Wages in America Are Too Low for the 30% Rule to Work for Renters Anymore

gonzalohm

Is it the wages or that shitty one bedroom apartments go for $2000+

selfmodruntime

Not really. Rent is too high. It's not a problem unique to America. Rents in Munich, for example, have also doubled since 2012. A three-room apartment often costs between €2,200 and €2,700 per month in this city. For reference, that's close to an entire net salary for many, even for someone in the top 20% of earners in Germany, where salaries are relatively low and taxes are high. The median net income here is around €2,200 per month. This has been a key factor in my fiancée's and my decision to move away, as it's simply unsustainable for families with children.

estearum

Henry George was right about everything

whoknowsidont

Landlords are the least productive class in society, and it's not even close in terms of ranking.

Arodex

Again seeing some blaming poor immigrants for this in the very first answers. Meanwhile, where do the money for OpenAI and the SpaceX IPO comes from? Who got hold of so much money? How did they got hold of it? And here's the killer question: would they, and the rules and system supporting them, change in any way if there were less immigrants?

cm2012

Wages in america are extremely high, its just property prices are even higher.

pelagicAustral

I think right now, the only place I can afford a house (in a place I would actually like to live in), is in some derelict, abandoned Italian town in Sicily, or something like that.

WarmWash

The problem is absolutley that housing is too expensive, which of course a bunch of realtors are not going to point out. Increasing wages will not fix the housing crisis, and will just drive prices higher. How convenient for a bunch of realtors...

iLoveOncall

In most European countries this 30% rule has never worked. It's always been a completely out of touch rule, and, especially for single people, rent has always easily been 50% of their net income in major European cities.

nextstep

too bad houses AREN’T for living in, but for speculating

FrustratedMonky

Very Recently, wasn't there a lawsuit against apartment owners for a vast price fixing scheme based on them all using the same software package that was telling them all to raise prices at the same time.

TrackerFF

Don't live in the US, but we're facing similar problems here in Norway. One main driver is that there's not being built enough new housing. It's a combination of building being too expensive, higher interest rates, etc. So the second-hand/used market is red hot. Renting has become so expensive, that many landlords have exited - so we're likely heading into a really bad crunch in the near future for the renters. I've read about people spending 50%-60% of their net pay on rent alone.

lp4v4n

At this point I honestly think this is a bit by design. There is a crazy amount of land in the world, but either it's too expensive or you're not allowed to build over it, or a combination of both. Houses have been built for millennia but somehow in the most advanced period of humanity you're supposed to pay hundreds of thousands of dollars for a roof over your head. I think that low key the ruling class + landlords are not interested that housing be an affordable thing, so the whole system works to create artificial scarcity. How's the population going to be forced to work unpleasant and low paid jobs if not by controlling their access to housing? You have to be too naive if you think that a few minds in your country's parliament haven't thought of this. If someday economic activity gets automated enough, and the majority of people are not needed anymore for regular jobs, and this populace gets violent with their ruling class, then I think a lot of housing will be built outside of cities, and the supply of houses will no longer be a problem.

stego-tech

I’ve been on the 50/30/20 budgeting rule for a while now, and I agree it’s a healthier perspective for an individual than a “30% gross on rent/housing” arbitrary metric. Housing is one part of a larger bill of necessities you have to pay every month because society dictates these necessities are not rights, alongside food, energy, transportation, insurance, healthcare, and communications. Laying all this out on paper then multiplying by two and accounting for taxes, helped me remain calmer in salary negotiations because I knew not what I thought I was worth, but what I actually needed to survive . The grim reality is that over-financialization of markets combined with a lack of regulations against predatory practices (like surveillance pricing and algorithmic rent setting) added gasoline to the bonfire that was a fundamental housing shortage brought about chiefly from treating housing itself as an appreciating asset rather than the land housing sits on and taxing accordingly (don’t even get me started on residential property tax schemes popularized by the Baby Boomers and the associated gap between sale price and tax assessed values dictated by law). Growing wages won’t fix this, nor will cutting interest rates. Building more housing is the only way out, but existing homeowners don’t want their assets to decline in value, so that’s generally not happening. Rent control is becoming increasingly popular, and I think it’s a good idea to protect existing renters and force landlords to side with wanna-be homebuyers instead of homeowners by forcing revenue growth through volume creation (new housing) instead of rent hikes.

holistio

Yet if I open X, I'm being told constantly that my European mind can't comprehend how poor we are and the richest European country is poorer than the poorest US state.

bcjdjsndon

Wage slave wages not even keeping up with inflation and they all think it's houses that are the problem lol.

MemoryHoleHQ

For the ones that didn't read the article, it says there. The problem is that the state takes more and more away from the workers wages: "The biggest flaw: It uses gross income, not take-home pay One of the biggest issues with the 30% rent rule is that it’s based on your gross income—not the amount of money that actually lands in your bank account on payday. To illustrate this flaw, let’s use some real-world numbers. According to the latest FRED data, the median household income in the U.S. is about $84,000 per year, or roughly $7,000 per month before taxes. Under the 30% rule, you could theoretically spend about $2,100 per month on rent if this is your income. But let’s take a look at what your take-home pay could be with this salary. "

throwawayffffas

> Although this rule isn’t necessarily wrong, the reality is that modern budgets are much more complicated than they used to be, so you can’t take the 30% rent rule as a hard-and-fast guideline. Modern budgets are not much more complicated. The rent is too damn high!

m4ck_

If companies would allow people to spread out more we could probably improve that situation some, but they want us all concentrated in 10-20 major metro areas. There's cheap housing in this country, its just in places where the job market is extremely limited.

ecshafer

I bang on this drum a lot. We need Land Value Taxes to incentivize productive use of land, and we need to eliminate (or greatly reduce the burden of) Zoning (Japan has zoning but a great model that really allows building housing efficiently). When it costs $50k in permits and takes 2 years just to put a shovel in the ground, to build a single family home, and millions to build an apartment building, of course homes are expensive. Inefficiently taxed land, and artificial scarcity via laws, turned housing into an asset class. This problem will not go away, in any country, as long as those two things are not resolved.