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The Rentals affordability Crisis
The onset of recession and the ever surging high cost of living is the root cause of the alarming number of people dropping out of the housing market in the country. Most of the Americans are opting to ‘double up’ as demographers will term it, or rent a room instead, as opposed to owning their own homes. Exponents of home ownership argue that, home ownership guarantees one more stability, privacy and security. Additionally, an increased rate of home ownership is an indicator of a significant improvement in a country’s economic health. On the contrary, their adversaries purport, that, benefits that come with renting such as: – ease of moving away; freedom from maintenance and responsibility, a better ability to budget for housing and affordability, outweigh the associated detriments of homeownership which are the exceedingly high costs and the high foreclosure rates currently being experienced. However, of late the key benefit that makes renting an attractive option to homeownership, that is affordability, is turning into one of its greatest shortcomings.
Six years after the recession, which resulted into prevalence of unemployment, ‘doubling up’ is still common practice in America. According to the (Census Bureau, 2013) the home ownership rate has been declining since 2005. The figure was pegged at 65.2% in the year 2013, a slight drop form where it had been a year before but still substantially lower from the all time high. This picture is mind boggling because it depicts a country whose economic health condition is in jeopardy, a state that is not good for investments to thrive. Note however that, one of the most significant sub-groups in the ‘doubled up’ population consists of young adults with their newly found jobs who are eager to move out of their parent’s house to start life on their own. Naturally, this group cannot be expected to be homeowners, as a matter of fact, renting seems to be a more feasible option for this group of home seekers. Consequently, there has been a significant increased demand on rentals.
According to (SWANSON, 2013) the renter share of household rose from 31% in 2003 to 45% by the year 2013.Notably, the demand for rentals is no longer a preserve for the young adults alone but also the older members of the society. Statistics by (Realty Trac, 2012) majority of the rentals were owned by adults aged between 30-54 years old, 65% of them being illegal immigrants.
The downside of the excess demand on rentals has been the increase in the rent fee charged. An option that initially favored the lower income earners is now turning out to be a financial burden. Of major concern is the fact that, it is now becoming cheaper to buy a home than it is to rent it in nearly all major cities in the United States.
As the demand for rentals escalates, the soaring rent continues to become an unbearable load for the renters to bear. Studies by Harvard’s Joint Centre for housing indicate that approximately a half of renters spent 30% of their income on rent. This has increased from 18% a decade ago. The country is currently experiencing one of the worst rental affordability crises ever.
The high rents coupled up with stunted wage growth are the main factors that fuel the house affordability problem. Reliable statistics from (SWANSON, 2013) indicate that in over four years there has been a 43% increase in number of Americans with the worst case of housing needs. This implys that these renters have been paying more than half of every dollar they earn on housing. It is every individual’s ultimate desire to own a home, however. with the ever rising mortgage rates, h.............
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