Rents have now become unaffordable for average workers in every state in America.
If you thought the pandemic was bringing lower prices and rents, the data says differently. It’s not happening yet. In fact, the opposite seems to be the case according to the latest statistics from many agencies and associations.
The Affordability Crisis
According to the latest data, the average worker can no longer afford even a mediocre rental in any state in the US.
According to the National Low Income Housing Coalition’s annual report and CNBC, a minimum wage worker would have to put in 79 hours a week to be able to afford a humble one bedroom apartment, and almost 100 hours a week for a two bedroom apartment. That certainly doesn’t give those with kids a legal place to live in many cases.
In at least five states workers need to be making over $30 an hour to afford an average apartment, In many more it takes $20-$25 an hour. Clearly minimum wages are far, far below that. Nevermind the recent increase in unemployment and likelihood that wages could decrease as competition for most offline jobs increases dramatically.
Why Rents Will Keep Going Up
More foreclosures are going to force more homeowners to become renters. Eviction bans are tying up units, and preventing them from being leased to paying tenants. Landlords are too scared to rent and never get paid.
This all means less available rental inventory. With more demand for less space, expect high rents and tougher qualifications to get in.
Many renters need a break, but who will give it to them?
On the Upside
It’s tragic when people cannot afford a roof over their heads or their children’s. It causes many other expensive problems for communities and downward spirals too.
Rising rents and demand to create security and profitability for strong landlords, and those with enough capital reserves to weather any blips in cash flow.
For those looking to help others and their own portfolios, look out for public-private opportunities to collaborate on affordable housing. The government always demands on getting paid, no matter what is happening. Perhaps Section 8 rentals or those backed by other community programs can be a win-win, and may offer great security to landlords too.
Find out more about investing in secured debt and real estate, go to NNG Capital Fund