Former New York City mayoral candidate Jimmy McMillan made it his slogan. Low-income and middle-class renters far beyond the Big Apple are echoing the sentiment. Across the nation, as the vacancy rate is plummeting and economic growth is slim, landlords are pretty much the only people who you won’t hear saying it.
Indeed, “the rent is too damn high.”
Nationally, home ownership rates are at their lowest in 15 years, meaning more and more Americans are depending on the rental market. Low-cost rentals are becoming more and more scarce. Some are being converted into higher-end units; others are falling into disrepair and coming off the market completely. According to the Huffington Post, the number of rentals under $500 dropped by one million between 2007 and 2010. During that same time period, rentals that fetched over $1,205 increased by 2 million.
A 26-year-old New Yorker named Ryan Nethery has a Tumbler site devoted to local Craigslist ads featuring tiny apartments for jaw-dropping prices. His blog has taken on a life of its own, its popularity no doubt spurred by the shared frustration of others who can’t believe how expensive even tiny, unkempt rentals are these days.
An example? One miniscule room with no windows in Brooklyn is going for $800. Other listings offer shared rooms—even shared bunk beds—to potential roommates for prices comparable to mortgages on most houses in the Midwest.
Over on the West Coast, San Francisco’s rentals average $1,905 per month for a two-bedroom apartment. A nonprofit research and advocacy organization called National Low Income Housing Coalition estimates that a person would need to make $76,000 annually (or $36.63 per hour) to live there (based on their benchmark that people shouldn’t spend more than one-third of their income on housing).
Families with incomes below the city’s median of $103,000 have been priced out of San Francisco, where the rate of foreclosures is among the highest in the country. Those foreclosed properties mean an influx of people into the rental market, where new supply via construction hasn’t kept pace with the demand. San Francisco is a city where new development isn’t easy—the urban core is already high-density and historical preservation places tight restrictions on new units.
Honolulu, Los Angeles, San Jose, Calif. and Santa Cruz, Calif. are other urban areas with notoriously high rents. But what about the less-well-known real estate markets where the rents are rising the fastest?
Renters in Greenville, S.C. are feeling the pinch as shrinking inventory and a shaky economy have combined to kick rents up 11.2 percent from 2009 to 2010, the biggest jump nationwide during that period. The other metropolitan areas with enormous rent increases during that time were Chattanooga, Tenn. (10.4 percent) and Savannah, Ga. (8.4 percent). Out west, rents in Portland, Ore. and San Jose, Calif., jumped about 8 percent.
Is there any good news for renters? Not really. But mortgage rates are at an all-time low, so if they can save enough to make a down payment it may be time for them to consider home ownership.