With the collapse of the housing market, the argument about renting versus buying a home was reset. Home prices suddenly plunged. For people who kept their jobs through the Great Recession, houses in some markets like Las Vegas were available for prices 40% below 2005/2006 peaks. The other component of his argument is personal finances. People who have no savings cannot afford down payments. People with low incomes can barely afford to rent or buy.
Source: Thinkstock
The ability to rent a home was studied recently by the National Low Income Housing Coalition. Its calculations were based on the fact that, nationwide:
[A]n individual needs to earn $18.92 an hour to afford a two-bedroom rental unit at Fair Market Rent. This figure is referred to as the “Housing Wage.” Today’s national average Housing Wage is more than two-and-a-half times the federal minimum wage, and 52% higher than it was in 2000.
Housing prices in many markets, on the other hand, have returned to near 2000 levels, according to the latest S&P/Case-Shiller report.
The coalition’s conclusions were grim, particularly for low-wage Americans. In its new report titled “Out of Reach 2014,” it concluded:
In 2014, the mean renter wage, or what the average American renter earned, is $14.64 an hour. While housing costs vary nationwide, Out of Reach 2014 finds that in no state can a full-time minimum wage worker afford a one-bedroom or a two-bedroom rental unit at the Fair Market Rent.
The worst markets for these Americans:
- Hawaii, with a two-bedroom housing wage of $31.54
- District of Columbia, with a two-bedroom housing wage of $28.25
- California, with a two-bedroom housing wage of $26.04
- Maryland, with a two-bedroom housing wage of $24.94
- New Jersey, with a two-bedroom housing wage of $24.92
For more details, by city and region.
The National Low Income Housing Coalition suggests that the debate about raising the federal minimum wage and how to address income inequality must include the issue of the shortage of affordable housing for the lowest income households.
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