U.S. Rents Just Hit a Record High. Here's When to Consider Moving
- Rent prices keep rising on a national level.
- Once your rent exceeds 30% of your income, it may be time to consider a move.
Is your rent getting harder to keep up with?
It's hardly a secret that living costs have been soaring this year due to inflation. But it's not just that consumers are paying more at the supermarket and the pump. They're also spending more money on rent.
In April, the national median rent rose to $1,827, according to Realtor.com. That's a 16.7% jump from a year ago. And it's putting many tenants in a position where they're struggling to keep a roof over their heads.
Why are rent prices soaring?
The reasons for higher rents are multifold. First, rental demand is up across the board right now. With home prices being through the roof and mortgages becoming more expensive thanks to rising interest rates, a lot of people can't manage to buy a home of their own. As such, they need to rent one, leading to more demand that landlords can capitalize on.
Also, many property owners are seeing their own costs increase, and are passing those costs along to their tenants. Because home values are up on a national level, some homeowners are already seeing their property taxes rise -- and so they're raising rents to compensate.
Similarly, many landlords cover utility costs for tenants, such as heat and water. But since utility costs are up, landlords need to find a way to cover those increases.
Should you consider moving if your rent has soared?
If your rent has climbed to the point where it's unaffordable, then it may be time to consider a move to a new home -- perhaps a smaller one, or one in a more affordable neighborhood or city.
How do you know if your rent is no longer affordable? A good rule of thumb is that your rent should not exceed 30% of your take-home pay.
So, let's say you bring home $5,000 a month. That means you shouldn't be spending more than $1,500 a month on housing. If your rent is $1,700, it means your home is no longer considered affordable, generally speaking.
That said, there are some exceptions. It may be that you live in a city and walk pretty much everywhere you go, thereby spending almost no money on transportation. In that case, you may feel comfortable going a bit above that 30% limit because you're keeping another major expense down.
But even if your rent doesn't exceed 30% of your take-home pay, if you're struggling to keep up with it, you may want to start looking at another home. Before you do, though, weigh the cost of moving against your potential savings.
Downsizing to a smaller space might shave $150 a month off of your rent. But if it will cost you $1,500 to move, and another $600 a year to rent a storage unit to house the belongings that won't fit in your new home, then you're not going to save any money in the course of a year (though you might reap savings if you stay in your less-expensive home beyond a year).
Right now, there's no telling when rent prices will start to drop. But if your rent keeps going up, it may be time to reassess your living situation and see if there are better options available.
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