The Rising Cost of Rent

While waiting to save up for their first home, most young workers will have to rent housing as they leave school and begin their careers. In order for young people to save enough of their salary to eventually buy a home, it is important that renters not overpay for their housing. The standard rule is that renters should spend no more than 30 percent of their gross salary on rent. However, keeping to this standard is becoming increasingly difficult for the majority of American renters.

Economic changes have noticeably increased the cost of renting a home. Following the collapse of the housing market in 2008, many former homeowners were forced to become renters. Fewer new homes and apartment buildings are being built, and there are fewer spaces available for people to live. Thus, the past few years have seen an increase in the demand for rental properties. The rise in demand has increased the median cost of rent throughout the nation. Now half of renters spend over 30 percent of their gross salary on housing, and over a quarter of renters spend more than 50 percent of gross income on this expense. This can be a distressing problem for those who need every penny in order to save up for their future goals.

While there may be little that individuals can do to reduce the median rent in their area, renters can take steps to reduce the impact of high rent:

1)    Roommates – Sharing a rental property with someone who is trustworthy can lead to significant savings as expenses can be split. Before you rent with another person, try to find a roommate you already know and trust, agree upon how expenses will be shared, and investigate how a roommate will affect your lease agreement.

2)    Rent a smaller space – Rent often varies based on the property’s square footage. By renting an apartment that provides just enough space for your needs, you can spend less per month. Smaller apartments are also more energy efficient, so you spend less on heating and air conditioning.

3)    Rent in a money-saving location – If you must spend more on a place to live, try to find an apartment that offers many nearby resources. For example, an apartment near public transportation will save you the cost of always needing a car. Renting near a library provides convenient and free entertainment.

4)    Be a good tenant and negotiate rent increases – If you wish to avoid a rent increase or a move at the end of your lease, negotiate with your landlord for a price that is within your budget. This is easier to do if you are a good, quiet tenant. The landlord will avoid losing money while trying to find a new renter, and you get to avoid the cost of moving.

5)    Opt to live with relatives – Living with relatives can save you a lot of money, even if you still have to pay rent to the family member. Agree upon terms and expectations in advance so there are no unpleasant surprises.

READERS, what do you think?

Which of these recommendations is the most appealing?

What other spending sacrifices could you make in order to afford an apartment?

References:

Fottrell, Q. (2013, December 11). Why your rent is so damn high. Marketwatch, Wall Street Journal. Retrieved January 10, 2014, from http://www.marketwatch.com/story/more-americans-pay-50-of-their-income-in-rent-2013-12-10.

Aho, K. (n.d., 2011). July rental advice: As rents rise, what’s a renter to do? MSN Real Estate. Retrieved January 10, 2014, from http://realestate.msn.com/july-rental-advice-as-rents-rise-whats-a-renter-to-do.