I just met with a woman who needs to sell her home. She might want a condo, maybe a house. My response was, “I can sell this in a heartbeat with multiple offers but we won’t find you a place to live very quickly. It’s like as a buyer you’re going into a store to purchase apples. And in the apple basket there is a brown rotten apple, a green apple (not ripe) and an overpriced red apple. I’ve shown those three apples over and over and the inventory is horrible. Rent first while we look for something to sell you!”
What about apartment/rental trends? Apartment List reported in December that the “national median two-bedroom rent is $1,160, up 2.7%” over the previous year. And a scary fact: “the share of occupied rental units under $800 fell by 27% from 2005 to 2016”. If you’re an hourly wage earner/low wage earner, you’re screwed. Affordable housing rental inventory has basically decreased by almost one third of all the available rental stock. Ironically, the report found that the share of “high-income renters’ in the top 100 metros increased by 4.2%.” The rich get richer.
Rentonomics just released their monthly report and found that rents are on the rise in Salt Lake City, with the median two bedroom apartment rent up 6.4% in the past year. Although the national average for a two bedroom rental is $1,160, they found SLC’s median to be $1,050 for the same unit.
Lenders like to see your housing cost to be no more than a third of your monthly income. If you’re getting $16 an hour, x 2080 hours in a year your gross wage will be $33,280 and about $2,773 gross wages per month A lender would say you could have a mortgage payment of $875-not including utilities-or less, per month IF YOU have LOW debt and GREAT credit. Futz with your debt and put high balances on credit cards or be late on payments for the furniture you bought and you’re screwed and wouldn’t qualify for even that amount per month. On a $200,000 home, with $100,000 as a down payment at 4% interest, your estimated house payment would be $831 (interest, principal, taxes and insurance). WHO has $100K down and WHERE is there a $200,000 home to buy? That’s like 2/3rds of a home in SLC (REALTOR.COM) that’s for sale right now ($330,000 median list price). AND if low income rental inventory is dropping by 1/3rd every decade, it will certainly increase faster given that we’re one of the fast growing areas in the country.