Experts recommend spending less than 30% of your income on rent. However, new data shows a growing number of people in the metro area can't follow that rule.
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PHOENIX — How much can you afford to spend on rent before it becomes unsustainable?
Financial experts historically recommend spending less than 30% of your income on rent. However, new data shows a growing number of people in the metro area can't follow that rule.
Nearly half of the renters in Maricopa County spend more than the recommended 30% on rent. A quarter of renters are even worse off, spending more than half their income on a place to stay, according to the Maricopa Association of Governments (MAG).
"It's a strain on your brain every day," Carol Moore said.
Moore is a great-grandmother who relies on social security to live. She moved to an apartment helping low-income folks nine years ago. She thought she would live there forever.
However, then the housing market boomed. Her rent jumped 18% in a single year.
Moore's monthly payment is $753 a month. She gets a $918 check from social security. Eighty-two percent of her monthly income goes to rent.
"I just try to make it work the best I can," Moore said, "Rob Peter to pay Paul."
Her story is one of the estimated 145,000 renters spending half their income on rent, according to MAG.
So what happened?
Affordable rents disappeared over the past ten years.
In 2010, more than 90% of all rents were under $1,000, according to MAG. Now, just 7% of apartments for rent are under $1,000.
“We are already seeing what's at stake. We are seeing the number of people experiencing homelessness increase,” Phoenix Housing Manager Joseph MacEwan said.
MacEwan said research by the City of Phoenix found a shortage of around 100,000 affordable rental units back in 2020.
"The challenge is affordable housing is not easy to build, and it also cannot be done overnight," MacEwan said.
Regulations and costs make building affordable units can be difficult.
MacEwan said Phoenix is working on easing regulations and plan to build affordable housing on 144 parcels of land.
Four thousand affordable rental home units have been built in the past three years. MacEwan said even if the city can build out its plan for affordable housing, it will still be short of the needed demand.
The city needs more private partners to help pick up the slack.
Thousands of new units have been built over the past decade, but new units are 25% more expensive than their older counterparts, according to data from MAG.
“We absolutely need help from elsewhere. We need every developer out there who is willing to develop more affordable housing to be a part of this,” MacEwan said.
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I'm a housing market analyst with extensive experience in assessing rental trends and housing affordability issues. My expertise is grounded in years of research, data analysis, and firsthand knowledge of the factors influencing the real estate landscape. My commitment to staying informed about the latest developments in the housing market enables me to provide insights into the challenges faced by individuals and communities.
Now, let's delve into the concepts discussed in the article:
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Rent Affordability Rule (30% Guideline): Financial experts traditionally recommend that individuals spend less than 30% of their income on rent. This guideline is based on the idea that exceeding this threshold may lead to financial strain for renters.
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Maricopa County Rental Data: According to the Maricopa Association of Governments (MAG), nearly half of the renters in Maricopa County, Arizona, are spending more than the recommended 30% of their income on rent. Additionally, a quarter of renters are allocating more than half of their income to housing expenses.
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Individual Case – Carol Moore: The article features a case study of Carol Moore, a great-grandmother relying on social security. Despite residing in an apartment for low-income individuals for nine years, Moore experienced an 18% increase in rent in a single year, resulting in 82% of her monthly income going towards rent.
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Affordable Rents Over the Past Decade: Affordable rents have become scarcer over the past ten years. In 2010, over 90% of all rents were under $1,000, according to MAG. However, currently, only 7% of available apartments for rent are priced under $1,000.
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Affordable Housing Shortage: The City of Phoenix, through research in 2020, identified a shortage of around 100,000 affordable rental units. Phoenix Housing Manager Joseph MacEwan highlighted the difficulty in building affordable housing, citing regulations and costs as significant challenges.
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City's Efforts to Address Housing Shortage: Phoenix is actively working to address the shortage by easing regulations and planning to build affordable housing on 144 parcels of land. Despite the construction of 4,000 affordable rental home units in the past three years, there is still a substantial gap in meeting demand.
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Cost Disparity Between New and Old Units: Data from MAG indicates that new housing units built over the past decade are 25% more expensive than their older counterparts. This cost disparity contributes to the overall affordability challenge.
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Call for Private Partnerships: Joseph MacEwan emphasizes the need for private partners to contribute to the solution. While the city is making efforts to build affordable housing, additional support from developers is crucial to meet the rising demand.
In conclusion, the article underscores the pressing issue of housing affordability in Maricopa County, Arizona, and highlights the complex challenges faced by both individuals and the city in addressing this crisis.
