It’s why in so many areas the amount of rentals is astounding. Las Vegas, for example, they keep building and building and people are paying $1800 a month- even those paying six figures or getting roommates.
It’s nuts.
It’s why so many companies, my industry which is automotive - both Toyota and Nissan have left and Honda moved some.
But even in the South In major cities there is the same issue.
This is why many think part of the Feds goal, including stopping inflation, is to crush housing prices.
Otherwise home ownership percentages will dwindle.
My son is finding one bedroom rentals are over 2k a month in our area. I think he’s settled on a place that’s $2,300. It’s not fancy, 80s era condominium, but that’s all he can afford without roommates. His rent will be considerably more than the mortgage on my beautiful 3,500 square foot house.
I think one can often find less. But maybe in neighborhoods many don’t find desirable for safety or other reasons.
It’s crazy. We have people making hundreds of thousands in our area renting at $4k a month plus because how does one come up with 100k, 150k, 200k for a down payment ?
We are in this pickle, likely because the fed kept money cheap for far too long, thinking they had inflation covered as they kept using the word transitory.
It goes to show you, that even for our best educated and most accomplished - all the academics in the world - it’s still a guessing game.
We are likely to pay a heavy price on the back end but I’m hopeful given the tight labor market that our upcoming graduates are in the position of your @socalmom007 vs jobless. It’s not great but it beats jobless. So far the interviews for my son are robust in # but no offers (it’s early) and I fear a repeat of recent history when kids with offers had them rescinded.
Yes, it will… and yet he was approved because rent to income ratios have gone out the window as prices have exploded. The company car is probably a $1500 a month benefit. Some utilities are covered. He’ll basically be paying for food and the rest of his utilities with his remaining income, but it will be tight. Thank God and the bank of dad he has no student loans or debts!
I saw this yesterday … $1,100 for 95 square feet in Manhattan. I’d love to know the history of the building. Do you think the owner subdivided normal sized apartments?
The state of rents in this country is really sad. And this is happening at a time when population growth is very tepid. I don’t know why that is. Real estate people say that a mortgage payment should not exceed 28% of gross income. So if your gross income is 100k, the mortgage payment should not exceed 28k a year. Assume you can afford the same, apart from the principal payment of some 20% – this means you can afford a rent of about 24k, or 2k a month. Does this feel right? There are obviously tax benefits to owning that don’t exist with rentals, but you’d expect the landlord to pass on some of the benefit to you. In NYC, this translates to a roughly 200sft living space.
It also doesn’t help that (a) no-housing-growth NIMBYs often dominate local politics, and (b) Wall Street investors are buying up starter homes and turning them into rentals (that are bigger and more expensive than entry-level rentals).
There is lots of building in many areas though. Las Vegas. Nashville amongst others.
But home builders haven’t gone crazy. But they build to earn.
With high interest rates, they’ll either need to incentivize or slow down.
But yes companies like Invitation Homes and many others are buying up homes. My neighborhood passed a no rental resolution as we are close to a tourist town. I voted against but it passed.
Not sure what the future holds but we had high portfolio values til 3 mos ago and still have high home values.
But the next generation. I hope it works out. But as a society what will we do to help them ??
That depends on where one is looking. Rents on the peninsula, especially in San Fran, are pretty high. Studios average a bit over $3K. Manhattan is pretty tough too.
That said, if you pay $20k more in The Bay than you would in say St. Louis, but you make $100k more, and the job you want is only there, it does pencil.
I think I am biased by the NYC requirement of income = to 40X the monthly rent, which is not a fair comparison to a LCOL area or a state w/o state and city income taxes. Plus, your son won’t have any commuting costs. Only $127/month in NYC for the subway but also more use of Uber & Citi Bike than someone who lives in a suburb.
Currently studio apartments in Boston are over $2K. They are building more apartments, but they are usually very high end with a handful of low income apartments required by the city. The middle class is getting pushed out (and here I mean those making close to $100K).
I read this article in the paper yesterday showing the # of new units built 2013-2021 in various cities and the share of all apartments the new units represent.
For those who cannot access the article, Nashville leads on a percentage basis with new units representing 79% of all apartments. Tampa 69%, Miami 66%, Orlando 61%, and Jersey City 60%.
Seems like I find some that on paper look ok - like $1200 up in small southern cities. Of course no clue on utilities. And $1600+ by us
He commuted last summer about 50 mins. Mom says no way if there full time.
Will see how it works out. Maybe $65k = $75k depending where.
Of course we need an offer - without that the rent issue is a non issue.
Kids could lower costs - roommates, etc. In some places a car is a must.
Kids don’t want to share pain ….like my kid says home or alone but no roommates. Alone comes at a cost - monetarily and in some ways socially as they won’t be around thousands of similarly aged kids.
My son shares a 3BR/3BA with 2 other engineers and pays over $1500 for his room. Essentially, they’re all still living like they did in college. They enjoy it though and they’re all socking a bunch of money away. He may live alone when he moves though.
My son was trying to find a larger place to share with friends, but could not secure anything. Housing is so scare if you have a 3 or 4 bedroom rental, you have families lined up. No one wants to rent to a houseful of 25 year old single guys with dogs.
I will say the company car with gas and insurance is quite the boon with gas at $6.50 a gallon in Los Angeles. We’re all a bit jealous of that.