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Jessica Rinaldi / Reuters
World War II veteran Howard McGowan, 88, is facing a 50 percent rent hike on the one-bedroom apartment in Malden, Mass., he and his wife have shared for 25 years.
One night last spring, David Hall returned home to his studio apartment outside Boston to learn that his monthly rent had spiked from $725 to $995.
It would be much cheaper for the maintenance manager to buy a nearby starter house than to stay put. But his mortgage broker told him that while his credit score was good, it was not high enough to meet banks' tough standards, he said.
"I know if I walk into a bank, they are just going to laugh at me," Hall says. "So I'm stuck."
He is not alone.
Five years after the housing bubble burst, the United States is in the midst of a housing affordability crisis. Home prices have fallen a third from their peaks, but many Americans cannot benefit because they cannot get a mortgage.
With credit tight, many consumers have no choice but to rent. Others who can afford to buy are also renting, because they view real estate as a lousy investment. With this increased demand, rents in some cities have jumped by double-digit percentage rates.
In the 12 months ended in May, rents rose 14 percent in San Francisco and 11 percent in San Jose, California, according to real estate data provider Zillow. Last year in Minneapolis, they spiked 11 percent even as home values sank 8 percent.
Apartment rent sticker shock gets worse
People with lower incomes have long struggled to find affordable housing, but many in the middle class are now hurting, too.
Most personal finance experts recommend allocating no more of 30 percent of family income to housing, but nearly 40 percent of Americans are paying more than a third, according to the U.S. Census Bureau's American Community Survey.
In New York City, one-third of households are spending more than half their pay on rent.
"We have falling incomes, rising rents and nothing but substantial upward pressure on those rents," says Chris Herbert, director of Harvard University's Joint Center for Housing Studies. "And nothing in the cards suggests it will turn around anytime soon."
Today's housing market is a buyer's paradise.
It is now cheaper to buy a home than it is to rent in virtually every major city in the United States, according to John Burns Real Estate Consulting.
But for many in the renter class, buying even a modest home is impossible because financing is so hard to secure.
Lending for home purchases hit a 12-year low of $404 billion last year, down from $1.4 trillion in 2006, according to trade publication Inside Mortgage Finance. That means mortgage credit is tighter than it was even before the housing boom.
This year, lending is expected to drop even more, according to Inside Mortgage Finance.
A recent Morgan Stanley research report states that the average credit score is 762 for a consumer securing a mortgage backed by government-sponsored enterprises like Fannie Mae . But 65 percent of Americans have scores below 750.
In other words, a disproportionate number of mortgages are going to people with unusually good credit. A perfect score is 850, and anything below 660 is considered subprime.
"Basically, access to credit for borrowers with less than spotless credit is severely limited," the Morgan Stanley report states. "A good chunk" of U.S. households are "cut off from mortgage credit on this count alone."
For people who can get mortgages, rates are at their lowest levels in several generations. Add that to the cheap home prices, and houses are at their most affordable since at least 1970, when the National Association of Realtors began tracking this metric.
Normally, high affordability translates into higher sales. And the housing market is showing some signs of recovery -- the S&P/Case Shiller index of home prices had its third consecutive monthly gain in April. Last week, the NAR said pending home sales had matched a two-year high in May.
But any recovery has been tepid. The NAR said existing home sales had declined 1.5 percent to a seasonally adjusted annual rate of 4.55 million in May from 4.62 million in April. That is 34.2 percent above the July 2010 bottom of 3.39 million, but far short of the 5.5 million pace that the NAR considers healthy.
"Home sales have just barely picked up from their cyclical lows, and that's because there are still constraints to borrowing," said Moody's Analytics economist Celia Chen.
Part of the lender pullback has to do with the stringent regulations Washington put in place after the housing crash, says Michael Fratantoni, vice president of the Mortgage Bankers Association. These rules put more of the losses from bad mortgages onto lenders, instead of investors or government-sponsored enterprises.
Then there is the climate of unstable home prices and a shaky labor market: "There's a risk that even a borrower with moderately good credit may fall behind," Fratantoni says.
Consumers who cannot buy must rent, and that is where many Americans are feeling the pressure. A rent index from Zillow shows year-over-year gains for 70 percent of the U.S. metropolitan areas, while its home value index rose in only 7.3 percent.
Only a few years ago, landlords in cities like San Francisco and New York were tossing in a month or two of free rent, sometimes with parking, to lure tenants into signing leases.
Today, applicants are showing up at apartment viewings with copies of their unblemished credit reports and letters of recommendation from bosses and prominent friends, in the hopes of snatching up a place to rent.
Equity Residential, one of the biggest apartment owners in the United States, has more renters with high credit scores than ever, Vice President of Operations David Santee said on an April conference call with analysts.
Demand for apartments is also higher because many potential buyers in their 20s and 30s want to stay flexible - home ownership is not as attractive as it was to earlier generations.
Still, plenty of people would prefer entry into the ownership class.
Last spring Rosemary Wynder, a physician order specialist, found her rent shooting up. She decided to buy a house.
But a bank glitch in February had caused one late car loan payment, dinging her credit score. The Utica, New York, resident has been unable to straighten out the mistake, and five banks have rejected her for a mortgage.
"I've been crying," says Wynder. "I've been praying."
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Maybe it's time for those in the north, who can't afford to live there anymore, to consider moving to the south. I've herd that one can buy a three bedroom brick house with a yard for around $600.00 a month. Eventually, we will learn that it is better to do that which is best for us, opposed to that in which we want to do. Besides, having more northerners move to the south can only make things better. That southern baptist thing really needs to be diluted a bit.
Inflation- the product of the Obama administration. Lets create a job that cost the taxpayers $400,000. A little more QE3, foodstamp, Free obamacare health for 25 million illegal aliens.
Damn this Obama has messed this country up so bad, with the price increases at Walmart, I feel like I'm shopping at Tiffany's.Why doesn't the author get right to the point on the rent problem-OBAMA
Obama is following the same disastrous type of policies Franklin Roosevelt implemented in the thirties. War anyone?
I invite you to search "Obama's accomplishments as president." You will be surprised at all that he has done. If you didn't complain about the things Bush did, it has to be racism that motivates you to complain about Obama.
ken, your post made almost no sense at all. Says very little for your intellect.
Ty-Why don' t you get a couple of jobs. Oh, that's right . Obama only saved jobs....??I guess you'll never get rich.
Retired, and my wife and I are living on a healthy six figure income. How are you doing with your jobs? Besides, if I leave this site, you would miss me. I would be one less person to remind the idiots of the country just how unenlightened they are, and why we should unite as citizens and take control of our country. That's now my job. By the way, it was George who lost the jobs, and it is the republicans who refuse to compromise and create new ones. Let's not be biased or deceitful.
Tyrone--great for you. I wish you great health. I lived in europe for years. It was going to take my my wife 18 months to get breast cancer surgery after her diagnose. You will soon find out..........
I agree yankee, hell I couldn't find a job in my field in the USA. I now work overseas making the big tax free money, but the healthcare here is horrible for the people that must rely on it. Long waiting periods for surgery. Now if you got money you'll get first class service, but, if your in the second class your wait times just tripled. Its kinda like being on the titanic the first class passengers got to load the boats first, while most in the second and third most of them drowned.
Tyrone- I'm one of those rich people. Thanks for doing your part in society..for yourself. I will be saving a bit on obamacare.
My wife survived stage four barest cancer so I am fully aware.
Sorry, but the rich will not save anything on Obamacare. No one rich is going to give up their health care for this type coverage. I'm surely not going to give up what I have. Fully covered and happy. I just want it for those who are not as fortunate as we are.
Tyrone....That is not a problem. This country has an illegal population that is larger then some countries. It is unfair to provide insurance to them. When, I can go to jail for hiring an illegal. I'm not for change. I just not for this mess.
A thirty year old single male making 40,000 dollars will have a gross domestic income of around 30,000. Under Obamacare his policy cost through an exchange is 4200.00 a year. ( The obamacare policy rates will just about match what people will pay on the open market) The Government will assist the 39 year old with a 1600 dollar tax credit. The 30 year old is on the hook for 2500.00 or approx 200 dollars a month. Considering if the Bush tax cuts expire this same person willbe missing just over a hundred dollars in income pdue to tax increase. Ty- this person will still not insurance as he is living form week to week on his paycheck. Also getting back to the illegal aliens. How do you justify this 30 year old paying 2500.00. The cost to insure the 25 million illegal aliens is oer 250 billion a year with no risk of a fine.
Although, I don;t have a problem with change beign needed. This plan is a disaster in the making. It is simply to insure 25 million illegals....for future Dem votes. The Dems are strting to lose some of the minorities. They need to replenish there vote base. Check out NBRA.INFO
Understand that I have a problem with the way the undocumented are being dealt with. I think that those who are here should be given a path to citizenship and taxed as every other American. I also believe that it is time to secure our borders, and insist that those who enters our country do it legally. The republicans nor the democrats are really interested in securing the border or taxing the undocumented. As usual, everyone in Washington are serving cooperate America by supplying cheap, untaxed labor.
Tyrone,
Visit www.nbra.info , I donate to this group. Yes, I'm white..and their black. They don't believe in the liberal mentality creating a welfare state, trapping Blacks and other minorities. Remember, Martin Luther King was a Republician.
Nor do I. I constantly speak of how the system encourages teen pregnancies. I also believe that every able body should be afforded a job instead of handouts. Nevertheless, I am fully aware that minorities collect less in social services than whites. That is rarely discussed.
However, no one can convince me to accept the current policies of the right. They want to end tax deductions on mortgages, end social security and medicare, repeal Romeny/Obamacare, give greater tax breaks to the wealthy, cut funds from our education system... Now I don't know about you, but those things are all detrimental to my life and to those who are less fortunate than I. We did not create the financial mess the country is facing. There is no way we should have to pay for it while the rich keep getting richer. I simply can't see the logic in that.
yankee, you are obviously an intelligent person, but I believe your views on Obama is motivated by biased views. His greatest problems are, he is not assertive enough, and the republicans in Washington resent the fact that a black man was elected, so they've decided that they will not work with him on anything. They made clear from the beginning that they were going to try and make him a one term president. That is so unpatriotic. It is they who has our country in this stagnated state.
If you think that 3 1/2 years of obstructism, while this country drowns is OK... you are a knot head. Deliberately derailling this country to politically get your way, as the regurges have done... is in fact unpatriotic!
Tyrone, Stage 4...I glad thing went great for you. What you don't understand is that your not keeping your insurance. You are not keeping your doctor. Everything is based around an exchange including your current insurance.
Not true. Everyone will have the option to keep their current insurance. That is just another falsehood from the far right.
Not even close to being a knot head. Again I ask you to search, "Obama's accomplishments as president." Even is you don't like him for personal reasons, that is no reason to ignore the facts. Be informed.
Again, if you didn't complain with what Bush did, your views most be motivated by biased views. That is not meant to be an insult, but an observation. It is quite common in our society. We are all still trying to overcome our biases. Racism is a cancer in our society. We are capable of being better.
...and the rich republicans continue to carry out their very carefully crafted plan... the rich get richer, the poor get poorer, and the stupid republicans contintue to vote for the rich republicans.
Now when we have only the very rich and the very poor, and the rich republicans no longer have a use for the stupid republicans, where will the stupid republicans go?
Considering the fact that they are rapidly becoming a minority, they will end up in the same place the poor minorities and poor whites have always been. However, I am certain that this will teach them the importance of uniting with their fellow citizens for a better America. They still think they have a kind ship with rich white Americans. Little do they know that they are looked upon as ignorant, white nyggars by the elite. We are all just peasants/servants to them.
Tyrone,
I would love to say that Obama had taken me to the promise land. I disagree with Obama's running of the country the same way I would feel if Adolf was running it. Adolf was white? Obama is a pure socialist. Yousimply must get beyond the color thing. Isn't that what you want me to do? We have a society that penalizes the hard working. It is forced charity, Blackmail. I should agree with this. The doantion system doesn't work? Catholic charities provides 85 percent of the worlds help.
By the way. I'm not responsible for anyones healthcare. should I expect free christamas presents for my children? Someone to pay car insurance? What made this country great is being given an opportunity for wealth. It is now one big wealthfare state/country.
The other thing I find suspect about Obam.. Obama sold himself off as a plantation negro. While, I understand the toil of early black Americans and the admiration he may have inspired being a man of dark color. I find one thing absolutely strange. Why does this guy want all of these illegals in the country. Resources that could be used in the Afro-American community. The community that has been affected the most by Obama's dismal performance.
You should read the book by Obama's car Czar. Someone Obama hired to bail out the auto industry. His words for the commanded in chief were not kind. We need someone that understands the business world. Damn, even a mafia Godfather could run things better.
Landlords are now looking at your credit report. So if you credit isn't great. Most likely they won't rent to you. Landlords are just like the Banks. You can't pay, They will evict you. You will be homeless.
The JOBS aren't there. Employers aren't hiring. Many well educated people can't get a job. What's that tell you?
It tells me that bush spent eight years destroying our country, and the republicans, that some of sent to Washington in 2008 and 2010, refuse to allow the current administration to accomplish anything. They are unpatriotic obstructionist, and you will reelect them again in November. We all know that if they would try, those in Washington could easily resolve the country's many problems. They are simply playing a political game with the people and state of our country. To deny this is just ignorant. Furthermore, our house and congress, with all of their hard work, have managed to obtain an impressive 8% approval rating. Do you not see anything wrong with that? Again, you will reelect them in November. Americans have no standards for politicians. A candidate belonging to a certain political party is all that is required. Still wondering why the country is in it's current condition?
"I disagree with Obama's running of the country the same way I would feel if Adolf was running it."
Based on that comment, I know you are a biased person. The longer we chat, the less intelligent you seem. You are obviously allowing your biased, personal feelings dictate your conversation, and you are becoming quite insulting and disrespectful. Do understand that I am not upset with you. It is your life, you have the right to live it any way you wish. It doesn't effect me at all. However, I would like to inform you that it is people like you who keeps the citizens of America divided. Try to imagine what we could accomplish if we were to unite as citizens. We could actually make our government work for us once again. We could stop cooperate America from enslaving the people. In short, we could make this potentially great nation reach her fullest potentials. Divided, we will continue to be manipulated to fight each other while our government and cooperate America takes full advantage of us. There are advantage of being a united force, and everyone could benefit from the results. Give it some thought okay.
The only thing that's preventing America from becoming a great nation is her citizens. We are simply ignoring; therefore, refusing to utilize, the power we posses as a united people. There is nothing intelligent about that. We've got the power.
Hmm so lets tell the banks to pay back all the money we loaned them to bail them out of the bad debt they created for themselves due to not adhering to a higher standard when they were lending money.
They were the ones who lobbied for an won mind you of the repeal of the Glass Stegall Act.
Then lets reenact the Glass Stegall Act in its original format.
Finally remove you money from the banking system and join a credit union.
They created their mess and the taxpayer bailed them out, now they screw the taxpayer with Federal backing.
Time to rid the system of all of them from Wall Street to Washington.
The money loaned to banks through TARP was paid back, with interest, by all the big financial institutions 3 years ago. Most of the other banks paid the loans back more than 2 years ago. The U.S. Treasury made a nice profit on those loans. Where have you been???
Supply and Demand. If people aren't buying houses they are renting. As the number of open units decrease it forces the price per unit up. Either that or the landlord or management company will give you a deal for a long term lease (2 -3 years).
I remember back in 2008 my rent was going to go from $800 a month to $1200 for a two bedroom 900 square foot apartment. We bought a house and once you subtract the tax deduction we are paying about $1400 a month for much bigger place to live. Granted heating in cooling is higher, but even with our house decreasing in value it's still a wash the way I look at it. Four years of paying $1,200 a month is $57,600. My house has decreased in value, but not that much.
My point is even with home prices still decreasing you are still better off buying a home. More so if you can live in it for at least ten years before selling.
When it comes to real estate prices and rental costs, government intervention makes the most sense. When wages are stagnant, unemployment is high and consumer prices are rising, rental costs need to stabilized. Our economy has been and is much too dependent on the value of real estate and this real estate dependence has allowed greedy landlord/investors to take advantage of renters. The concept of Section 8 needs to be expanded but only to landlords who are responsible and do all they can to hold down the costs of renting.
Renters, find responsible roommates to share costs, move back in with parents (and help them pay their housing cost which helps the entire family) and refuse to live in over priced properties, whether in making housing purchases or renting. Consumers would use their "buying power" to drive down the cost of real estate and rentals until the government gets wise and does more to keep these price down. I will also add that rising energy costs (electric, gas, oil, etc) are also part of this problem.
However, when renters damage rental property and leave behind use repair bills for landlords, those renters should be responsible for paying for those damages. Along with control of rental prices needs to come a change in the laws that often make it costly for responsible landlords to evicts people who willfully do not pay their rent or do malicious damage to the property of others.
Fairness is required on both sides to the rental equations.
Too many typo's in my post so I'm resubmitting. Sorry!
When it comes to real estate prices and rental costs, government intervention makes the most sense. When wages are stagnant, unemployment is high and consumer prices are rising, rental costs need to be stabilized. Our economy has been and is much too dependent on the value of real estate and this real estate dependence has allowed greedy landlord/investors to take advantage of renters. The concept of Section 8 needs to be expanded but only to landlords who are responsible and do all they can to hold down the costs of renting.
Renters, find responsible roommates to share costs, move back in with parents (and help them pay their housing cost which helps the entire family) and refuse to live in over priced properties, whether in making housing purchases or renting. Consumers should use their "buying power" to drive down the cost of real estate and rentals until the government gets wise and does more to keep these price down. I will also add that rising energy costs (electric, gas, oil, etc) are also part of this problem.
However, when renters damage rental property and leave behind huge repair bills for landlords, those renters should be responsible for paying for those damages. Along with control of rental prices needs to come a change in the laws that often make it costly for responsible landlords to evicts people who willfully do not pay their rent or do malicious damage to the property of others.
Fairness is required on both sides to the rental equations.
My wife and I were absentee landlords recently for about a year and a half, renting, through a property manager, a well cared for, 2,100 sq. ft., stand-alone house in suburban Dallas. Although the renter had a good credit score and paid the very modest rent ($1,350) on time, he did absolutely none of the required, very modest, maintenance on the house. We're talking about changing the HVAC filters on a quarterly basis, replacing toilet parts so the toilets don't continually run, etc. He also brought in three dogs, even though only one was authorized. My wife and I paid for all of lawn mowing, weeding, fertilizing, and tree and bush trimming. Because the HVAC filters were never changed, we incurred $2,700 of A/C repairs in one summer. The renter left the back door open on 100+ degree days, causing the system to run constantly. Too many renters think that a house is like an apartment, meaning they should have to do no maintenance whatsoever, even though requirements have been stipulated in the lease. For us, there was no profit whatsoever, even though we had no mortgage on the house. After the renter moved out, the property manager was unable to find financially qualified applicants. (We were aware by that time that it becomes a game for renters to pay the first months rent, a minor security deposit, then stay as long as possible without paying anything else.) We sold the property several months later.
I see people living in the damn projects, driving BMW"S, Mercedes and big sport utility vehicles. Now if they can afford those high end vehicles, they can afford to pay high a$$ rent. Hell I'm surprised we don't have a program, that pays for the poor's vehicles. We provide them with free rent, cell phones, insurance and food. Hell we pay for their drug and gambling addictions also.
just as Connie implied I'm blown away that a stay at home mom can get paid $7651 in 4 weeks on the internet. did you read this web site LazyCash43.com
First of all, I think those charging the crazy high rents are just greedy and taking advantage of people. I own two houses. I was renting one at cost (insurance and taxes) to family. Now we are moving into that house and doing a rent to own with the house I've been in for the last 10 years. They will be paying the mortgage after I pay it down to a reasonable asking price (I'm underwater). We want to be fair even though we know their credit was blemished witht he housing issues. Even if we didn't sell it to them and were going to rent it, I would try to be reasonable as far as the asking price. We had plenty of people who wanted to rent the house so it is not as if we would have a hard time finding renters.
On the other hand I don't think the government has the right to tell a private citizen what they can or cannot charge for rent. I wouldn't want them telling me what I could or could not do with my own property. I just think it is terrible for people to take advantage of others. I always try to do the right thing.
“To everybody out there blaming Obama, Bush or any other singular government official as the cause for America's prosperity getting flushed down the toilet. You're missing the big picture. The situation is simple: The near entirety of the US government is corrupt and run by political Bribe-takers bought and paid for by people who have amassed the most wealth overall in this country (Top 1% of the US Population). These politicians, now solely representing their funders and not the voters turn around and pass legislation that gives the Super Rich here every advantage possible, including free money (Quantitative Easing/Bailouts), lower taxes and zero accountability for their actions. In order to prevent revolts from the increased burden to the unrepresented in this country, the Super Rich have set up a bogus political party to siphon off and redirect the anger of the masses (The Republicans) and an ineffectual party (The Democrats) to cave to “republican pressure” while pretending to care about the masses. In addition, they have co-opted and bought out nearly all of the mainstream media in order to filter out any info that would lay the blame on the true culprit, instead leaving the majority of America divided and focusing their energies on decoy scapegoats and partisan nonsense. The super rich and those they pay for care not one bit about jobs or the welfare of the country they grew from. They merely care about having as many digits as possible for their bank statement balance. And if that means the middle/working class will eventually need to vanish, then so be it. The entire system is broken.”
”P.S. Please feel free to repost this message elsewhere if you agree. Part of the way to help turn the tide of this problem is by raising awareness to the reality of the situation. Thx –c”
Originally posted by Craig, then Groucheeoleman….and couldn’t have been said better!
Thomas Jefferson said in 1802:
'I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered...'
and the filthy, greedy rich pigs continue to rape and plunder