By Mike Bodeen · 11 January 2016
To set the record straight, the oft quoted Apollo 13 statement from James Lovell, played by Tom Hanks was actually, “Houston, we’ve had a problem here.” Astronaut John Swigert Jr. said it first, then it was repeated by Lovell. No extra charge for that.
Our story however, is in the present tense. Some recent national real estate news stories are shedding some light on what has become an increasing problem for renters across the country and in the Phoenix Metropolitan community as well.
In recent national trade news, Realtor.org reported that:
The rental affordability crisis is showing signs of worsening: Nearly half of all renters are struggling to pay their monthly payments, according to a new report by Harvard’s Joint Center for Housing Studies.
Financial experts usually recommend keeping housing costs around 30 percent of a person’s monthly income. However, the number of renters considered “cost-burdened” – those who spend more than 30 percent of their income on rent – is rising and topped 21.3 million people last year, according to the report. Even more concerning, more than 26 percent are considered “severely cost burdened” and spend more than half of their income to pay for rent.
Read entire article: http://realtormag.realtor.org/daily-news/2015/12/10/half-renters-are-struggling-afford-rent
For a number of years now, we’ve been waiting for “millennials” to make the move into the housing market. Many reasons have surfaced to answer the “why haven’t they” question, and we try and try to get inside the millennial cranial, but perhaps it’s just basic economics. As in, people are spending more than they’re making and not saving anything towards anything, let alone a down payment. Paying the bills is the priority. And those bills include credit card, car loans, student debt, etc. According to these articles linked here, the economy has not been kind to renters. Rents are rising faster than wages, which is great for landlords, but not so much for renters.
According to the article, almost half of renters are struggling to pay rent. And unfortunately, it sounds like the problem is extending to folks in higher incomes as well, not just the millennial gen.
The catch 22 is that to help solve the problem, renters could buy a home and obtain a fixed low interest rate mortgage. This would not only help shelter renters from annual housing cost increases, but could enable them to begin building equity. But of course, because they’re getting more buried in debt, they’re not able to qualify for the mortgage.
Politics matter and along with national defense and immigration issues, the economy is also wreaking havoc with us. According to the article household incomes have fallen 9% from 2001 to 2014 while rents and home prices have increased:
…Rental costs are skyrocketing across the country, much faster than wages. Inflation-adjusted rents climbed 7 percent from 2001 to 2014. In that same time period, household incomes fell 9 percent, according to the report. Demand for rentals is high, which has pushed vacancy rates down, and given landlords more reason to raise prices.
In the end, voters will vote first for self-preservation. That could be the national defense even immigration issue, but it will certainly include the economy – and that may be the biggest political issue that determines the outcome of the 2016 election. Oh, which reminds me of an oft repeated campaign phrase used successfully nearly a quarter century ago, “It’s the economy, stupid!”
Oh and Speaking of Politics….
Sarah Palin’s Scottsdale Home on the Market