Is rent really too high?

[Grendalcat]

So recently I have read many articles and comments stating that housing and rent are too high for the average person to afford.

However consider this:

In 1986 we rented an 1100 sf appartment(2BR, 2B) for $400/month.
This week a friend of ours rented an almost identical apartment, in the same part of town, for
$1000/month. Using this inflation calculator, the expected cost would be $1146/month.

https://www.usinflationcalculator.com/

So is my area unusual, or are people not taking into account the affect of inflation on rents?

[Garou]

Yes it is. Especially in high density areas with inadequate housing vs population. Low/average income people will be struggling solo without a partner.

[Will be deleted]

Tonepoet eredeti hozzászólása:

So part of what you're saying is, rent is 10.46% higher than inflation accounts for.

You're missing part of the bigger picture here. Inflation is a bit of a lie. The dollar devalues, but it doesn't devalue unilaterally in such a way where you can apply it to any given price of a good in the past, and guess what any individual price should be priced like now. Some things outpace inflation. Other things underperform inflation.

Unfortunately, the price of housing is one of those things which has has outpaced the pace of inflation by 2.4 times since 2013, and they're 25 times higher than they were in 1963.[www.prnewswire.com]

Going by inflation, a house that cost $50,000 in 1973 should be somewhere between $150,000 and $200,000 today. What it actually costs is closer to $450,000.

In the past you maybe rent a place while you get off your feet, save up some money and buy your home so you never had to pay rent again. Today you're less likely to be able to own your own home, so you are likely to either be paying rent on an indefinite basis which really eats into your savings or living with your parents to offset costs[www.cbsnews.com], if they're so gracious as to keep you around.

Moreover, in 1973 minimum wage[www.chicagotribune.com] was $1.60. Inflation adjusted up to 2021, that's the equivalent of $9.88. It had been at $1.60 for quite some number of years before, but in '74 it bumped up to $2., which was the equivalent of $11.29.

Federal minimum wage hasn't been adjusted since 2009, when it was set at $7.25 per hour. People may very well have less buying power trying to buy more disproportionately expensive houses.

To verify, in 1974, the average salary was $8,030.76, which is $59,226.86 in today's money.

Today the average salary is $63,795[www.sofi.com]. Better? I'm not so sure.I mean, $3000 out of $60,000 is only 5% more income which doesn't seem to offset the extra cost of rent.

However, it also needs to be considered Elon Musk and Jeff Bezos are worth nearly 200 billion dollars.

During the 1970s, the richest man in the world was oil tycoon J. Paul Getty, but his 6 billion dollar fortune would only be worth about $42 billion dollars, if we track from 1973.

That some people are able to reach heights that are over four times greater than what the very wealthiest man could manage to earn before suggests to me that the wealth may not be spreading around as much as it used to spread, suggesting that the simple average either over-represents what the typical American earns or we have more people living in extreme poverty, because the average is being propped up by extreme earners. I'm not quit sure which is the case though.

Should be noted that the rate of homelessness is 19.4 per 10,000 people[usafacts.org], and either way it seems like an undesirable outcome.

The houses tend to be larger today and interest rate tend to be lower which combined may explain atleast part of the housing cost and add in people moving to certain cities, like San Fransico which housing prices are now crazy high while leaving other parts of the country behind like rust belt may explain the rest of the increase.

Minimum wage was bad in 70s and still bad, never been anything other than bad, also federal minimum wage is not what many states use which can be much higher.


Average salary being the same in 70s and 2020s mean if things like rent have increased, other things must gotten cheaper.

Looking at paper wealth of the rich don't make much sense, we should look at how much actual income they have as that income could be money paid to the workers. But it seems economic inequality is the number 1 issue with USA and despite its very high gdp per capita it tend to underperform in social issues, like instead being like number 5 or whatever its gdp per capita is, it tend to be around 20-30 when looking at its overal performance and generally have declined since the 90s, like its human development index was number one once upon a time and now quite far from it and adjust for things like enviromental impact and it become far worse.

USA is a very rich country but extreamly wasteful about its wealth, which mean it fall behind countries significantly poorer than it.

[Kobs]

I'm not complaining, my $280,000 house is now worth half a mil and climbing . All I have to pay are taxes on it which comes to about $420 a month

[Grendalcat]

AdahnGorion eredeti hozzászólása:

Grendalcat eredeti hozzászólása:

So recently I have read many articles and comments stating that housing and rent are too high for the average person to afford.

However consider this:

In 1986 we rented an 1100 sf appartment(2BR, 2B) for $400/month.
This week a friend of ours rented an almost identical apartment, in the same part of town, for
$1000/month. Using this inflation calculator, the expected cost would be $1146/month.

https://www.usinflationcalculator.com/

So is my area unusual, or are people not taking into account the affect of inflation on rents?

In 1986 the avarage salary in the US was 20k a year (Female earned around 15k, male around 25, hence my avarage here)

In 2024 the avarage salary is around 60k

Avarage rent of an apartment is 1100 usd.


Basically its cheaper now to rent, than it was in 1986

That is along the lines of what I was thinking. Although as others have mentioned, the salary/rental cost ratio is probably worse in major metro areas. The metro population where my friend lives is about 500,000.

[AdahnGorion]

Grendalcat eredeti hozzászólása:

AdahnGorion eredeti hozzászólása:

In 1986 the avarage salary in the US was 20k a year (Female earned around 15k, male around 25, hence my avarage here)

In 2024 the avarage salary is around 60k

Avarage rent of an apartment is 1100 usd.


Basically its cheaper now to rent, than it was in 1986

That is along the lines of what I was thinking. Although as others have mentioned, the salary/rental cost ratio is probably worse in major metro areas. The metro population where my friend lives is about 500,000.

I reckon that is true.
The big cities and metropolis are ofc more expenssive, but nobody is forced to be there!

Overall the change is lower for the majority of people.. I think it has to do with the fact that people consume more today, than they did back in 1986.

[Mizu]

So, are medium sized cities the way to go, then? I've lived in a big city for a decent chunk of my life and can't fathom being here anymore.

[Grendalcat]

Yui Kamui eredeti hozzászólása:

So, are medium sized cities the way to go, then? I've lived in a big city for a decent chunk of my life and can't fathom being here anymore.

IMO yes. Certainly for me, I can't imagine living in a major metro area.

[Mizu]

Grendalcat eredeti hozzászólása:

Yui Kamui eredeti hozzászólása:

So, are medium sized cities the way to go, then? I've lived in a big city for a decent chunk of my life and can't fathom being here anymore.

IMO yes. Certainly for me, I can't imagine living in a major metro area.

Yea, I just really want to live somewhere that's quiet, safe, and affordable. My current area has been steadily getting more expensive over the years, and there's too much going on for my liking.

I remember wanting to rent a very comfortable apartment once that was listed at around $1100 from what I remember, and last i checked not too long ago it went up to about $1500-$1600. I've been looking to move to smaller cities since then.

[Stop Having Kids]

High crime areas have low rents. Not thanx.

[Triple G]

In the city i live in the rents are 43 % higher than 10 years ago. Apparently only 13 other cities had a higher raise here. And this is like an average city with around 170k people. Nothing special.

And obviously the wages didn´t raise by 43%.

So it´s not only an US thing.

[Xero_Daxter]

You have to be making 2000 dollars a month minimal just to slide by. And that’s if you live in a perfect world with no accidents and inconvenience.

[Triple G]

I mean recently there were some threads about the nice and high salary for certain jobs in the US. Like 200k for something in IT. Shouldn´t be a problem for those who earn more than 10k per month to pay like 3k rent. It´s only bad for those which earn less...

That´s one big problem if it´s about such big gaps in the salary of people - even if the people have full time jobs. So those with the money can also save money and time by shorter ways to their work - while for others it´s a trade off. Less rent for higher costs for the way towards the work.

[HypersleepyNaputunia]

the partial solution is corporations cant own single family homes

[Triple G]

kimiko eredeti hozzászólása:

the partial solution is corporations cant own single family homes

Those are usually owned by the banks, as young couples buy them, and then they divorce before it´s paid off. There are a good bunch of them for rent - at least here. A good solution would be that corporations or companies can´t own any property which is for living, except they build it for their own workers exclusively.

Another solution would be to cap the prices for rent - which turns off the corporations to have them as investment objects.

And one could work on the wage gap.

[Agenda 2025]

County Property taxes went up 50% in 2023. There is no way Democrats can "limit" rent when counties raise property taxes 50% in ONE YEAR.