How To Beat Being Priced Out Of Renting In Your Area
Affordable housing is becoming a major issue in many American cities. Many residents and key workers are simply being priced out of the cities they have lived in for years, and where their kids have been growing up. So if you feel like you are being priced out of town, what can you do about it?
America’s Affordable Housing Crisis
While we technically still have a long way to go to return to previous real estate highs, many are complaining about a lack of affordable housing. Earnings just haven’t kept pace with rent and home price growth. Even if minimum wage workers win the battle for $15 an hour, they’ll barely be making 30% to 50% of what they need to afford the median priced apartment in many cities. According to statistics from Zillow, you’d need to make over $416,000 to afford the average apartment in the most desirable part of the country. Within the next 12 months, most renters will be up for lease renewal. And they aren’t going to like the new numbers.
So what can renters do to avoid being priced out of their cities, or out of housing altogether?
Why Outrageous Rents Aren’t A Big Deal Anymore?
Sky high rents in areas like San Francisco, CA have many worried that key workers simply can’t afford to live nearby. An area that lacks good teachers, emergency workers, and law enforcement could be headed toward some of these issues. However, with over half of individuals now expected to be working remotely, the dynamics are changing. This is causing a glitch in employment figures. But it also means that individuals are free to move anywhere. At least where there is decent internet service. Instead of a stampede to dense urban areas with overpriced micro-apartments, many could choose to move outward to the burbs and rural areas. Here, housing costs are dramatically lower. Yet, the same incomes can be achieved as if working in San Francisco or New York.
Of course, not everyone wants leave their home city. Not everyone wants to move far from the best healthcare, their family, or take their kids out of their schools and away from their friends. So what are the other options?
One way to offset higher rents and home prices is to rent out a part of your property. Even renters can do this if they get permission from their landlords. Rent a room, or two, and bring in enough income to combat higher rent.
Building a home may even be a less expensive option for some. Shipping container homes, tiny homes, and manufactured homes have all been trending. Not all are less expensive options, but some can be. And of course, not everyone wants to live in these alternative housing options. However, for some, they could mean eliminating housing costs far earlier. If you are paying $1,000 in rent now, a $24,000 manufactured home would mean you could be rent and mortgage free for life in just 24 months.
Buy Now Before It’s Too Late
Unless you realistically expect your income to rise dramatically and outpace housing costs, this is the time to buy a home. Interest rates are great, and they are only going up. Rates make much more of a difference to the real cost of buying a home than asking prices. So while you might have to pay $10,000 or $20,000 more for the same home today versus last year, this is still the cheapest it is going to get. In many areas, buying is even far cheaper than renting today. And when you consider how tough many rental applications and screening processes have become, it is even easier to qualify to buy a house than to rent one. Even if you pay the same amount in mortgage payments as you were in rent, at least you are gaining equity, and you’ll only have those payments for 15 to 30 years, until your mortgage is paid off. That sure beats a lifetime of rising rent payments.
Note: if you can’t afford to buy where you really want to live, you can buy and rent a property out for a profit. Then use the cash flow to pay your rent where you really want to be.
Key workers can also find many deals. Some foreclosure auctions offer up to 50% discounts to law enforcement, teachers, and EMTs. Real estate wholesalers can be a great resource for everyone looking for discounts on houses and condos.
However, once you buy a home and solve your own affordable housing crisis don’t forget to help someone else. A huge part of the problem is just accessing the right information. Too few people are aware of their options, or of how easy buying a home really is today.