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People Paying Highest-Ever Percentage of Income on Rent
Tuesday, August 18, 2015 6:40 AM

Renters now pay 30.2 percent of their income on rent, according to a Zillow analysis of rental and mortgage affordability in the second quarter. That is the highest percentage ever, said Zillow, which has data going back to 1979.

Economists consider an affordable proportion of income for people to pay on rent is less than 30 percent. Between 1995 and 2000, renters on average spent just over 24 percent of their incomes on rents.

Rental affordability worsened in 28 of the 35 metro areas covered by Zillow. It remained especially poor in the New York area and pricey West Coast cities. Los Angeles renters could expect to pay 49 percent of their incomes in rent. San Francisco renters are paying 47 percent of their incomes on rent. In New York rent is now consuming 41 percent of pay.

Economists say the rising rents are making it even more difficult for renters to make the transition to buying because it is difficult to save for a down payment. Stricter credit standards have also made it more challenging to get a mortgage.

Source:  The Wall Street Journal, 13 August 2015