How To Avoid Being Priced Out Of Your Neighborhood
Millions of Americans are being priced out of their neighborhoods. Investing in real estate might be their only hope to turn things around.
Across the U.S., residents aren’t being priced out of their favorite neighborhoods, or the areas they have grown up in. They are being priced out of entire cities for that matter. Investing in real estate is rapidly becoming the only hope many have of holding on to their lives, heritages, and giving their families a fighting chance in the future.
The media normally loves controversy and sensational stories, but there is one thing they might not be making enough noise about: how tough the affordable housing crisis is becoming. We’ve heard that it has become half as cheap to buy a home than to rent. Zillow has reported that in some neighborhoods workers need to earn a minimum wage of over $100 an hour to afford a mediocre apartment (while no one wants to pay $15 an hour). We’ve seen data published showing rents going up by double digits in some areas. It’s hardly a secret that home prices have been marching upwards fast. Yet, not even these reports show how tough it is in some places. We are not even talking about Manhattan, Fisher Island, LA, or San Francisco.
In Bonita Springs, Florida, rents have more than doubled in some neighborhoods in that last couple of years alone.Landlords are favoring seasonal vacation renters who are happy to pay $2,500 or more a month on units that used to be leased to local annual tenants for just $800 per month. As of June 2015, there were maybe 3 real estate listings on the MLS for less than $200,000. That includes one listing for $199,000, one pending sale, and one Fannie Mae foreclosure. If you can’t afford $2,500 per month in rent, or to purchase a $200,000 home – you won’t be living in this city. At least not for long.
The media has been quick to pounce on new government initiatives to create more equality and demand access to all price ranges of housing throughout America. However, that is a big battle, and a long one. One with a lot of opposition. Even where there are rent controls and affordable housing subsidies, it is clear that there isn’t nearly enough.
Your Two Options
When you get into a financial bind like this, you have two options:
- Decrease your expenses
- Increase your income
Renters and current homeowners that face escalating expenses can move to cut their bills. They can move to more rural areas where housing is cheaper. Of course, this often means moving away from family, friends, schools, and jobs. Not everyone can handle that.
Other bills and expenses can be cut too. Car payments, credit card bills, eating out, groceries, clothes, etc. Again, these can only be cut so much. You’ve got to have clothes, food, and a way to get to work. Life isn’t much fun if you can’t enjoy it sometimes.
Once you’ve slashed your bills as low as you can go; you can only keep up, or get ahead by increasing your income. Most instinctively try to tackle this by working longer hours and taking on multiple jobs. That can take a big toll in many ways: physical health, stress, and relationships. There are obviously only so many hours a day. Even if you make $35 per hour, when you add in utilities, you’ll still be working around 2 weeks of the month, or paying half your income to rent a $2,000 a month apartment. That’s before you pay all your taxes.
Investing in Real Estate to Get Ahead
Buying your own home is a great way to cut your expenses. Many will find that today’s low interest rates mean that they can actually own a home for less than they were paying in rent. They’ll be building up wealth, and eventually get rid of those payments forever.
To solve the income problem, individuals can invest in income producing real estate. Mobile homes, apartments, single-family homes, and even parking lots can all produce income. Those in high priced areas can invest further afield where properties are cheap, and can produce positive cash flow.
This income than can then be used to help buy a home where you really want to live, or if you love renting, to offset your high rental payments. There are even hybrid options like buying small multifamily properties, which can provide both a home, and income, while building wealth at the same time.