A number of different household expenses have increased significantly so far this year, but some rose much more than others.
According to National Housing Conference Center for Housing Policy, the combined cost of housing and transportation increased close to 44 percent in the nation’s 25 largest metropolitan areas since 2010.
“If we really want to understand whether housing is affordable, we need to consider housing and transportation costs together,” said Center for Housing Policy executive director Jeffrey Lubell. “Along with utilities, which we include within housing costs, these are the true ‘costs of place,’ and our report shows they have grown much faster than incomes since 2010.”
Individually, housing costs increased 52 percent since 2010, while transportation costs rose 33 percent, the report said. This was only slightly offset by a 25 percent gain in median household incomes.
As a result of increases costs, households earning between 50 and 100 percent of the median income in the 25 cities examined dedicated roughly three-fifths of their incomes to these two expenses. This is troubling because most experts recommend dedicating just 30 percent of your income to housing and 15 percent to transportation.
On a local basis, residents of Washington, D.C. dedicated the largest portion of their incomes to these expenses. In addition, households in Boston and San Francisco also put some of the largest shares of their paychecks toward housing and transportation.
Why Has This Happened?
The average price of gasoline increased significantly during the past decade, which contributed to rising transportation costs.
Meanwhile, following the housing market collapse, many Americans were forced to put their dreams of homeownership on hold and stay in the rental market. This caused average rental rates to also rise significantly. In fact, it is now more affordable to own a home than rent one in the majority of housing market.
While some would believe more consumers would buy homes to compensate for this increase, this is often easier said than done. Stricter lending standards and stagnant wages have made it difficult to qualify for mortgages and save for down payments, forcing people to rent.
Coping With Rising Rental Rates
There are several ways to save on the cost of rent. However, if a financial misstep leaves you struggling to pay your landlord one month, a bad credit payday loans may be able to help you avoid eviction. Just remember, this loan should only be used to cover rent if you have run out of options and never make it part of your overall plan to take of property.
Instead, try to talk to your landlord to see if you have other options. You may be surprised as to how willing they are to hear you out.
If you currently live by yourself, and the cost of rent has become too much to handle, consider getting a roommate. Even if you don’t have a spare bedroom at the moment, that doesn’t mean you don’t have the room.
Some landlords might allow you to set up a temporary wall to create a second bedroom. Just make sure you get permission to do this. You might get in trouble if you take the initiative without the green light.
Before you sign or renew your lease, ask your landlord if the rental rate is negotiable. If it isn’t, see if you can get other perks, such as utility costs included or free parking to compensate.