Here’s why renters in America feel trapped
By Mandi Woodruff via Yahoo Finance
Things aren’t looking great for aspiring homeowners in the U.S.
In a recent report by the FINRA Investor Education Foundation, researchers offer a sobering peek into the homes of renters. Nearly one-quarter of renters in a survey of 25,509 renters and homeowners combined say meeting their monthly financial commitments is “very difficult,” and more than half say they wouldn’t be able to come up with $2,000 to cover an emergency expense.
Homeowners, by comparison, feel much more stable. Half as many homeowners as renters say they find meeting their monthly bills “very difficult” and nearly half say they have no trouble meeting their monthly expenses, according to the report.
Because the cost of renting and buying varies so widely across the U.S., you have to take reports like these with a healthy dose of salt. In some metro areas, like San Antonio and Phoenix, it’s actually much cheaper to buy a home than rent.
But the reality is that the cost of renting across the country is on the rise, straining the budgets of many renters. In the largest 25 metro areas in the U.S., rents increased by 5.5% in 2013, eating up more than 40% of the average renter’s household income, according to Trulia. Most financial experts recommend spending less than one-third of income on housing.
“Once [rent] is over 30%, that’s when you start getting into the danger zone financially,” says Helen Stephens, a certified financial planner in Dallas. “And the problem when you’re renting is that you may be in a lease for a year, and at the end of that year your landlord has the right to raise the rent on you.”
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