According to a new study by DePaul University, rental prices have been skyrocketing at a level so high that it now has "burdened" many Americans who are renting. Those who are feeling the pain spend about 30% or more of their monthly income on their housing bills. Two major factors contributing to this affordability gap are stagnant salaries and a weak economy. But when you think about it, aren't rentals generally expected
to be the safe housing alternative to an unstable and weak economic climate? The ironic, yet unfortunate, financial circumstance that now plagues many Americans is the fact the renting is now more costly than buying.
"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." Additionally, it can be said that the increase in rental prices is indicative of a strong and growing economy. Right? Supply and demand have been pushing home prices to increase, and now rental prices as well. But what about those who have been pushed to foreclosure and forced into renting? How are we able to save up for a down payment if we're not able to? "In strong markets, keeping housing affordable is the challenge, while in weaker markets the focus is on community development and rebuilding demand. In transitional markets, understanding whether the increase in rental demand is short- or long-term will inform the appropriate policy response," said Smith.