The Rent (and Mortgage) Is Too Darn High

The Rent (and Mortgage) Is Too Darn High

By most accounts, real estate in the U.S. is on the rebound, and the housing crisis is firmly in the rearview mirror.

And yet for more than half of Americans, housing remains a major cause of financial stress.

According to new research by the MacArthur Foundation, 52% of American adults have had to make major sacrifices in order to cover their mortgage or rent payments—including racking up credit card debt, delaying saving for retirement and even taking on a second job.


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"While economists and housing experts say that the housing crisis is behind us, large proportions of the American people are not feeling the relief," the report noted. The problem: Home prices have surged 20% in the last two years—but wages have hardly nudged, Lawrence Yun, chief economist at the National Association of Realtors, told MarketWatch.

And its not just homeowners who are feeling the pressure: Rents are skyrocketing as well. In fact, a recent RealtyTrac study found that one in three Americans live in a housing market where average rent payments exceed 30% of the area's median pay.

LearnVest generally recommends that homebuyers devote no more than 28% of their monthly take-home pay to housing costs. But in competitive housing markets like parts of California or New York City, it's becoming increasingly rare to snag a home under those guidelines. One 2014 study found that in San Francisco, for example, a mere 14% of the available homes could be deemed affordable for a middle-class family.

Want to learn more about how much you should be shelling out for a home? Start here.


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