LANSING — Real estate experts across the state say the cost of renting a home is rising and the trend toward higher rent will only continue.
Recent economic turmoil has raised barriers when it comes to owning a home, sparking a surge in the rental market across the country. But what happens when wages and income level don’t line up with the rising cost of rent?
According to the National Low Income Housing Coalition in Washington, D.C., one in four renters pays half of his or her income in rent.
In St. Joseph County, for example, out of 1,565 rentable households, only 616 available units are considered adequate and affordable, coalition figures show. And the rents for two-thirds of those homes have gone up, according to last year’s fair market rent, a real estate term that indicates the amount of money a given property would command, if it were open for leasing at the moment. Van Buren and Cass counties also showed small increases in all unit sizes.
Many factors explain why rent rates are increasing, such as investment in real estate, rising home prices, higher taxes and insurance rates and tighter housing standards for property owners, according to the Michigan State Housing Development Authority.
Kelly Rose, director of rental assistance and homeless solutions for MSHDA, agrees an overwhelming number of families struggle to pay rent.
“Typically in Michigan, one has to be making at least $14 an hour to be able to support a family today, and as a safe harbor, at least 30 percent of that should go to rent. But looking at cities like Traverse City, on average 50 percent of residents’ income is going to rent,” said Rose.
With the improving economy there is a higher demand for affordable housing. And with wages often not increasing at the same rate, some households may trade off paying for education or even weekly groceries to cover their rent.
The National Low Income Housing Coalition said that areas in the state are struggling more than others.
“About 33 percent of renters in the Grand Rapids region are paying unaffordable rent — most of them being small business owners and hourly workers,” said Cindy Underwood, director of the Department of Health and Human Services in St. Joseph County.
Underwood, like Rose, said those workers must make around $15.16 an hour to afford rent in the state. And although the number of jobs has increased, wages have not.
Michigan State University public and health economics professor John Goddeeris said the tightening of the market has the most significant impact on low-income renters.
“The problem continues to grow as potential homeowners are increasingly priced out of the market, instead turning to rentals, further limiting the rental stock and driving prices higher,” said Goddeeris.
According to the Bureau of Labor Statistics, 96,000 Michigan residents work at or below minimum wage, making finding affordable housing more difficult than ever.
“More than half of these households are headed by elderly or disabled people, a third of them with children, that are continuously struggling to pay rent, making them more prone to homelessness. This is a crisis not only in our state, but in the country,” said Goddeeris.