted to take their homes for sale off the market and turn them into a rental property.
The light doesn't look any brighter in the near future. Hopefully, this will be able to be fixed through building affordable rental homes for low income households.