More than 20 million rental households spent more than 30 percent of their income last year on rents. In fact, more than half of those renters spent at least half their income on housing, â€œseverely burdeningâ€ their finances, according to Census data.
Rents have been on the rise the last few years as demand surges. In the past seven years, median rent payments have soared nearly 20 percent from $728 to $871. Sme markets have seen double-digit increases in rent in just the last year, such as in cities like Houston, Seattle, and the San Francisco Bay area where strong job markets are fueling high demand.
"More demand with little new supply means rising rents and shrinking vacancies," says Jed Kolko, chief economist with the real estate Web site Trulia.
Millions of home owners who lost their home to foreclosure or did a short sale are now forced to rent as they repair their credit, which has been contributing to the rising numbers. Also, some potential home buyers have been left on the sidelines, unable to qualify for financing to jump into home ownership.
"Despite the strong affordability for owning, there are severe barriers to home ownership â€” and those won't change quickly," Kolko told USA Today. "Lots of people are in no position to qualify for a mortgage or save for a down payment, so that will keep a lot of people who might want to own as renters."
Source: â€œMore Renters Burdened by Higher Costs,â€ USA Today (Sept. 19, 2012)