The National Association of Realtors (NAR) has released a list of worst places for renters, and it's showing an alarming trend.
NAR explains that the gap of the growth in rent and income is increasing based on its study from 2009 to 2014 of 70 metropolitan areas.
Its effects are now seen in some places, according to CNN.
High Rent: Rent Eating Up Income
As expected, New York City will be on the list. As noted here on RealtyToday, the prevailing median rent in New York eats up to 60% of the regular New Yorker's income. With only 40% of the remaining earnings to provide for basic needs such as food, clothing, medicine and education, that leaves a bleak future for people living in the area. This is a growing dilemma---"high rent, low wages"--- as stated by Teresa Tritch on Taking Note.
However, according to the same report by CNN, it is not just New York that suffers such a high rent scenario. The highest increases in rents since 2009 were observed in New York (50.7%), Seattle (32.%), San Jose, California, (26%), Denver (24%) and St. Louis (22%), NAR adds.
Falling Income
In some areas, rent has not increased like that in New York, but the income has actually fallen, creating a larger gap, says CNN. Thus, a tenant's capacity to afford a good place to stay is lowered. The top areas with this kind of sad situation ---where rent increases while income decreases---are Alburqueque, Omaha, Syracuse, Providence, Tuzcon and New Orleans. The most dramatic is that of Alburqueque's case, where rent increased up to 10% and with a 12% decline of income, as seen in CNN's report.
Overall, rents have increased 15% from the period 2009 to 2014 and generally, except for some cities, the income has gone up to 11%, according to NAR's report.
Rent to Income Imbalance
Rents have increased tremendously in Seattle in the 5-year period of the study by as much as 32%. Even San Jose experienced a 26% increase during the same period. However, only 15% increase in income was recorded for Seattle and 8% in San Jose' metro regions.
In fact, NAR, reveals that only 4 among 70 metro areas namely --- Oklahoma, Salt Lake City, Dayton, and Detroit -- had higher increase in income than the increase in rent.
So what does this tell us? There's a growing concern for such an imbalance. You may see the disparity, so as it builds up through the years, it will just make it harder for the people in these areas to live more comfortably.
Aside from that, Lawrence Yun, NAR's chief economist explains that this widening gap between rent and income will make it harder for renters to become homeowners.
